antitrust – Media Nation

New Jersey and California learn that what the government giveth, the government can taketh away

There are two problems with direct government funding of journalism. The first is that it opens the door to government interference. The second is that, even if safeguards are built in to protect independence, the money can be reduced or cut off in the event of a crisis.

That is exactly what is happening in New Jersey and California. In the former, that state’s Civic Information Consortium, a pioneering effort to distribute taxpayer funds for journalism and other types of storytelling, is in danger of being zeroed out after receiving $3 million this past year. In the latter, a deal that California officials had reached with Google to pay for news is starting to come apart.

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New Jersey’s Democratic governor, Phil Murphy, has proposed getting rid of the funding in his budget for fiscal year 2026. The consortium calls it “a potentially devastating blow to local media and civic information access across the state. Without this funding, NJCIC’s critical work could cease.”

Since it was launched in 2021, the consortium has granted some $9 million to 56 organizations. It’s administered by an independent board appointed by the governor and run out of Montclair State University. Ellen Clegg and I wrote about it in our book, “What Works in Community News.”

Murphy declined to comment on the cut when contacted by Terrence T. McDonald of the New Jersey Monitor, but McDonald noted that the governor’s office had said earlier this year that his budget proposal would include “some belt-tightening.” Even so, McDonald observed that next year’s budget was on track to be larger than the current year’s.

The California situation stems from a much-criticized deal that the state cut with Google last year. According to Jeanne Kuang of CalMatters, Democratic Gov. Gavin Newsom has reduced a $30 million allocation to help pay for local news to just $10 million for the coming year as he wrestles with a $12 billion deficit.

That, in turn, trigged a cut by Google from $15 million to $10 million. The money — now just $20 million instead of $45 million — will be administered by a newly formed California Civic Media Fund, which Kuang writes will comprise “a board of publisher representatives to determine how to distribute it.”

California’s five-year deal with Google was reached after the state abandoned efforts to pass legislation that would have taxed Google for the news that it repurposes. One version of the tax would have brought in $500 million a year.

There are all kinds of problems with what essentially amounts to a link tax, started with the reality that news publishers benefit when Google links to their content. Users who click through encounter those publishers’ advertising, or may even be induced to subscribe if they have a paywall.

Now publishers are facing a much deeper threat from Google, as the search giant is going all-in on artificial intelligence, thus eliminating the need to click through.

“Links were the last redeeming quality of search that gave publishers traffic and revenue,” Danielle Coffey, the CEO and president of News/Media Alliance, said in a statement reported by The Verge. “Now Google just takes content by force and uses it with no return, the definition of theft. The DOJ remedies must address this to prevent continued domination of the internet by one company.”

“DOJ remedies” is a reference to recommendations by the Department of Justice after Google recently lost two separate antitrust cases.

On our 100th podcast, Tom Breen tells us what’s next for the New Haven Independent

Tom Breen in downtown New Haven. Photos (cc) 2021 by Dan Kennedy.

For our 100th “What Works” podcast, Ellen Clegg and I talk with Tom Breen, the editor of the New Haven Independent. Tom joined the staff of the Independent in 2018 and then became managing editor. Last November, he stepped up to succeed founding editor Paul Bass, who launched the Independent in 2005 and is still very much involved.

Paul is executive director of the Online Journalism Project, the nonprofit organization he set up to oversee the Independent, the Valley Independent Sentinel in New Haven’s northwest suburbs and WNHH, a low-power community radio station. He continues to report the news for the Independent and hosts a show on WNHH, and he started another nonprofit, Midbrow, which publishes arts reviews in New Haven and several other cities across the country.

We spoke with Tom about his own vision for the Independent and why he thinks it has been successful enough to still be going strong after 20 years. He also reminisces about a harrowing encounter he once had with a pitbull while he was out knocking on doors for a story on mortgage foreclosures. I interviewed Tom for our book, “What Works in Community News.”

New Haven Independent reporter Maya McFadden interviews Victor Joshua, director of a youth basketball program called RespeCT Hoops.

Listeners will also hear from Alexa Coultoff, a Northeastern student who wrote an in-depth report on the local news ecosystem in Fall River, Massachusetts, a blue-collar community south of Boston that flipped to Donald Trump in the last election after many decades of being a solidly Democratic city. We recently published Alexa’s story, so please give it a read.

Ellen has a Quick Take on two big moves on the local news front. The National Trust for Local News has named a new CEO to replace Elizabeth Hansen Shapiro, who resigned earlier this year. The new leader is Tom Wiley, who is now president and publisher of The Buffalo News. And in the heartland, The Minnesota Star Tribune has named a new editor to replace Suki Dardarian, who is retiring. The nod goes to Kathleen Hennessey, the deputy politics editor of the New York Times and a former Associated Press reporter.

My Quick Take examines a recent court decision ruling that Google has engaged in anti-competitive behavior in the way it controls the technology for digital advertising. This was the result of a lawsuit brought by the Justice Department and a number of states, but it’s also the subject of lawsuits brought by the news business, which argues that Google has destroyed the value of online ads. It’s potentially good news. It’s also complicated, and its effect may be way off in the future.

You can listen to our conversation here, or you can subscribe through your favorite podcast app.

How news outlets may benefit from a ruling that Google’s ad tech violates antitrust law

To the extent that news organizations have been able to overcome the collapse of advertising caused by the rise of giant tech platforms, it’s through two imperfect methods.

For-profits, especially larger newspapers, charge for digital subscriptions and try to maintain a baseline level of print advertising, which has maintained at least some of its value.
Nonprofits, many of them digital-only, pursue large gifts and grants while attempting to induce their audience to pay for voluntary memberships, often for goodies like premium newsletters.

At the same time, though, news publishers have continued to look longingly at what might have been. When journalism started moving online 30 years ago, the assumption was that news outlets would continue to control much of that advertising.

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Those hopes were cut short. And in large measure, that’s because Google — according to publishers — established a monopoly over digital advertising that news organizations couldn’t crack. Now we’re getting a glimpse of a possible alternative universe, because last week a federal district-court judge agreed, at least in part.

I’ve read several accounts of Judge Leonie Brinkema’s 115-page ruling on an antitrust suit brought by the U.S. Justice Department and eight states (but not Massachusetts). It’s confusing, but I thought this account by David McCabe in The New York Times (gift link) was clearer than some, so I’m relying on it here. I’ll begin with this:

The government argued in its case that Google had a monopoly over three parts of the online advertising market: the tools used by online publishers, like news sites, to host open ad space; the tools advertisers use to buy that ad space; and the software that facilitates those transactions.

In other words, the suit claimed that Google controlled both ends of the market as well as the middleman software that makes it happen. Judge Brinkema agreed with the first two propositions but disagreed with the third, saying, in McCabe’s words, that “the government had failed to prove that it constituted a real and defined market.”

Brinkema put it this way: “In addition to depriving rivals of the ability to compete, this exclusionary conduct substantially harmed Google’s publisher customers, the competitive process, and, ultimately, consumers of information on the open web.”

Lee-Anne Mulholland, a Google vice president, said in response, “We won half of this case and we will appeal the other half.” I’m pretty sure that losing two out of three is two-thirds, but whatever.

Brinkema will now consider the government’s demand that Google’s ad business be broken up. But given that the company has already said it will appeal, it could be a long time — like, on the order of years — before anything comes of this. Same with an earlier ruling in a different courtroom that Google’s search constitutes an illegal monopoly, which is also the subject of hearings this week.

The News/Media Alliance, a lobbying group for the news business, praised Brinkema’s ruling, saying:

The News/Media Alliance has spent years advocating on behalf of news media publishers against Google’s unlawfully anticompetitive actions. We are strongly supportive of a similar lawsuit in Texas that will follow, as well as the Gannett lawsuit currently being litigated on the same issues. Much of this was prompted in the House Report that documented Google’s abuse in the ad tech ecosystem, the scope of which is wide-reaching.

As the organization observes, Google’s ad tech has been the subject of several suits by the newspaper business. One of them names Facebook as a co-defendant, claiming that the Zuckerborg chose to collude with Google rather than compete directly. Gannett’s suit, on the other hand, only names Google.

The News/Media Alliance also continues to push for passage of the Journalism Competition and Preservation Act, a pet project of Democratic Sen. Amy Klobuchar of Minnesota and Republican Sen. John Kennedy of Louisiana.

The proposal, which never gained much traction and is surely all but dead with Donald Trump back in the White House, would force Google and Facebook to pay for the journalism they repurpose. The legislation is problematic for many reasons, not least that Facebook has made it clear it would rather remove news from its various platforms, as it has done in Canada, than pay for it.

Punishing Google for clearly defined legal violations is a much cleaner solution. Let’s hope Judge Brinkema’s ruling survives the appeals process — not to mention whatever idea starts rattling around Trump’s head to reward Google as a favor for CEO Sundar Pichai’s $1 million kiss. Perhaps this can be the start of making advertising great again.

Google in the dock

The New York Times today reports on the U.S. Justice Department’s antitrust case against Google. The federal trial is scheduled to get under way next Tuesday.

The lawsuit, according to the Times’ David McCabe and Cecilia Kang, revolves around accusations that Google monopolizes search by paying off the likes of Apple and Mozilla to make Google their default search engine. But I think a group of newspaper publishers are pursuing a more interesting antitrust case against Google (and Facebook), charging that Google’s control of every aspect of online advertising technology has allowed the giant platform to drive down ad prices and leave media organizations on the sidelines.

Facebook is part of the suit because the publishers claim that Google and Facebook have colluded in order to keep Facebook from setting up its own competing ad system. Separately, Gannett has sued Google, but not Facebook, over the same issues.

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In a separate lawsuit, Gannett joins antitrust effort aimed at Google (and Facebook)

Since early 2021, Google has faced legal challenges over its control of digital advertising. Essentially, the tech giant stands accused of violating antitrust law by controlling all aspects of the ad market. As Paul Farrell, the lawyer for a group of seven newspapers in West Virginia, told Gretchen A. Peck of the trade publication Editor & Publisher:

They [Google] have completely monetized and commercialized their search engine, and what they’ve also done is create an advertising marketplace in which they represent and profit from the buyers and the sellers, while also owning the exchange. Google is the broker for the buyer and gets a commission. Google is the broker for the seller and gets a commission. Google owns, operates and sets the rules for the ad exchange. And they are also in the market themselves.

The suit filed by Farrell on behalf of the West Virginia papers was later joined by about 200 papers and included Facebook, which was accused of colluding with Google in order to receive preferential treatment. Attorneys general in Texas and several other states filed a separate suit, with BuzzFeed News reporting that the CEOs of Google and Facebook “personally signed off on a secret advertising deal.” The Justice Department got involved, and the European Union is suing Google on similar grounds.

On Tuesday, Google’s legal woes grew that much more complicated as Gannett, the country’s largest newspaper chain, filed its own lawsuit against Google in federal district court. Writing in USA Today, Gannett’s flagship publication, chair and CEO Mike Reed accused Google of “monopolization of advertising technology markets and deceptive commercial practices.” He added:

The core of the case and our position is that Google abuses its control over the ad server monopoly to make it increasingly difficult for rival exchanges to run competitive auctions. Further, Google’s exchange rigs its own auctions so Google’s advertisers can buy ad space at bargain prices. That means less investment in online content and fewer ad slots for publishers to sell and advertisers to buy. Google always wins because it takes a growing share of that shrinking pie.

In addition to USA Today, Gannett owns about 200 daily papers and other publications across the country, including local papers such as the Telegram & Gazette of Worcester, The Patriot Ledger of Quincy, the MetroWest Daily News of Framingham and The Providence Journal.

So why did Reed decide to file his own lawsuit rather than joining antitrust efforts that are already under way? It’s a good question, and it’s one that Editor & Publisher’s Mike and Robin Blinder asked him about in their vodcast, “E&P Reports.” Reed’s answer: “You know, as far as us going by ourselves, we just felt like we had the right size, we had the right legal counsel, and we felt like we didn’t want to wait.”

Jeff Jarvis, a well-known digital media observer and director of the Tow-Knight Center for Entrepreneurial Journalism at the City University of New York Graduate School of Journalism, was critical of the Gannett suit, telling E&P:

It is tragic that once-great Gannett is resorting to protectionism and retribution against its competitors rather than have a strategy for innovation and growth in a changed marketplace. There are legitimate questions to be addressed regarding Google’s power in both sides of the advertising market and authorities in both Europe and the U.S. are investigating them. But for Gannett to blame Google’s alleged monopoly for its present troubles is just sad.

But you can disparage Gannett for decimating its newspapers while still supporting legal efforts to hold Google to account. Few media observers have been more critical of Gannett than my What Works partner Ellen Clegg and I. Greed and crushing debt have led the chain to cut its journalistic capacity far more deeply than would have otherwise been necessary. Yet it’s simply a fact that very little digital advertising money has flowed to the news business, and that lack of innovation on the part of the news business is only partly to blame. If news publishers and government investigators are able to show that situation is either partly or wholly the result of illegal practices on the part of Google (and Facebook), then there’s no reason why Gannett shouldn’t be one of the beneficiaries, regardless of the company’s otherwise loathsome behavior.

Moreover, the antitrust route strikes me as far more promising than congressional efforts to force Google and Facebook to pay for the news they repurpose. Last week, the Senate Judiciary Committee passed the Journalism Competition and Preservation Act on a bipartisan 14-7 vote, according to Ted Johnson of Deadline. The JCPA would allow the news business to bargain collectively with Google and Facebook for a share of their revenues. Even if the JCPA passes the full Senate, though, it seems unlikely to prevail in the Republican-controlled House. A similar law in Australia has served mainly to enrich press baron Rupert Murdoch, and there’s no guarantee that the JCPA would bolster journalism at the local level.

Regulating a monopoly often leads to unintended negative consequences. Breaking one up, as Gannett and its numerous co-plaintiffs would like to do, can spark innovation. Local news today is getting by through a combination of paywalls, low-value programmatic ads and — in the nonprofit sector — foundation grants, membership fees and events. Nothing would be more welcome than to see that bolstered by a reinvigorated ad market.

Help local news? Sure. Force Google and Facebook to pay? Probably not.

Sen. Amy Klobuchar meets a fan in Iowa. Photo (cc) 2019 by Gage Skidmore.

For years now, news executives have been complaining bitterly that Google and Facebook repurpose their journalism without paying for it. Now it looks like they might have an opportunity to do something about it.

Earlier this week a Senate subcommittee chaired by Sen. Amy Klobuchar, D-Minn., heard testimony about the Journalism Competition and Preservation Act (JCPA), sponsored by her and Sen. John Kennedy, R-La. The bill would allow representatives of the news business to bargain collectively over a compensation package with Google and Facebook without running afoul of antitrust laws. If they fall short, an arbitrator would impose a settlement.

“These big tech companies are not friends to journalism,” said Klobuchar, according to an account of the hearing by Gretchen Peck of the trade magazine Editor & Publisher. “They are raking in ad dollars while taking news content, feeding it to their users, and refusing to offer fair compensation.”

There’s no question that the local news ecosystem has fallen apart, and that technology has a lot to do with it. (So do the pernicious effects of corporate and hedge-fund ownership, which has imposed cost-cutting that goes far beyond what’s necessary to run a sustainable business.) But is the JCPA the best way to go about it?

The tech giants themselves have been claiming for years that they provide value to news organizations by sending traffic their way. True, except that the revenues brought in by digital advertising have plummeted over the past two decades. A lawsuit brought by newspaper publishers argues that the reason is Google’s illegal monopoly over digital advertising, cemented by a secret deal with Facebook not to compete.

Though Google and Facebook deny any wrongdoing, the lawsuit strikes me as a more promising strategy than the JCPA, which raises some serious questions about who would benefit. A similar law in Australia has mainly served to further enrich Rupert Murdoch.

Writing at Nieman Lab, Joshua Benton argues, among other things, that simply taxing the technology companies and using the money to fund tax subsidies for local news would be a better solution. Benton cites one provision of the Build Back Better legislation — a payroll tax deduction for hiring and retaining journalists.

In fact, though, the payroll provision is just one of three tax credits included in the Local Journalism Sustainability Act; the others would reward subscribers and advertisers. I have some reservations about using tax credits in a way that would indiscriminately reward hedge-fund owners along with independent operators. But I do think it’s worth a try.

Even though local news needs a lot of help, probably in the form of some public assistance, it strikes me that the Klobuchar-Kennedy proposal is the least attractive of the options now on the table.

Antitrust suit brought by states claims Google and Facebook had a secret deal

There’s been a significant new development in the antitrust cases being brought against Google and Facebook.

On Friday, Richard Nieva reported in BuzzFeed News that a lawsuit filed in December 2020 by Texas and several other states claims that Google CEO Sundar Pichai and Facebook CEO Mark Zuckerberg “personally signed off on a secret advertising deal that allegedly gave Facebook special privileges on Google’s ad platform.” That information was recently unredacted.

Nieva writes:

The revelation comes as both Google and Facebook face a crackdown from state and federal officials over antitrust concerns for their business practices. Earlier this week, a judge rejected Facebook’s motion to dismiss a lawsuit by the Federal Trade Commission that accuses the social network of using anticompetitive tactics.

The action being led by Texas is separate from an antitrust suit brought against Google and Facebook by more than 200 newspapers around the country. The suit essentially claims that Google has monopolized the digital ad marketplace in violation of antitrust law and has cut Facebook in on the deal in order to stave off competition. Writing in Business Insider, Martin Coulter puts it this way:

Most of the allegations in the suit hinge on Google’s fear of “header bidding,” an alternative to its own ad auctioning practices described as an “existential threat” to the company.

As I’ve written previously, the antitrust actions are potentially more interesting than the usual complaint made by newspapers — that Google and Facebook have repurposed their journalism and should pay for it. That’s never struck me as an especially strong legal argument, although it’s starting to happen in Australia and Western Europe.

The antitrust claims, on the other hand, are pretty straightforward. You can’t control all aspects of a market, and you can’t give special treatment to a would-be competitor. Google and Facebook, of course, have denied any wrongdoing, and that needs to be taken seriously. But keep an eye on this. It could shake the relationship between the platforms and the publishers to the very core.

Our latest podcast features Rhema Bland, director of the Ida B. Wells Society

Our guest on the latest episode of the “What Works” podcast is Rhema Bland, the first permanent director of the Ida B. Wells Society for Investigative Reporting at the University of North Carolina school of journalism. She was appointed in October 2020 after working in higher education as an adviser to student media programs. She is a veteran journalist who has reported and produced for CBS, the Florida Times-Union, WJCT and the New York Daily News.

The Wells Society was co-founded by award-winning journalists Nikole Hannah-Jones, Ron Nixon and Topher Sanders. The society is named after the path-breaking Black journalist and activist Ida B. Wells, who fearlessly covered the lynching of Black men and was present at the creation of the NAACP. The society’s mission is essential to the industry: to “increase the ranks, retention and profile of reporters and editors of color in the field of investigative reporting.” Bland and her colleagues host training seminars for journalists across the country, focusing on everything from entrepreneurship to racial inequality to COVID-19.

Also in this episode, Ellen Clegg talks about Ogden Newspapers’ purchase of Swift Communications, which publishes community papers in western ski towns as well as niche agricultural titles like the Goat Journal. And I share news about federal antitrust lawsuits that are in the works against Google and Facebook by more than 200 newspapers.

You can listen here and sign up via Apple Podcasts, Spotify or wherever fine podcasts are found.

Google and Facebook have decimated newspaper ad revenues. A lawsuit aims to change that.

Previously published at GBH News.

One afternoon in early 2016, I arrived at The Boston Globe’s former headquarters in Dorchester to talk with John Henry about the state of his newspaper. Before we could begin, though, he wanted to talk about something that was bugging him.

Google, it seemed, had started slapping the word “subscription” on Globe content when it came up in searches, even though few people were likely to run into what was then a relatively porous paywall. It took months to straighten out, he complained — costing the Globe readers and, therefore, advertising revenue.

Henry’s lament illustrates the complicated relationship publishers have long had with Google. On the one hand, they complain bitterly that the dominant search engine is repurposing their journalism without paying for it. On the other hand, they depend on the clicks that Google sends their way.

Now matters may be coming to a head.

Under pressure from the Australian government, Google and Facebook have agreed to start paying for the content they repackage, MediaPost reports.

In the U.S., the News Media Alliance, which represents newspaper publishers, has long sought an exemption from antitrust law so that they could attempt to negotiate a compensation package with the two companies. There are signs that Congress may finally pass legislation to let them try.

And now, a chain of newspapers in West Virginia has filed a lawsuit charging that Google and Facebook violated antitrust laws by forming an alliance aimed at perpetuating their monopoly on digital advertising.

In order to understand exactly what the two companies — especially Google — have done to harm the news business, you need to consider two different but related practices.

First there is the matter of grabbing content, which, as Henry’s complaint shows, is convoluted: Publishers can’t live with Google and can’t live without it. Years ago, before the Google-Facebook lockdown on ad revenue was even on the horizon, publishers would argue that Google should pay them. Google would counter that it was driving traffic to news sites, thus increasing the value of advertising on those sites. There was some logic to Google’s argument, though somehow it never worked out in favor of the publishers.

The problem in recent years is that Google acquired a number of advertising businesses and now controls not just search but also the advertising associated with search. Through the use of an automated auction system, the price of digital ads is being driven ever lower, making it all but worthless. As Nicco Mele, a former deputy publisher of the Los Angeles Times, explained several years ago, a full-page weekday ad in the paper that cost $50,000 had given way to Google ads on its website that brought in less than $20 to reach the same number of readers.

“To a large extent, Facebook and Google are sucking up revenue that publishers of content should be receiving,” Mele told an audience at Harvard.

It’s the ever-shrinking value of digital advertising that’s being targeted in the West Virginia lawsuit, brought by HD Media. The small chain owns seven newspapers, most notably the Charleston Gazette-Mail and The Herald-Dispatch of Huntington. Paul Farrell, the lawyer who represents the papers, told the trade magazine Editor & Publisher that Google is leveraging its control of two entirely different businesses in order to monopolize ad revenues and squeeze out anyone else.

“They have completely monetized and commercialized their search engine, and what they’ve also done is create an advertising marketplace in which they represent and profit from the buyers and the sellers, while also owning the exchange,” Farrell was quoted as saying. “Google is the broker for the buyer and gets a commission. Google is the broker for the seller and gets a commission. Google owns, operates and sets the rules for the ad exchange. And they are also in the market themselves.”

So where does Facebook fit in? According to a lawsuit filed by several state attorneys general that was reported by The Wall Street Journal, Google and Facebook are colluding through an agreement that Google has code-named Jedi Blue. The AGs contend that Google provides Facebook with special considerations so that Facebook won’t set up a competing ad network. (Google and Facebook have denied any wrongdoing, and, in the E&P story, Google reiterated that stance with regard to the HD Media suit.)

For Google, it’s a perfect closed environment: It holds a near-monopoly on search and the programmatic advertising system through which most ads show up on news websites. And it has an agreement with Facebook aimed at staving off competition.

As Washington Post media columnist Margaret Sullivan observed, the collapse of advertising is what has led to the closure of more than 2,000 newspapers over the past 16 years — as well as the shrinkage of surviving papers like the Gazette-Mail, which won a Pulitzer Prize for its coverage of the opioid crisis in 2017.

Back when newspapers were manufactured out of dead trees, advertising was responsible for about 80% of revenue. Once they started moving online, that revenue stream was decimated, first by Craigslist, a mostly free service that scooped up nearly all the classified ads, and then by Google and Facebook.

Ironically, Craigslist founder Craig Newmark today directs much of his considerable philanthropy to the news business, and Google and Facebook spend quite a bit on various journalism initiatives as well. But whereas Newmark’s only sin was to build a better mousetrap, Google and Facebook’s dominance has more in common with the robber barons of the Gilded Age. It’s time that someone brought them to heel.

At least some newspapers have come up with a formula for overcoming the digital-advertising debacle. The New York Times, The Washington Post, The Wall Street Journal and, yes, John Henry’s Boston Globe have all reinvented themselves as successful enterprises by reducing their reliance on ads in favor of digital subscriptions.

But it’s far from clear whether that will work for local and most regional papers, and even those that are doing well run the risk of becoming overreliant on one source. A reliable stream of ad revenue, freed from the depredations of Big Tech, would go a long way toward revitalizing journalism.