EXTRA It has long been the case that many of the conflicts between rights owners and online platform operators that play out as copyright disputes have as much to do with the mechanics of value capture in online markets as with any of the exclusive rights of copyright owners. There are a number of reasons for that conflation, many beyond the scope of this blog. But one big reason is that copyright law does in fact endow authors and their assignees with explicitly defined exclusive rights, the infringement of any one of which can trigger potentially ruinous statutory damages. It’s the biggest hammer in rights owners’ legal toolkit and in many ways the easiest to wield.
Even so, rights owners have often been disappointed with the long-term impact of those clashes, even when they prevail on their copyright claims. That’s because copyright can’t really cure the structural weakness of their position when it comes to capturing value in digital markets. Even the biggest of hammers can’t neatly drive a square legal peg into a round structural hole.
As we’ve discussed here in previous posts, however, courts and regulators recently have begun to examine how competitive factors, or their attenuation, can affect markets for creative works even in the absence of clear copyright infringement.
That’s clearly one of the factors at play in the wide-ranging antitrust case the U.S. Department of Justice and 8 states filed this week in federal court against Google. As a legal matter, the complaint targets Google’s dominance of the digital advertising industry and its alleged anticompetitive behavior in the ad-tech sector.
One industry behemoth, Google, has corrupted legitimate competition in the ad tech industry by engaging in a systematic campaign to seize control of the wide swath of high-tech tools used by publishers, advertisers, and brokers, to facilitate digital advertising. Having inserted itself into all aspects of the digital advertising marketplace, Google has used anticompetitive, exclusionary, and unlawful means to eliminate or severely diminish any threat to its dominance over digital advertising technologies…
Google’s anticompetitive behavior has raised barriers to entry to artificially high levels, forced key competitors to abandon the market for ad tech tools, dissuaded potential competitors from joining the market, and left Google’s few remaining competitors marginalized and unfairly disadvantaged. Google has thwarted meaningful competition and deterred innovation in the digital advertising industry,
The DOJ asks the court to order Google to divest the publisher ad server platform it acquired from DoubleClick in 2008, and the adX digital ad exchange.
It’s clear, though, that the department sees the injured party as publishers (and advertisers), as much as potential ad-tech competitors.
The harm is clear: website creators earn less, and advertisers pay more, than they would in a market where unfettered competitive pressure could discipline prices and lead to more innovative ad tech tools that would ultimately result in higher quality and lower cost transactions for market participants. And this conduct hurts all of us because, as publishers make less money from advertisements, fewer publishers are able to offer internet content without subscriptions, paywalls, or alternative forms of monetization. One troubling, but revealing, statistic demonstrates the point: on average, Google keeps at least thirty cents [sic]—and sometimes far more—of each advertising dollar flowing from advertisers to website publishers through Google’s ad tech tools. Google’s own internal documents concede that Google would earn far less in a competitive market.
Publishers, of course, have long complained that Google, as well as social media platforms like Facebook, make unauthorized and unlicensed (i.e. infringing ) use of publishers’ content on their platforms, even where publishers willingly make their content available for indexing and viewing. And outside the U.S. they have had some success in framing the issue in copyright terms.
In 2020 the Australian government amended its copyright law by introducing the Media Bargaining Code, which requires Google, Facebook and other online service providers to negotiate licensing and payment terms with publishers in order to display the content on those platforms. The European Union’s Directive on Copyright in the Digital Single Market, which went into effect in 2021, contains a similar provision requiring digital platforms to secure a license from publishers to re-use their content.
The DOJ’s case against Google makes no mention of copyright. But if it succeeds it could ultimately do more to help publishers than any new copyright measure because it targets one of the pillars of Google’s structural advantage over publishers in capturing value: it’s alleged monopoly over the digital advertising ecosystem.
In that sense, it represents the flip side of the coin the News Media Alliance, which represents newspaper and magazine publishers, has been trying to tender in the U.S.: the Journalism Competition and Protection Act (JCPA) The bill, which the NMA has been trying to get through Congress since 2019, seeks to level the playing field by creating an antitrust exemption allowing its members to bargain collectively with publishers over payments. The NMA nearly succeeded in the 107th Congress, getting the JCPA attached to a must-pass, year-end omnibus bill authorizing government spending for the next fiscal year, only to see it stripped from the final version of measure.
The DOJ complaint makes no mention of the JCPA, either. But the NMA was quick to see the connection and rushed out a statement applauding the department’s action.
“This marks an important day in our history where a dominant monopoly is being charged for blatantly anticompetitive behavior in the digital advertising market,” NMA Executive Vice President & General Counsel, Danielle Coffey said. “This behavior impacts consumers’ data, prices, and the quality of information they receive, while journalism struggles to provide valuable and critical content that informs and enriches communities across the country.”
The case will no doubt take years to play out. But it could potentially prove an important step in rewriting the rules of engagement between rights owners and digital platforms.