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OPINION AND ANALYSIS | 03-10-2020 08:40

Journalism, beware of Google’s billion-dollar siren calls!

The largest threat for Google and Facebook, and Big Tech in general, is regulation.

There is a fundamental battle going on that will determine the future of how and what information people consume. This war between Big Tech — exemplified by Google and Facebook — and certain courageous publishers such as Axel Springer in Germany and News Corp in Australia is about money, but it is also about the future makeup of an information ecosystem that is currently trending toward the gutter, defined by misinformation, fake news, and “viral content” that is making people addicted to behaviours determined by algorithms whose only objective is to make more money.

In a letter signed by none other than Sundar Pichai, chief executive at Google-parent Alphabet, the search giant proudly announced a US$1-billion investment over three years this week in order to “play our part by helping journalism in the 21st century not just survive, but thrive.” Pichai reminisces on lofty childhood memories of sharing the newspaper with his Grandpa and Pa, and goes on to say that “a vibrant news industry is critical to a functioning democratic society.” He says Google wants to help build the future of news. Several outlets across the globe were revealed to have signed up for a new product that would pay publishers directly for content, among them Argentina’s Infobae.

The letter, of course, is riddled with fallacies and imprecise information, all of it designed to make Google look good, which is then mindlessly replicated by news outlets across the globe, knowing that good news about Google is favoured by their search algorithm (hello, Doodle). Infobae published a laughable piece that reads more like a press release than a journalistic article, working as a well-oiled part of the search giant’s lobbying machine. In it, they give as facts figures put together and published by the Silicon Valley juggernaut that are impossible to validate or audit. Google earned only US$1,2 million on advertising on “news-related searches” in Argentina in 2019, according to Infobae, and just US$4 million in Brazil, which was the eighth-largest economy in the world according to IMF data. 

Infobae, which is part of Argentina’s publishers association ADEPA — which has been publicly pushing for regulation at least for the past four years — kicks it off thusly: “While there are no regulatory measures in the horizon in Argentina, Google has already selected the first news outlets that will participate in their content programme […] and Infobae was selected by the company.”

In a piece entitled “Google is giving US$1 billion to news publishers – to help convince governments not to take a whole lot more than that,” Joshua Benton, the director of the Nieman Journalism Lab, details that the newspaper industry is a US$94-billion annual business worldwide, rendering Google’s annual licensing offer a meagre 0.035 percent of that. Taken over the three-year span announced by Pichai, he projects Google will “earn something like US$632 billion in revenue over that span — about two-thirds of it coming from its advertising business,” valuing the offer at 0.12 percent. Noting this new “Showcase” product will make the search giant no revenue, he says: “What could possibly make a company want to give away 0.15 percent of its revenue? The threat of someone else taking 10 percent of it.”

The largest threat for Google and Facebook, and Big Tech in general, is regulation. These companies have become the most successful money-making machines in history by disrupting and innovating their way to the top. That must be celebrated. But, at a certain point, they appear to have become too powerful, using their dominant position to either stifle or acquire competition, infringe privacy through data harvesting and surveillance techniques, aggressively reduce their tax burden by operating out of tax havens, and essentially becoming unaccountable given regulators’ incapacity to influence their behaviour through monetary disincentives. In other words, they make so much money that the largest fines ever account for a few weeks, perhaps a month or two, of revenue.

News publishers have been lobbying hard across the globe to get regulation rolled out, with the European Union passing its copyright directive directive last year and Australia’s anti-trust body indicating it will bring in third-party arbiters to settle obligatory fees for the use of content by the likes of Google and Facebook. The News Media Alliance in the United States has asked for permission to negotiate collectively with the platforms, while different regulators have launched anti-trust negotiations which also include Amazon and Apple. In Argentina, Editorial Perfil has been at the forefront of the push for fairer rules regarding news publishers’ relationship with Big Tech.

Google’s offer to pay publishers for their content is a positive step in the right direction, as is Facebook’s decision to enter into content licensing negotiations in some countries. Yet, these companies cannot impose their terms unilaterally, using obscure formulas and cloak-and-dagger tactics aimed at dividing and conquering. Many publishers, particularly in countries like Brazil and Argentina, are staring into the abyss, their business models completely shattered by crumbling economies, devaluation, inflation, and Covid-19. Buying them off with dollars is like taking candy from a baby, and several publishers will sell themselves out for crumbs. 

If the tech industry is serious about engaging the news industry in negotiations over paying for the use of content, and if they truly believe that a thriving journalistic ecosystem is valuable for democracy, then they should pay a fair price for said journalism. The media industry needs to stand together and demand compensation that will allow reinvestments to build the newsrooms of the future. And legislators should guarantee that Google and Facebook aren’t allowed to exterminate its news industry.

Agustino Fontevecchia

Agustino Fontevecchia


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