Note: This was originally published as the daily newsletter for the Columbia Journalism Review, where I am the chief digital writer
On July 8, the Wall Street Journal reported that Google, the search-engine subsidiary of Alphabet, had offered concessions to the US government, in an attempt to stave off a potential antitrust lawsuit targeted at its advertising business. “As part of one offer, Google has proposed splitting parts of its business that auctions and places ads on websites and apps into a separate company under the Alphabet umbrella,” the Journal reported. If this were to take place, the entity created would be worth tens of billions of dollars, according to the sources the Journal spoke with. The proposal was described as a “sign that legal and regulatory pressures on the tech giant are coming to a head.” Over the past two years alone, Google and Alphabet have been the target of half a dozen antitrust actions led by both state and federal authorities, aimed at the company’s control over both the search market and the digital ad market, and members of Congress have proposed a law that would break up Google’s digital ad business. The European Union’s antitrust regulators are also investigating the company’s advertising operations.
Google’s proposal to split its ad operations doesn’t seem to have been warmly received by the US Department of Justice, however. On Thursday, a report from Bloomberg said that antitrust authorities are “likely to reject concessions offered by Alphabet, clearing the way for an antitrust lawsuit over Google’s dominance of the online advertising market.” Bloomberg said a lawsuit could be filed against the company as early as August, according to its anonymous sources. The lawsuit would join a similar suit that was launched by the Department of Justice in 2020, aimed at Google’s dominance of the online search market. According to Bloomberg, the digital ad lawsuit is being handled by Doha Mekki, the second most powerful official in the Department of Justice, which makes the likelihood of a quick settlement remote at best. “You’re going to see a lot more litigation from the antitrust division,” Mekki said at an event in April. “The division’s position is we are not planning to take settlements. Settlements suggest compromise.”
Google’s advertising business is also the subject of an antitrust suit by a number of state attorneys general, led by Ken Paxton, Attorney General for Texas. That lawsuit was filed in December 2020 and remains ongoing in New York federal court. It was recently updated with an unredacted document that details how Google allegedly uses its control of all aspects of the ad market to rig auctions in its favor, boosting its revenue by potentially hundreds of millions of dollars (online ads generated more than $30 billion in revenue for Google last year). Like most of the other lawsuits and regulatory actions against Google for its dominance of the digital ad business, the one from the state attorneys general focuses on one thing: the fact that Google simultaneously controls the world’s largest digital ad buying platform, the largest online advertising exchange, and the largest platform for displaying ads on publishers’ websites. According to Wired, one unnamed employee who was quoted in the state attorneys general lawsuit compared it to “if Goldman or Citibank owned the New York Stock Exchange.”
In May of this year, a group of congressmen led by Mike Lee, a Republican senator from Utah, introduced a bill called the Competition and Transparency in Digital Advertising Act, which would effectively prevent Google from controlling all aspects of the online ad market. Although it doesn’t mention the company by name, it says that any company with more than $20 billion in digital advertising revenue—in other words, Google and Facebook—would be forbidden from owning multiple parts of the online ad sales infrastructure. These digital giants could choose to own the ad sales end of the market, or an online ad exchange, or the ad buying and display business, but not all of them at the same time. The lack of competition in digital ads, Lee said in a statement when the bill was tabled, “means that monopoly rents are being imposed upon every website that is ad-supported and every company that relies on internet advertising to grow its business.”
Among the companies that rely the most on internet advertising are digital news publishers. Instead of selling their own ads, most use ad networks and ad exchanges, the largest of which (in both cases) belong to Google. This allows them to take advantage of both the reader targeting such networks offer, and tools such as “real time bidding,” in which a split-second virtual auction for ad space is held when a page is loaded. The Paxton lawsuit alleges Google uses its control of both the buy side and the sell side of the ad market to rig these auctions. The Competition Markets Authority in Britain, a central regulatory body, recently announced that it is concerned that Google may “illegally favour its own ad exchange services.” One of the dangers of Google’s control over the market, the CMA says, is that it could “reduce the ad revenues of publishers, who may be forced to compromise the quality of their content” or put it behind paywalls.
Google initially succeeded by building a better search engine, the CMA stated in an overview of the online ad market it published in 2020, but “they are now protected by such strong incumbency advantages – including network effects, economies of scale and unmatchable access to user data – that potential rivals can no longer compete on equal terms.” Google disagrees, not surprisingly. In a response to Paxton’s lawsuit in January, Google maintained that the suit was filled with “inaccurate and inflammatory allegations,” and that it “fails to acknowledge that ad tech is a highly dynamic industry with countless competitors.” Google has responded in the past to allegations about the effect it has on publishers by pointing out that its ad technology “helps news organizations make money by showing ads on their websites, apps and videos” and that every year Google pays “billions of dollars directly to the publishing partners in our ad network.”
Here’s more on Google and advertising:
Ad nauseam: An analysis of the online ad market by Digiday, published in February, predicted that Google, Facebook, and Amazon will account for more than half of the global ad market this year—not just digital ads, but all ads. According to one estimate, last year the three companies took in almost three quarters of all global digital ad spending. Google’s ad business, including ads sold on its own sites as well as ads sold through third-party networks, brought in more than $200 billion in revenue, while Facebook accounted for $115 billion. According to a report in the Financial Times, the three tech giants have doubled their share of ad revenues in the past five years.
OpenTube: Google offered in June to let rival ad networks and agents place ads on YouTube, as part of an attempt to settle an investigation by the European Union into its advertising dominance. As part of the case, “the EU competition watchdog singled out Google’s requirement that advertisers use its Ad Manager to display ads on YouTube and potential restrictions on the way in which rivals serve ads,” Reuters reported. If Google can’t find a way to settle the case, it could wind up having to pay a fine equivalent to 10 percent of its global revenue, or about $26 billion.
Bedfellows: Oles Andriychuk, director of the Centre for Internet Law and Policy at the University of Strathclyde in Glasgow, wrote about how traditional media chose to get in bed with Google and Facebook instead of trying to fight them. “The current structure of digital advertising markets makes the Google-Facebook duopoly an unavoidable trading partner for every party in the content consumption supply chain,” he wrote. “The media industry remains the only meaningful market force potentially capable of mitigating the duopolistic order of digital advertising, but traditional media appear to be more interested in partnering with Big Tech than competing with it.”
Other notable stories:
Chinese hackers sent a flood of malicious emails to White House correspondents and other prominent US journalists in the days leading up to the January 6, 2021 attack on the Capitol, according to an analysis by Proofpoint, a US cybersecurity firm, as reported by CNN. The hackers were “scrambling to ascertain whether there would be a peaceful transfer of power in the US,” according to the report, so they used email subject lines about Donald Trump’s attempts to overturn the 2020 election, pandemic relief legislation, and other key US political topics. “Proofpoint attributed the hacking efforts to a group that has been linked to China’s civilian intelligence agency, the Ministry of State Security,” CNN reported.
Tech platforms such as Facebook and Twitter seemed intent on removing misinformation about the war in Ukraine when the attacks first started, but their commitment to do so has waned, according to a report in the Washington Post, based on research from a European nonprofit. “Ukrainian officials who have flagged thousands of tweets, YouTube videos and other social media posts as Russian propaganda or anti-Ukrainian hate speech say the companies have grown less responsive to their requests to remove such content,” the Post reported, and “accounts parroting Kremlin talking points, spewing anti-Ukrainian slurs or even impersonating Ukrainian officials” remain active on social networks.
Britain’s proposed Online Safety Bill is expected to be delayed until the fall, due to the ongoing impact of the resignation of Boris Johnson, the British prime minister, as leader of the Conservative Party, Politico reported. “The bill would impose a legal duty of care on internet companies such as Twitter and Facebook to keep users safe [but] moves to include some legal but harmful content in the scope of the bill have been controversial,” Politico reported. One of the candidates to replace Johnson as leader of the Conservative party, and therefore a potential prime minister, has said that he doesn’t agree with some aspects of the Online Safety Bill as it has been drafted.
A new study authored by a group of social scientists at Stanford, Cambridge, and the University of Pennsylvania suggests that American TV audiences are far more polarized politically than online audiences are. The researchers said they analyzed “billions of browsing and viewing events between 2016 and 2019,” and came to the conclusion that 17 percent of TV-watching Americans are “partisan-segregated” in their content consumption, compared with roughly 4 percent of online news readers. TV news consumers are also “several times more likely to maintain their partisan news diets month-over-month,” the group found. “Our results suggest that television is the top driver of partisan audience segregation among Americans.”
The Guardian announced Thursday that Betsy Reed will be the new editor the Guardian’s US operations. She was previously the editor-in-chief of The Intercept, a position she took n 2015, just a year after the site was founded. While she was the editor, The Intercept won a number of journalism awards, including a Polk Award. Prior to joining the site, Reed was executive editor of The Nation. Reed replaces John Mulholland, editor of Guardian US since 2017, who announced earlier this year he was stepping down. She will be replaced as editor-in-chief of The Intercept by Roger Hodge, formerly deputy editor, and Nausicaa Renner, a former editor at CJR, becomes deputy editor.
A Chinese woman “spent years writing alternative accounts of medieval Russian history on Chinese Wikipedia, conjuring imaginary states, battles, and aristocrats in one of the largest hoaxes on the open-source platform,” Vice reported. The hoax was exposed last month by Yifan, a Chinese novelist, who was doing research for a book. The user, known as Zhemao, wrote more than 200 articles on the Chinese edition of Wikipedia since 2019, and many had elaborate (but fake) footnotes and citations to books and documents. “The content she wrote is of high quality and the entries were interconnected, creating a system that can exist on its own,”John Yip, a Chinese Wikipedian, told Vice. “Zhemao single-handedly invented a new way to undermine Wikipedia.”
Reporters, editors, and producers who work at PBS NewsHour announced that they are attempting to unionize with SAG-AFTRA, which already represents the news unit’s anchors and correspondents, according to The Hollywood Reporter. “The workers, who are calling their group the NewsHour Union, announced their organizing attempt on Tuesday,” the magazine reported. The organizing committee representing the staffers said in a statement that “as the creative engine behind one of the most trusted news institutions in the country, our goal is to strengthen this pillar of American television news by creating a better, healthier and more transparent workplace.”
Greg Burns writes for the Local News Initiative at Northwestern University about a number of small investment groups that have been snapping up local newspapers over the past year or so, as chains like Gannett, Lee Enterprises, and Alden Global restructure their portfolios. “Since 2020, three companies have led the way,” he writes, including CherryRoad Media of New Jersey, which owns 63 papers in 10 Midwestern states; Paxton Media, which is based in Kentucky and owns 115 newspapers in 10 Southern and Midwestern states; and Ogden Newspapers, based in West Virginia, which owns 101 papers in 18 states stretching from New Hampshire to Hawaii.