At the end of last month, the latest in a string of legal cases against Google over its relationship with the UK publishing industry was launched. The suit, with former Guardian Technology Editor Charles Arthur at its head, is seeking up to £3.4bn in damages from Google for alleged abuse of its dominance of the display ad market to the detriment of more than 200,000 websites and apps. The end goal is a payout for UK publishers big and small, as well as potential changes in the way the company operates in the future.
Google’s dominance of display advertising, controlling huge swathes of the whole process from buyer to seller, is in little doubt. The company is thought to account for something close to one-third of all display ad revenues, and the vast majority of sites are plugged into its ad systems in some way.
The suit’s argument is that Google’s position allows it to keep the amount it takes out of the value chain artificially high, meaning publishers see less of the value of the inventory they sell. And it’s not just the sales operated directly by Google. The suit covers the company’s impact on the whole ecosystem since 2014, effectively seeking to put Google on the hook for costing publishers money supposedly lost for all display advertising.
“Our argument is that Google distorted the market, pushed the take rate up. So everyone said, okay, that’s the take rate that we go out,” says Arthur. “Therefore, anyone who is buying display advertising would have seen the same take rate because people aren’t going to the fact they’re not going to be if you’re a tiny person trying to sell ads for publishers, you’re not going to say what we’ll sell at a much lower price and cut our own throats and Google will put us out of business because they get more money.”
All publishers must do to benefit from any possible payout is register on a site established for the purpose. Then, if the suit is successful, they will receive a slice commensurate with what they are deemed to have lost out on, though making that calculation will be tough and is likely to require data from Google itself, theoretically secured as a result of the case. They may have to wait a while though. The normal timeline for a case like this is in the region of four years.
The case is actually the second in a quite similar brace launched in the UK that may end up being rolled together, though the earlier case is seeking maximum compensation of almost four times as much, presumably based on different calculations for how much publishers supposedly lost.
Both law suits are effectively trying to do what French regulators did in 2021 and rule on the impact of Google’s dominance. The difference is that the €220m Google was fined as a result of that ruling did not make its way to the media industry. There are also ongoing investigations into the adtech space by the European Commission and the UK’s Competition and Markets Authority. Regulators in the US are also closely examining adtech and Google, encouraged in part by the anti-trust suit which has revealed some quite striking allegations about Google’s behaviour and arrangements with Facebook.
Arthur is keen to stress that the suit isn’t trying to punish Google for becoming the go-to search advertising platform, something many publishers resent for basically blowing-up the formerly lucrative classifieds business.
“This is not saying that Google has somehow done publishers down by capturing a market that didn’t really exist before, the fact of search advertising,” says Arthur. “This is about open display advertising through Google tools, where the ads that appear on a publisher site are sold through Google’s tools.”
The suit in itself is interesting for UK publishers, of course. Which publisher wouldn’t like to see a cut of a more than £3bn pot of money they thought was long lost? But it also fits into a broader tussle between the publishing industry and not just Google, but Meta as well.
The latter has been signaling its increasing reluctance to support the publishing industry for the past few years. The most recent signal was a report from Meta claiming that less than 3% of posts seen by Facebook users involve links to news content, and only 7% of all posts include links at all. Given the fundamental way that the growing social networks – Instagram and TikTok – work, their reliance on links, and thus the ability to drive traffic, is likely even more curtailed.
And, of course, there are ongoing attempts to make Google pay publishers for linking to their content. That’s already well underway in Australia and Canada, and there are similar rumblings in the UK, though a Spanish attempt to make Google pay for links in Google News failed when Google simply pulled the Spanish version.
Speaking in his capacity as a long-term tech watcher rather than as part of the case, Arthur is skeptical about attempts to force Google to pay for links and more generally about attempts to get the tech companies to pay for activity that points users towards publisher content.
“Looking at the Australian experience and looking at the Spanish experience, the idea of forcing Google to or Facebook to pay for links which appear there is a bit of a hiding to nothing,” says Arthur. “It’s rather like when British Telecom said, ‘hey, we’ve got to build a hyperlink, we can get everyone to pay us for using hyperlinks’. And that was a court case which which rapidly ran into the sand because you just can’t do that on the open web.”
“It comes down to who wields the biggest the bigger economic power. Where’s is the place that people go to? Do they go to Google more or do they go to a publisher? And, if Google says we’re not going to feature any links from news publishers because we’re told to pay for them, I think that the news publishers, are the ones who will lose out. This is why news publishers are so terrified of Google tweaking its algorithm for search, because if results stop turning up in the first 10 links, then they’re stuffed effectively.”
For my money, I think Arthur is largely right on this. The moral argument for getting Google, or anyone else, to pay for hosting links or indeed snippets of articles is relatively shaky – Google is providing a service and driving traffic. And when attempts have been made to force Google to pay for featuring links in Google News, it hasn’t necessarily turned out well.
And that is despite Google itself arguably needing publishers to some degree. Someone, after all, needs to create all that information that Google wants to organise (and sell ads against).
For Facebook, or indeed the even less link-friendly Instagram and TikTok, the value is even lower. In contrast, holding Google to account for the way it has allegedly used its dominance over the display ad market seems – in many ways – more straightforward and defensible.
Of course, the whole broader debate about who monetises publisher content is about to get a lot more animated by the advent of Large Language Models and the chatbots they power, which appear to be taking information from sources including publishers and not driving any traffic back to them at all.
That is, in many ways, an even more existential question for the publishing industry, and one that may define the relationship between the news media and big tech in coming years. The journey has begun.
