Media and Communications Policy : Media Policy & First Amendment Foundation : The Media Institute : Free Speech, Media Regulation, Content Controls

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The Wall Street Journal was the first to report, in June, that Google was about to be served with subpoenas as part of an investigation by the Federal Trade Commission into “whether the Internet giant has abused its dominance in Web-search advertising.”  If the FTC gets around to asking (under subpoena and in confidence) what media companies think about that allegation, they better come prepared to stay awhile.

This, because although you won’t find many media companies willing to say so publicly, Google is roundly feared and detested, and for good reason.  Google dominates the online advertising market, “by skimming away the earnings of media companies as it scrapes up their content, denying them of the scale that would be required for effective competition with the gatekeeper to the Internet.”

This and other observations are among the findings in a white paper submitted to the FTC by The Media Institute last week.  Titled “Google and the Media: How Google Is Leveraging Its Position in Search To Dominate the Media Economy,” the paper amounts to an indictment of the business practices of a company that has achieved extraordinary success with consumers.

As stated in the press release: “Google has used two principal strategies for appropriating the creative content of others for their own gain.  The first, exemplified by Google News, takes content from potential competitors to launch new businesses while depriving those competitors of the revenue their original content generates….  The second strategy, exemplified by YouTube and Google Books, is to test legal limits of copyright and, when challenged, to resolve any disputes by further cementing its monopoly.”

The Institute’s white paper makes no specific recommendations to the FTC, saying only that we are confident that the Commission can “find an appropriate prospective remedy to protect competition in the media, search, online and mobile markets.”

Our commissioning and release of this paper has led some – like the excellent media reporter John Eggerton – to ask whether this isn’t sort of an unusual position for an organization like TMI to take, given our view that government ought to stay out of the marketplace generally, and the media specifically.

And the gentleman is right; it is somewhat out of the ordinary.  But it’s also the case that there’s nothing usual or ordinary about Google, or about the threat that Google presents to an entire industry – in this case the professional, for-profit media – which taken together represent something special and uniquely important in this country.  And as shown here and here, our concern with Google’s business practices predates the FTC investigation by at least three years.

More than this, we would argue that the careful application of the antitrust laws is completely consistent both with capitalism and the general wisdom in keeping the government at bay in most ways.

A good parallel can be found in the Institute’s robust promotion both of freedom of speech and of strong copyright laws. We know that there is a certain tension between the two, but we think that tension can be reconciled, and that in fact these two values are the opposite sides of the same coin – valuable in their own right and vital when taken together.

And in any case, the facts here speak for themselves.  As stated in the conclusion of the white paper:

Despite its stated values to the contrary, Google has shown a willingness to exercise its monopoly power to the detriment of media companies, publishers, and journalists. These are companies ready to compete in the digital age, and prepared to rise or fall on the quality of their content and the strength of their creativity.  They face challenges that will promote innovation.  But they also face a challenge – from Google – that discourages improvement, and that transforms any advance into a setback as Google misdirects users to its own webpages, displaying the content of others and foreclosing competitors from that same aggregated content.  Absent intervention by the Commission, the future of the media economy will remain in significant danger of being dominated by a single entity that will foreclose competition.

The opinions expressed above are those of the writer and not necessarily of The Media Institute, its Board, contributors, or advisory councils.

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The search giant Google is attracting criticism from those who see in that company’s business practices a threat to professional journalism, old and new.  The latest such comes in the form of a policy paper written by media attorney Kurt Wimmer, and published online by The Media Institute.

Honored this year by the Reporters Committee for Freedom of the Press, Wimmer has advised journalists and legislators in more than two dozen countries concerning new media laws, protection of journalists, and freedom of information.

The thrust of his paper is that, at a time when there is great concern for the future of the media, much of this concern is misplaced.  There’s no crisis in journalism per se, he argues, but rather a crisis in the monetization of journalistic content, a condition greatly exacerbated by the fact that one company dominates both search and online advertising.

Is anyone monetizing digital content?  Yes.  News and information continues to be monetized – at a rapidly increasing rate – by search engines, content aggregators, and others whose new, targeted advertising models have overtaken the spending that had supported journalism in the past.

Again, the dramatic new feature here is the split between content creation and content monetization – those who create the content are not those who are monetizing it.  Google, for example, had a record $23 billion in revenue during 2009, without producing a word of original content.  Google’s job is simply to monetize the content that others have created, and it has performed that job exceptionally well.  Today, more than 70 percent of the Web searches conducted in the United States (and up to 90 percent of those in Europe) flow through Google’s servers.  By its recent acquisition of AdMob, Google will control the vast majority of the mobile application advertising market as well.

Complaints about Google’s disruptive effect on professional journalism are not new, of course, and this is not the only active concern about Google’s business practices.  Other people have problems with the company’s abuse of copyrighted material (as in Viacom’s lawsuit against Google’s YouTube subsidiary), or with Google’s invasion of privacy, such as seen in the recent “Spy-Fi” affair.

What is new is the degree of scrutiny of Google’s practices by government antitrust officials.  As reported last month in a lengthy story in The New York Times, “the search giant’s decisions on such matters may soon be judged by higher authorities.”  As the Times reporter, Brad Stone, put it: “Almost a decade after Google promised that the creed ‘Don’t be evil’ would guide its activities, the federal government is examining Google’s acquisitions and actions as never before, looking for indications that the company’s market power may be anticompetitive in the worlds of Web search and online advertising.”

It’s become hard to know, in recent years, what the government may deem to be in restraint of trade, but if it happens, sometime in the near future, that it initiates an antitrust review of Google and you find yourself wondering why, read Wimmer’s piece and wonder no more.

Cross posted here on Huffington Post.