Un-Googling the News, Part II: The European Edition

EXTRA Antitrust authorities in the European Union are apparently fed up with what they view as Google’s ongoing anticompetitive behavior in the online advertising business. Having levied at least three antitrust fines against the search giant in recent years totaling nearly $9 billion but doing little to alter Google’s business practices, the EU’s executive arm, the European Commission, is now recommending a breakup of the Alphabet unit’s ad-tech monopoly through the forced sale of assets.

“It’s a reflection of how pervasive Google is in this value chain that we think a divestiture is the only way to solve this,” the EU’s competition chief  Margrethe Vestager said in announcing the new recommendation. Any less severe measures, she added, “would allow Google to continue doing what it has been doing so far, just under a different disguise.”

The commission’s move echoes the wide-ranging lawsuit filed against Google in January by the U.S. Department of Justice and eight states, and leaves Alphabet facing the threat of a breakup of its digital advertising empire on both sides of the Atlantic.

Both cases stem from Google’s prominent position on both the buy-side and sell-side of the digital advertising ecosystem. Whether you’re a publisher looking to sell ads on your website, or a brand looking buy space, it is effectively impossible to avoid routing your business through one or more of Google’s ad-tech platforms. And if you’re an ad-tech service provider hoping to compete with Google on one side of the table, you’re likely to find yourself needing to do business with it on the other side.

While both cases will turn on the particulars of antitrust law in their respective jurisdictions, as discussed here in January in reference to the DOJ lawsuit, breaking up Google’s ad-tech monopoly could be a boon to publishers long frustrated at having to yield effective control over a significant portion of their ad sales — and therefore revenue — to Google. As the DOJ stated in its initial filing in that case:

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.

The News|Media Alliance, which represents newspaper and magazine publishers in the U.S., was quick to applaud DOJ’s move, in fact, recognizing the nexus between the lawsuit and its own focus on antitrust law as one remedy for publishers’ online woes.

“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 at the time. “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.”

Publishers in the EU have in the past focused more on changes to copyright law, as in the 2021 EU Copyright Directive, to bolster their leverage with online platforms. But more recently, they too, have begun to focus on Google’s ad-tech dominance as one source of the problem. The European Publishers Council, which represents media companies there, last year filed a complaint with the EC accusing Google of “leverag[ing] their position to the disadvantage of publishers.”

“We look forward to working with the commission as the case continues,” the council’s executive director, Angela Mills Wade, said in response to the EC’s latest recommendation.

As we’ve noted here before, 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. Focusing on the market structures behind those mechanics could ultimately do more to benefit creators than any change in copyright law.

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