Big Tech vs Big Media: Google Matches US News Industry’s Digital Ad Revenues

Google made a whopping $4.7 billion through its search and Google News in 2018, says a new study first reported by the New York Times.

But what has gotten the goat of media houses in the United States is that this is nearly as much money as that made by the news industry in the US — $5.1 billion — from its digital advertising revenues.

What’s more, news forms a significant part of Google’s business.

Around 40% of clicks on Google’s trending queries are for news, says the report by the News Media Alliance, which represents over 2,000 print and web publications in the country.

The News Media Alliance report is based partly on a study done by strategy and economics consulting firm Keystone Strategy, which has relied on a statistic made public by a Google executive in 2008 that Google News brought in $100 million. Among other factors, the study noted how much Google’s revenues had grown since that time.

In fact, the News Media Alliance said this estimate of Google’s earnings was a “conservative” one — as it did not include the value of the personal data of users that is gathered by Alphabet, Google’s parent company, each time they click on articles.

David Chavern, president and chief executive of News Media Alliance, told the NYT that since the ‘news’ content on Google is not made by Google, so the news industry deserves a cut of that $4.7 billion.

“They make money off this arrangement and there needs to be a better outcome for news publishers,” Chavern was quoted as saying.

Google and Facebook are, in fact, the major distributors for news publications online — together they bring in more than 80% of the external traffic to news sites. In the process, they earn a huge proportion of the online ad revenue.

The print media industry has indeed suffered setbacks in the United States over the past couple of decades, with a good number of them shutting shop or downsizing.

However, the big corporate media houses among legacy news outlets in the US continue raking in substantial profits.

For example, the New York Times alone in 2018 reported earning $709 million in total digital ad revenue. Similarly, the Washington Post had a profitable 2016 and 2017, as this report in New York Magazine points out. This same report adds that one in five local papers has closed down since 2004, while newsroom employment fell by 23% from 2008 to 2017, making up around 27,000 jobs.

Also read: Tech Giants Continue to Grow, Startups Failing as Antitrust Laws Fail to Promote Competition

The NYT report on the study by News Media Alliance also had the alliance chief speaking of the Journalism Competition and Preservation Act.

“The bill now before lawmakers would give news publishers a four-year antitrust exemption, allowing them to collectively bargain with the owners of online platforms over revenue splitting,” says the report.

Meanwhile, the US government has been considering tighter scrutiny of Big Tech — Google, Apple, Amazon and Facebook — and over antitrust laws (fair competition laws).

But another news report says that for two straight years, Google has been the biggest corporate sender on lobbying (with lawmakers over regulations, policy, etc.) in the United States.

Last year alone, Google spent $21.7 million on lobbying. Among the other tech giants, Amazon and Facebook are not too far behind — having spent $14.4 million and $12.6 million, respectively, on lobbying last year.