Billions Owed: News publishers fight Big Tech over peanuts

•  JULIA ANGWIN

A bitter battle is taking place between Big Tech and the free press over how to share in the income that news content generates for technology giants. The future of our news ecosystem, a linchpin of democracy, depends on the outcome.

Last week, after months of hardball negotiations, Google and the Canadian government agreed on a deal that would require the company to pay Canadian news outlets about $73.5 million a year. Canadians are no longer facing the threat that Google would remove all news content from its search results.

The settlement is far less than Canada wanted — it had sought $126 million — and a small fraction of the estimated $550 million that news publishers deserve from Google. The lesson here is clear: As much as publishers may be suffering right now, they must continue to stand firm against the bullying tactics of Big Tech.

These platforms gained their audience in part by sharing news content free. Now they are using their market power to force the press to continue to do business on their terms. Canada is a test case for the world. In June its government passed a law that will force tech companies to pay for the news content featured on their platforms. In August, Meta, the owner of Facebook, responded by blocking Canadians from seeing or sharing any news items on Instagram and Facebook. Meta argues that it has generated significant revenue for publishers.

The ongoing Meta blockade is already damaging Canadian publishers, particularly smaller ones. Chuck Lapointe, the chief executive of Narcity Media, which operates websites designed for Gen Z and millennials, wrote that his properties had suffered a 30 percent decline in traffic and a 15 percent decline in revenue since the blockade began, forcing him to lay off over 16 employees. The Meta blockade “is killing us,” wrote Gabriel Ramirez, a journalist and co-founder of The Bridge Canada, a news outlet for Latin American immigrants.

Canadian publishers were even more terrified of a Google boycott because Google drives even more traffic to news. A few months before the law was passed, the company ran a weeks-long test that removed Canadian news outlets from its results, in what it described as a “potential product response” to the law.

It was like saying, “Nice restaurant you have here; it would be a shame if it had a fire,” said David Beers, the editor in chief of a nonprofit regional news site in British Columbia, The Tyee, which gets about one-third of its traffic from Google.

The Canada-Google deal sets an important precedent: It prevents Google from influencing which media businesses survive and fail.

In the past few years, after enduring withering criticism for profiting by purloining news content, Google and Meta began cutting private deals with individual news outlets across the globe (including The New York Times). Google says it has committed $1 billion to journalism and has cut deals with news outlets in more than 22 countries since 2020. Critics say that without government intervention, the deals tech companies strike allow them to determine which news outlets survive and could allow them to financially starve those that are critical of their business or political interests.

“The internet is supposed to be a level playing field. Instead these platforms are picking winners,” said David Skok, the founder and chief executive of The Logic, a business and tech news publication. He said that his publication was one of only two Canadian national non-broadcast news publications that had not already signed a deal with Google or Meta before the legislation’s passage.

Two years ago, Australia became the first country to push for a level playing field, enacting a bargaining code that required Google and Meta to negotiate payments to news publishers. Facebook shut off access to news content in Australia for about a week but ultimately complied. The Australian code proved to be a boon to the news industry there, prompting the hiring of more than 100 reporters and generating more than $130 million in annual payments to Australian news outlets large and small, according to Rod Sims, a former chairman of the Australian Competition and Consumer Commission.

When other countries initiated similar efforts, however, Google and Meta started pushing back more aggressively. When Brazil considered a similar law last year, Google posted ads on its popular search page stating that the law would “force Google to fund fake news.” The bill was withdrawn. South Africa and California are facing similar pushback.

Canada’s draft regulations required Meta and Google to each pay news outlets a minimum of 4 percent of their annual revenue in Canada. For Google, that would have amounted to about $126 million, according to government estimates.

Google argues that fewer than 2 percent of search queries in Canada are seeking news. “Simply put, the 4 percent appears to be an arbitrary figure that overstates the commercial value of news-related links,” Google wrote in its public comments on the law. The government appears to have agreed to Google’s terms in agreeing to cut the minimum payment by nearly half.

But a new working paper concluded that Google and Meta are vastly undercounting the value of news to their platforms. The study, by researchers from Columbia University, the University of Houston and the Brattle Group consulting firm, estimated that about 35 percent of searches on Google were “seeking news media content.”

“News is to Google what sports is to cable,” said one of the study’s authors, Haaris Mateen, an assistant professor of finance at the University of Houston. “Without it, the product loses most of its value.”

The study estimated that Google owes U.S. publishers 50 percent of the value created by news, which it estimated at $10 billion to $12 billion in revenue sharing annually. The study found that Facebook, whose users spend less time seeking news — about 13 percent of their time — owes $1.9 billion to U.S. news publishers.