Google goes after news sites on its doorstep as law closes in
Plus, a media scion predicts Google's era is ending, the UK Government goes after socials, Netflix profits surge, media lawyers make a killing, and more
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It’s been a big week so let’s get right to it, starting with Google.
Google has begun removing news content from some search results in California in reaction to a new state law demanding they pay publishers.
Assembly Bill 886 is also called the California Journalism Preservation Act. It builds on the Australian model by requiring Big Tech to pay a share of ad revenue that’s determined by three judges.
It then requires publishers to spend at least 70 per cent of what they get on new journalists.
The bill’s author, Buffy Wicks, told The SF Gate: “It’s time they start paying market value for the journalism they are aggregating at no cost from local media.”
Google quickly responded with a blog post saying it was starting a “short-term test for a small percentage of users to measure the impact of the legislation on our product experience.”
California has already lost more than 100 local news organisations as Big Tech’s wealth has ballooned and syphoned off advertising.
It’s also axing Google News Initiative payments and other incentives for publishers to tighten the noose.
“By helping people find news stories, we help publishers of all sizes grow their audiences at no cost to them. (This bill) would up-end that model,” Jaffer Zaidi, Google’s vice president for global news partnerships, wrote in the blog post.
He adds: “To be clear, we believe CJPA undermines news in California. We don’t take these decisions lightly and want to be transparent with California publishers, lawmakers, and our users.
“To avoid an outcome where all parties lose and the California news industry is left worse off, we urge lawmakers to take a different approach.”
I’m not sure what this worse outcome could possibly be. And, as I posted on LinkedIn at the time: “Hey Google, you don’t get to choose what you can and can’t do when it comes to the law.”
Predictably though, Meta’s following suit.
It told the SF Gate: “We will be forced to remove news from Facebook and Instagram rather than pay into a slush fund that primarily benefits big, out-of-state media companies under the guise of benefiting California publishers.”
Bill author Wicks said: “We are committed to continuing negotiations with Google and all other stakeholders to secure a brighter future for California journalists and ensure that the lights of democracy stay on.”
Google’s responses and blog posts around this issue are almost verbatim to the ones they issued to fight similar efforts in Australia and Canada.
This is a play book, make no mistake. Google and Meta have zero interest in paying anything for news content and appear to be willing to go down swinging.
This is now an out-and-out boxing match that will reveal whether Government or tech holds the upper hand of global power in 2024.
Google and Meta, as well as Amazon and Apple, are all facing antitrust suits which have the power to atomise them into far less powerful parts.
At the same time, tech CEOs and their investors are worrying they are at peak tech.
Unless they can break through this Government tape, they cannot unleash their landgrab with AI and another $2 trillion in value.
Note the comments of FTC chair and antitrust champion Lina Khan in her recent interview with Jon Stewart on The Daily Show.
“Is their game to see how far they can push it?” Stewart asks.
Khan replies: “It’s possible but you need to think about tactics around deterrents. Who is the mafia boss here rather than the foot soldiers.”
She then adds: “We need to be clear-eyed that there's no AI exemption from the laws on the books.”
She’s referring to President Joe Biden explicitly saying that laws that have protected tech such as Section 230 will not exist in the AI era.
She continues: “We see sometimes businesses try to dazzle enforcers by saying these technologies are so new, they're so different, let’s just take a hands-off approach.
“That's what ended up happening with web 2.0, and now we’re reeling from the consequences. You know, the rise of social media…
“In the early 2000s, the initial set of companies ended up innovating, but ultimately becoming monopolistic… adopting business models that are premised on endlessly surveilling people…”
Stewart says: “And hoovering up data and creating algorithms that are clearly harmful, not just to children, but to political discourse. It's pretty wild how they're able to do that.”
Khan responds: “We are the decision makers.
“We need to use the policy tools and levers that we have to make sure that these technologies are proceeding on a trajectory that benefit Americans and we're not subjected to all of the risks and harms.”
It’s clear Meta and Google’s game plan is to hold the line on its monopolistic power and outsized earnings for as long as it can, but in face-to-face fisticuffs with Government they’ll lose.
Ask Microsoft’s Brad Smith, or Standard Oil, or AT&T…
Right now, in late April 2024, the news media industry has been placed in the no man’s land of a war between tech and Government not seen in half a century.
Tech’s tough line responses are a signal of desperation.
Google taking aggressive action against publishers on its own doorstep in California would have been unthinkable a year or two ago.
It’s making the Hail Mary decisions I warned were coming just before their last quarterly results in January.
Next will come the shift from search to SGE, leading to a likely fatal fall in traffic referrals, making ad-funded websites unprofitable and unviable for any publisher that relies on Google.
Only…
Paying close attention is Mathias Dopfner, the cool dude of the news industry.
The former music critic turned billionaire Axel Springer CEO has penned an op ed predicting Google is about to fall. He also owns Insider and influential US site Politico.
He is seen as a trendsetter, a friend to some in Silcon Valley, and was one of the first to sign an AI deal with Microsoft and OpenAI.
“The zeitgeist has changed. Google has a headwind,” Dopfner wrote in a guest article for the Frankfurter Allgemeine Zeitung this week.
A decade ago, he warned publishers not to become reliant on Google, but that went unheard, and the search engine absorbed media’s business model and revenue.
But Government action, heavier fines, and changing public sentiment about the $1.7 trillion enterprise is an agent for change.
In his new op ed, he wrote: “Today, you no longer need to be afraid of Google.
He said media’s decline was causing a “democratic recession” which will lead politicians to react more decisively.
“This time it’s about power and the future of democracy,” he wrote.
“Artificial intelligence and the development of market conditions have the potential to undermine and destroy every party, every politician, every election and all democratic institutions.
“This is now dawning on even the latecomers to digitalisation.”
The platforms will either regulate themselves, and pay publishers and others for content, or politicians will “set limits more quickly and more resolutely and define rules that ensure that intellectual property is protected in the same way as real property.”
To this end, I’m in London next week keynoting the Minds International conference of the world’s top news agencies to discuss strategies around AI.
Attending are The Associated Press, Reuters, AFP, The Canadian Press, Australia’s AAP, and the leading agencies of Austria, Belgium, Denmark, Germany, India, Italy, Japan, Spain and more.
I’m also hosting a dinner of UK media executives to share the best new business models I am seeing emerging.
Sticking with the UK, Downing Street has summoned Google, Apple, X, and Meta to talks aimed at getting them to sign a voluntary charter granting parents more control of social media.
The voluntary charter would require tech firms agreeing to alert parents when their children repeatedly look at disturbing content, Bloomberg reported.
Fascinatingly, the Government has already said it expects the tech platforms to say no, raising the prospect that this is an offer to collaborate in lieu of another tough law.
Prime Minister Rishi Sunak first raised the prospect of a legal ban on social media for children under 16 late last year, after warnings from the National Crime Agency.
Government and tech clashing is becoming a meaningful trend that I will follow.
Tech’s quarterly earnings reports are starting to come in, with Netflix up first.
Profits surged as 9.3 million new paying subscribers joined, The Guardian reports, raising its paying audience to 269.6 million worldwide.
Netflix, like other tech firms, is now in a landgrab, expanding with investments to corner live events, sports and video games. My reporting on the landgrab is here.
Revenue rose 15% to $9.4 billion for the three months to March.
Finally, earlier this month, Google settled a case over taking people’s confidential data from Chrome’s incognito browsing mode.
Google agreed to delete it but boasted that no damages would be paid. “The plaintiffs originally wanted $5 billion and are receiving zero,” it said.
Now the attorneys that brought the class action, Boies Schiller, Susman Godfrey, and Morgan & Morgan, are making bank.
Puck reports under the headline Billionaire Boies Club:
As anyone versed in class-action settlements knows, plaintiffs’ lawyers typically seek a quarter to a third of the total sum.
Well, I did the math, and I can confirm that we’re on the brink of witnessing a billion-dollar-plus legal fee petition, to be split between the three firms.
Yes, we saw a similar request earlier this year, when the attorneys who successfully contested Elon Musk’s $55 billion Tesla pay package asked the judge for $5.6 billion of Tesla stock - a fee request that is still pending.
But the Google settlement is perhaps even more remarkable.
According to a declaration from one of the lawyers, over 75,000 attorney hours were poured into this four-year-old case.
While that is certainly substantial, a $1 billion fee would amount to more than $13,333 per hour.
And while a pay bonanza for the lawyers may not come as a shock to anyone who has ever received a meagre settlement check in the mail, how about a billion or two for them and no financial redress whatsoever for the supposed clients?
Ker-ching… The greedy hurt the needy every time Wonka. That's the way of the world.
See you next time from London…