TOBY SHAPSHAK: Google will never pay back money to the media

SA has become the latest country to tackle the disastrous effects of programmatic advertising on the media industry. In a landmark ruling the Competition Commission found that Google has distorted the online advertising market, and ordered the US search giant to pay R300m-R500m a year to the media industry.

Good luck with that. Despite it being a pittance to Google, with its $350bn revenue last year, it will fight tooth and nail to prevent being cast for what it is: a search “monopolist” (in the words of a US judge).

Now, after a 16-month investigation, the commission’s Media and Digital Platforms Market Inquiry has published a provisional report that finds “Google’s monopoly position and the unequal bargaining position of the media” has created a vast “value imbalance” between Google and the news industry.

“This inequity has materially contributed to the erosion of the media in SA over the past 14 years and will continue to do so unless remedied,” concluded the inquiry, led by the commission’s chief economist and acting deputy commissioner, James Hodge.

For instance, the commission calculated the value of news to Google’s Search and Discover services in 2023 was R800m-R900m. Its estimates do not include the “R100m-R200m of additional value that Google derives from YouTube revenue share for news video referrals” and this “value increases to R200m-R300m when one accounts for adtech revenues earned by Google for all traffic to news publishers”.

Google, meanwhile, paid news publishers all of R200m in 2023, according to the commissions’ estimates. Its news partner lead for Sub-Saharan Africa, Marianne Erasmus, told News24 that less than 2% of its search queries related to news, and in 2022 it made a mere R35m in advertising revenue from news content. “In 2023 our products like Google Search and News generated an estimated R350m in referral traffic value for SA publishers, while we earned less than R19m from ads displayed next to news queries,” Google said in a statement.

Google’s defence that it gets little economic value from news websites is, frankly, insipid and untrue. To get a sense of how valuable news is to Google, look at the research done by the Swiss media industry in 2023. As much as 40% of Google’s revenue comes from media content, the study by FehrAdvice & Partners found. That equates to “$176m per year in Switzerland alone,” wrote Courtney Radsch, director of the Centre for Journalism & Liberty and a fellow at the UCLA Institute for Technology, Law & Policy. She added that news content “accounts for the majority of Google’s $280bn annual revenue”.

Academics from Columbia University and the University of Houston calculated that US publishers are owed $11bn-$14bn a year by Google and Meta. “News is important to Big Tech platforms,” wrote Haaris Mateen, an assistant professor at the University of Houston, and Anya Schiffrin, a senior lecturer in Discipline of International and Public Affairs at Columbia University.

“Unsurprisingly, by keeping the cost of goods sold (news) down, Google and Meta have grown rich off the advertising revenue they reap from attracting the world’s eyeballs to their sites. Meanwhile, news deserts have become a global problem as outlets struggle with the loss of revenue, though some — like The New York Times and The Guardian — have been able to offset the losses with subscriptions and other income,” their 2023 study found.

Google keeps claiming news isn’t that useful or valuable to its search results. But common sense and all evidence to the contrary — as these two studies by reputable organisations show, Google utterly depends on the media for accurate and reliable information. How many times do you personally search for something and read the precis of it on Google’s home page? How many Springbok caps off the bench does Steven Kitshoff have? Or what was the name of the guy who just won the Oscar last night? Most people never click on that news link or go to that Wikipedia page because they have already found what they are looking for.

That Test cap count and other trivia don’t come from the
poor-quality, AI-generated drivel that has infiltrated the web and overtaken what is made by humans. It comes from a reputable website that will never see a click here, a click there. Add it all up and its worth $280bn to Google.

Taking Google’s word for it, as it insists the world should, is just ridiculous. It gives out little data that can be analysed, and frankly, after all the scandals Google’s own data isn’t reliable. Google has also been shown to say one thing — sometimes in contravention of its own advertising standards, such as video views on other websites — only for it to be revealed that those figures are patently untrue. The US government, department of justice and many attorneys-general have sued Google for this. 

In a blockbuster antitrust trial brought by the justice department, US district judge Amit Mehta ruled that “Google is a monopolist and it has acted as one to maintain its monopoly”. It’s no different to the way Google has used its monopoly power to squeeze the economic lifeblood from the media, in SA and the rest of the world.

• Shapshak is editor-in-chief of Stuff.co.za.