Explained: Why news publishers across the world are suing Google – their biggest source of readers

Canadians will no longer be able to find local news websites while searching for news on Google. That is because Google, the world’s largest search engine, announced on June 29 that it will be removing links to Canadian news from its products.

The company’s decision was a reaction to a new Canadian law that compels tech giants to pay news publishers for using their content.

Senior Google official Kent Walker said that the Canadian government’s decision was unfair as it would force the company to pay simply for facilitating access to news from Canadian publishers.

However, Canadians will still be able to access these websites by typing the URLs directly into their browsers.

This is not the first time Google has found itself in a battle with publishers. The platform has also faced lawsuits in the United States, the United Kingdom, the European Union, Germany, France and Belgium.

Why are news publishers suing Google?

A lawsuit filed by Gannett, one of the largest news publishers in the United States, in June answers this question.

“Today, online digital advertising is a $200 billion business – a nine-fold increase since 2009,” the suit said. “Yet, despite the opportunity for publishers to produce more news content and earn more revenue, news publications’ advertising revenue has declined by nearly 70% over the same timeframe.”

The company holds Google responsible for this revenue drop, as also for newsroom employment dropping by more than half since 2009. More than 20% of all newspapers have closed and the circulation of the remaining daily and weekly newspapers have decreased by more than 40% in the same period, Gannett alleged.

Why is Google said to be responsible for this?

There are two ways in which this happens.

1. Digital advertising

Most media organisations earn the bulk of their revenues from advertisements. In the pre-internet era, publishers negotiated deals with individual advertisers. Publications had a limited number of ad slots and advertisers.

As publications moved online, publishers started auctioning ad space electronically using sophisticated software. Because space on the internet is unlimited, publishers sold exponentially more ad slots every day. This year, the global digital advertising market is estimated to be valued at $626.9 billion.

However, Google and its parent Alphabet have a monopoly over the advertising technology tools that publishers and advertisers use to buy and sell online ad space.

The bulk of online display advertising space is bought and sold in real-time on online “advertising exchanges”. These exchanges are very similar to electronically traded financial markets. In these exchanges, Google is the largest seller of ad space globally. It operates the leading ad trading platform as well as the most prominent intermediaries that ad buyers and sellers go through to trade.

This means that Google has a conflict of interest. To use a football analogy, Google is a referee who is also playing in the game.

In her widely lauded research paper titled “Why Google Dominates Advertising Markets”, researcher and author Dina Srinivasan alleges, “Google’s exchange shares superior trading information and speed with the Google-owned intermediaries, it steers buy and sell orders to its exchange and websites (Search & YouTube), and abuses its access to inside information.”

Srinivasan wrote in The New York Times: “​​These problems took root more than a decade ago when Google made a bid for DoubleClick, the popular service that helps websites sell ad space. The service became part of Google’s ad exchange division, which it later called AdX.”

After acquiring DoubleClick, Google not only pushed its advertising clients to its own exchange but also stopped competing exchanges run by Yahoo, Microsoft and others bidding on the ad space, she alleged.

“Unsurprisingly, such self-dealing allowed Google – a late entry to the exchange market – to quickly grow AdX into the largest trading venue for ads,” she noted. “Websites paid the price: The lack of exchange competition resulted in their ad space selling for up to 50% less than what it otherwise would.”

In 2020, more than 84% of the $146 billion in ad revenue generated by Google went towards its own Search and YouTube products. In 2022, Google’s ad revenue amounted to $224.47 billion.

2. Google Search, News, Discover products

According to a 2022 report, 99,000 search queries were processed by Google every second. Over 8.5 billion times a day people across the world searched for information such as recipes, news, games, weather updates, celebrity gossip and much more.

Every search leads to pages full of links with thumbnails, headlines and snippets based on which the users decide which site they want to visit – and which they choose to avoid. Many publishers believe that Google is infringing on their content by showing these snippets. This practice also keeps users from clicking on external website links since they get the gist of the content on Google itself. As a consequence, some publishers say that if the tech giant wants to use their content, it should pay.

In 2020, 64.82% of searches conducted on Google globally concluded within the platform itself – without users clicking on external website links, including those of publishers.

In India, the News Broadcasters and Digital Association, Digital News Publishers’ Association and Indian Newspaper Society have filed complaints against Google with the Competition Commission of India about their interests being affected.

The News Broadcasters and Digital Association in its complaint claimed that the tech giant “free-rides on the content of its members by forcing them to provide their news content to Google to prioritise their web links in the Search Engine Result Page”.

India’s Competition Commission in October 2022 ordered an investigation against the tech giant into allegations that it has abused its dominance in the news aggregator space, violating the Competition Act, 2002.

Do publishers have any options?

Short answer: No. Google accounts for the biggest source of traffic for most publishers.

The company claims that at least 24 billion of its users go to publisher websites each month using Google Search and News.

“The challenge with Google’s model is its emphasis on scalability,” said the former revenue head for an Indian digital-only newsroom who asked to remain anonymous. “If you fail to grow your content, your traffic gradually diminishes. This often compels publishers to resort to creating subpar content and constantly seeking new tactics to manipulate the Google algorithm and improve Search Engine Optimisation” or SEO.

SEO refers to the technical and other practices a website adopts to try to get it to appear higher on the pages of search engine results.

For over 25 years, publishers have been offering their content in exchange for potentially wider audience reach. “While this dynamic is particularly visible with platforms like Facebook and Google, it is important to note that these terms of trade apply to almost every platform,” said Rasmus Kleis Nielsen, a professor of political communication and Director at the Reuters Institute for the Study of Journalism at the University of Oxford. Google and Facebook are among the funders of his institute.

Microsoft-run search engine Bing, for example, does not provide payment to publishers and neither does Elon Musk-owned Twitter. Similarly, many creators upload their podcasts to Spotify, videos to TikTok and posts on Telegram for free. Most publishers agree to these terms of trade.

Taking a contrarian viewpoint, Nielsen believes that this arrangement seems to reflect the market value of much online news, given the abundant supply of free content. “It is crucial to remember that the majority of people do not pay for online news, and even among those who do pay, they consume more news for free than the news they pay for,” he said.

According to Ahmed Aftab Naqvi, global CEO & co-founder of the integrated marketing agency GOZOOP, major publishers give 5%-20% of their ad revenue to Google. Small, emerging publishers, on the other hand, pay as much as 25% or more of their ad revenue to Google.

A study found that UK publishers received an average of just 51% of advertiser spending, with the remainder going to intermediaries in the supply chain. A third of this money was unaccounted for. The UK regulator estimated that, on average, at least 35% of the value of advertising went to intermediaries rather than publishers.

“Since Google is the majority stakeholder in the digital advertising space, they unilaterally decide the amount to be paid to the publishers for the content created by them [and] also the terms on which the amount has to be paid,” Sujata Gupta, secretary general of the Digital News Publisher’s Association, told an interviewer in January 2022.

Google, on its part, claims that publishers retain 90% of the revenue generated through ads on average.

Google has a larger than desirable impact on several aspects of online publishing, said Mithun Kidambi, head of product and revenue at TheWire.in. From how publications get traffic to what they need to focus in the area of product development to what kinds of content will get traffic, everything is decided by Google, he said.

“Tech platforms claim that they want to showcase only quality content to its users but quality is a subjective thing,” said Kidambi. “The definition of quality remains subjective and ever-changing. It does not solely pertain to journalistic quality, as there is no definitive way to measure it.”

Small newsrooms claim that Google’s search results are biased in favour of large, well-known publishers, which makes it difficult for smaller publishers to get their content seen by users.

Google has denied these allegations, and it has argued that its search results are based on objective criteria, such as the relevance and quality of the content.

There has been a noticeable shift among publishers in how they approach Google Search algorithm’s core updates in the past five years, said Prasad Sanyal, business head at Times Internet Limited, which runs websites like The Times of India and Navbharat Times. The Times Group has signed a revenue sharing deal with Google News Showcase.

The Google Search algorithm’s core updates are changes that Google makes to its search algorithm in order to improve the quality of search results. Core updates are typically rolled out over a period of several weeks, and they can have a significant impact on the ranking of websites on the search page. As a result, publishers have to be mindful of how their content is affected by these updates.

“They have become more cautious and guarded, as it takes time to fully grasp the extent of the changes, and the available documentation from Google is often insufficient,” said Sanyal. “Predicting the impact of these updates has become increasingly challenging. Previously, there used to be two major updates per year, but now the situation remains uncertain for a while.”

By the time publishers figure out the necessary adjustments to regain their traffic, the next update rolls in.

While Google has documented some aspects of how its algorithms work, there is no way for anyone to know for sure why their content ranks or does not. The platform has a long list of best practices for websites to follow but the decision on a website’s credibility, which decides how their content will be ranked on Google Search, is made by the tech giant.

When websites fail to meet the criteria, they are penalised: their links drop in Google Search pages. Publishers are constantly trying to figure out how to get their work showcased on Page 1 of Google Search.

A recent study shows that only 0.63% of Google searchers clicked on items that appear on the second page of results.

“As publishers, we are compelled to chase headlines and write about topics that are popular among searchers,” said Kidambi. “Even if we cover subjects of national importance, our rankings can suffer if people are not actively searching for the content we produce.”

When Google introduces new formats such as “visual stories”, publications have to invest resources to effectively implement them. “It’s not just about the newsroom; the content management system needs to be enabled to support the new format, and training is required for the newsroom staff,” said Sanyal.

The editor of a prominent business news outlet said that it is too late for publishers to try to battle with Google for revenue. This person explained that Google Search is evolving from being just an index of links into a more comprehensive and intelligent search engine. With the introduction of artificial intelligence, Google Search is now able to understand the context of users’ search queries and provide more relevant results.

The editor believes that this change will make it even more difficult for publishers to compete with Google. As firms enter this new territory, regulation will be required.

With all platforms now endeavoring to give all the answers along with the search query on their platforms, users will no longer need to go to publishers’ websites to find the information they are looking for, the editor said.

This person also said that reader revenue can come in many forms. He argued that it is not necessary to have a large audience of millions of people in order to be financially sustainable: instead, publishers should focus on building small, engaged communities of followers.

Their newsroom is also a Google News Showcase partner.

What do policy experts think?

Rajeev Chandrasekhar, the Union Minister of State for Electronics and Information Technology, earlier this year said that technology companies that display news content in their search results and feeds must give a “fair share of revenues” to publishers.

He expressed the hope that the Digital India Bill, which is expected to replace the Information Technology Act, will address the imbalance of power between content creators and ad-tech companies.

Chandrasekhar said that the current system is “disproportionate” and gives too much control to ad-tech companies. He argued that this imbalance is preventing publishers from earning a fair return on their content.

Shashank Mohan from Centre for Communication Governance at National Law University Delhi believes the best way to hold big tech companies accountable is by building frameworks of transparency in platform regulation.

“The Digital Services Act and the Digital Markets Act in the [European Union] are two recent efforts that build-in various transparency requirements for tech companies that obligate them to share information, such as on ad networks and their recommender systems/algorithms,” he said. “Such transparency can help with better understanding the complex nature of these platforms.”

In 2021, Australia made headlines when it passed legislation requiring Facebook and Google to share algorithmic information with and pay licensing fees to news organisations. The News Media and Digital Platforms Mandatory Bargaining Code was enacted after a landmark report by the Australian Competition and Consumer Commission.

The report found that Big Tech platforms were benefiting from news content without paying for it, while controlling much of the advertising market that the news industry relies on. The commission based its decision in part on the intrinsic value that news provides to the platforms.

Google and Facebook threatened to pull their services from Australia to avoid complying with the law. Facebook made good on this threat in 2021, when it shut down its service for nearly a week.

This happened just as the government was rolling out the Covid-19 vaccine, and it had a significant impact on small, nonprofit, regional, community, and rural media outlets. These outlets rely on social media to reach audiences with local news, and the shutdown cut them off from these audiences.

Eventually a compromise was reached. Press Gazette, a British magazine, has reported that Google paid only the top media houses in Australia.

India is one of a handful of countries in the Global South that has both the expertise, user base, and regulatory influence to pursue the Australian strategy, suggests researcher Courtney C Radsch, the author of a paper titled “Making Big Tech Pay for the News They Use”.

However, Jeremy Dear, deputy general secretary of the International Federation of Journalists, which represents journalist unions and associations in more than 140 countries, is wary of the Australian approach. “The fear is that a lot of small publications will lose out because they don’t have that commercial clout to do a deal, so it reinforces the big media companies,” he warned in an interview with Radsch.

India will face distinctive challenges due to the diverse nature of media newsrooms, said Mansi Kedia, Policy Researcher, Indian Council for Research on International Economic Relations.

“Larger organisations will have a stronger position when it comes to negotiations, while smaller and regional ones may struggle,” she said. “These smaller entities require wider reach but lack the necessary leverage in negotiations.”

Pointing out the demise of thousands of local news organisations in the United States, the business head of one of India’s biggest newsrooms, said, “When the news organisations suffer, democracy suffers as well. A shortage of trusted reporters who hold government officials accountable has exacerbated issues at the local level. In the US, according to a study by University of Notre Dame and University of Illinois researchers, communities located in news deserts suffer from less competitive political campaigns, less informed voters, and lower voter turnout. Without reporters holding officials accountable, these communities also see higher public costs.”

This person said it would be good if Google looks at its revenue from democratic countries and non-democratic countries and understands that for its own long-term survival, healthy democracies are essential.

Prateek Waghre, policy director at Internet Freedom Foundation, was not certain if Australia’s link tax approach will actually help journalism and said it could fundamentally alter the functioning of the internet as we know it today.

“The way Google established agreements with news publishers in Australia appeared to be completely arbitrary, resembling more of a lobbying effort that primarily benefited mainstream publishers,” he said. “It is important to recognise that these deals do not provide a comprehensive solution to the challenges faced by the media industry.”

The introduction of a digital tax distributed to publishers by the French, Spanish, Italian and British governments raises concerns, particularly within the context of India. Such a tax could potentially be used as a means for the government to exert control over the media, said Waghre.

“It would be more prudent to focus on examining Google’s role in the adtech market, as that is likely where the crux of the issue lies – potential abuse of dominance within the adtech space,” he said.

How is Google trying to help the news industry?

Over the last few years, the tech giant has amped up its outreach efforts with publishers. Through its Google News Initiative, the platform has partnered with 7,000 news publishers in over 130 countries and disbursed more than $300 million in grants. It has also provided training for 570,000 journalists in over 70 countries. (Scroll is the recipient of a Google News Initiative grant.)

In 2018, the Google News Initiative India Training Network was launched to help journalists fight misinformation. The network hosts regular training sessions for journalists, newsrooms and media educators.

“The biggest win for us was the shift in our own mindsets from a journalist thinking to a product and business thinking,” said Bhanupriya Rao from BehanBox, a participant of the GNI Startups Labs. “This thinking is helping all our future innovation and taking our journalism to bigger audiences.”

Sanyal commended Google’s efforts to educate journalists about fact-checking through its programmes and said that The Times of India newsrooms have benefited from these initiatives. However, Kidambi suggested that “the outreach programme is essentially a marketing programme wearing different clothes.”

Google and Twitter are the only two major tech platforms that work with publishers.

“Despite their collaborations, the funds and grants they provide to combat misinformation are comparatively small considering their substantial revenue,” said former journalist who has worked in the fact checking ecosystem in various capacities. “In response to external pressure, they often announce grants; however, they have not yet established a sustainable environment or provided sufficient incentives for fact-checkers.”

In 2020, Google CEO Sundar Pichai announced the launch of Google News Showcase to pay publishers for high-quality news content. Publishers who participate in the programme can earn money by giving Google exclusive access to their content. Google then displays this content in a dedicated section of Google Search and Google News.

According to Google, the Google News Showcase programme is available in 22 countries, where they have partnered with over 2,300 publishers.

In India, Google has signed Google News Showcase deals with more than 80 partners representing more than 130 publications, including national, regional and local news organisations. The Times Group, The Hindu Group, HT Digital Streams Ltd, Indian Express Group, ABP LIVE, India TV, NDTV, Zee News, Amar Ujala, Deccan Herald, Punjab Kesari, The Telegraph India, news agencies IANS and ANI have signed revenue sharing deals with Google.

The platform has also launched a programme for English, Hindi, Kannada, Tamil, Telugu, Bengali, Malayalam, Gujarati and Marathi language publishers in India to help them increase their reach.

Kedia contends that grants provided often end up benefiting Google, as the content created ultimately finds its way onto the Google platform.

Scroll contacted Google for comment but their spokesperson was unavailable. Questionnaires sent to the Ministry of Electronics and Information Technology, the Ministry of Corporate Affairs and the Competition Commission of India also remain unanswered. This piece will be updated if responses are received.

Disclaimer: Scroll is a recipient of a Google News Initiative grant and the author has been a part of some training sessions and events hosted by the platform.