Has Google Destroyed the 4th Estate?
There is an article out in the Washington Post by Craig Timberg about how Google has been able to sign exclusive deals with both major Presidential campaigns as well as the independent expenditure groups to force publishers to take pennies on the dollar for their advertizing space this political season.
This has serious implications for political websites that depend on election season advertizing for their annual revenue. John Amato spoke for all of us I think in his post entitled “Democratic and Progressive Groups Now Advertise on Cheap Google Ads.” It’s high hypocrisy to be told by the labor unions for years that we have to pay more to use union printers, buy union goods and avoid saving money by buying products made in China, only to be met with a shoulder shrug of “hey, we’ve got to get the best price we can” when unions like SEIU, the American Federation of Teachers, the AFL-CIO and the Communication Workers spend million with Google for online advertizing (which, by the time the DC consultants mark it up, is much more expensive than buying with websites directly.)
But there’s another, much more sinister layer to the problem that Alex Treadway of the Daily Caller gets to when he says “As long as [Google] continues to dominate, and as long as they continue to drive down the price, they will put free press out of business.”
Google has this bone-crushing monopoly because the FTC and the SEC have largely been asleep at the wheel while it gobbled up competitors and engaged in anti-competitive practices that drove others out of business.
The FTC recently woke up, however, and are currently conducting a sweeping antitrust investigation into Google’s activities. But though there has been much discussion of Google’s search practices, I haven’t heard much about the impact they have had on the field of journalism as a whole over the course of the last decade.
News outlets across the globe are struggling to keep the doors open as news advertising revenues continue to sink. As Peter Jukes at the Daily Beast rightly points out, advertising revenues peaked in 2000 at $60 billion dollars (adjusted for constant 2012 dollars). Last year, that figure was $19 billion.
Where did that $40 billion go, he asks? Coincidentally, Google raked in almost that much last year in revenues — $37.9 billion — 96% of which came from advertising.
Google’s incredible profits didn’t materialize out of nothing. They are derived because as the news audience has migrated online, Google has skimmed the lion’s share of news advertizing revenues for itself. That money used to go to pay for investigative reporting. Google’s glittering balance sheet basically comes from driving the 4th estate out of business.
I’m not immune to the argument that a company shouldn’t be penalized for “building a better mousetrap.” But Google didn’t get to its dominant market position without generous government assistance. They exist, as AT&T did, as a government-sanctioned monopoly, likewise creating a business environment that stifles innovation and competition. At a recent Senate antitrust hearing the CEOs of both Yelp and NextTag testified that they would not start their companies today, given the way Google has been allowed to dominate the market under the protection of the government.
NASA’s Moffett Federal Airfield has turned into “a taxpayer-subsidized private airport for Google and their corporate junkets. Google recently partnered with the CIA to fund a company called Recorded Future that “monitors the web in real time.” They also have a private deal with the NSA, and were widely criticized for entering into a deal to spy with them. As Evgeny Morozov wrote at the time:
Headlines in Russian press: “Google & NSA will spy together. No way Google will now prove they are not part of US govt.”
As an online news publisher myself, it was comforting to hear that this week the FTC hired an economist, Rich Gilbert, to to assist with its antitrust investigation of Google. FTC Chairman Josh Liebowitz recently said that the agency’s investigation is scheduled to wrap up by the end of the year, and the Gilbert hire is a sign that they are preparing for an eventual court fight.
Less comforting is today’s report in The Hill that Liebowitz may step down from the FTC after the election. And President Obama’s new nominee to the five-member FTC commission, Joshua Wright, is an outspoken critic of the Google antitrust investigation. Wright was recommended for the job by Mitch McConnell, and recently wrote a paper entitled “Google and the Limits of Antitrust: The Case Against the Antitrust Case Against Google.”
I hope the FTC continue its investigation, and that it will expand to explore what is happening to publications that are forced to take whatever Google wants to pay them for their advertising, or get nothing at all. What Google is doing to news organizations is no different than what the Duke Tobacco trust did to farmers at the turn of the 20th century, forcing them to take less than what it cost to grow their crops because they were they only game in town.
Unfortunately, few on the news publisher end want to speak out because they know Google can shut off their revenue stream in a heartbeat. As an outspoken Google critic, FDL has already been removed from Google News with no explanation, and repeated attempts to contact them to ask why it happened have been ignored by the company.
But this is a conversation that has to start, because a democracy is no healthier than its 4th estate watchdogs are. And courtesy of Google, ours are are currently on life support.