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DOJ’s Google case helps explain local news death spiral




The future of America’s local news system may turn on the outcome of a federal lawsuit filed against Google on Tuesday.

That sounds highfalutin, but it’s hard to overstate how important the Department of Justice’s new antitrust case is to newspapers in particular.

Newspapers, which provide most local news coverage, are all pivoting to the internet where they are increasingly dependent on online ads and subscriptions.

But chances of long-term success are slim when entering a marketplace that’s rigged against you.

Because Google is abusing its monopoly over digital advertising tools and competing unfairly, publishers are being shorted, advertisers are overpaying and the online market of ideas is hobbled, according to the federal lawsuit.

Publishers have little choice but to use Google’s dominant tools for buying and selling ads online. This ends up harming not just publishers and advertisers but the public as well, the suit said.

“Fewer advertising dollars reach website publishers — because of
higher ad tech fees and less efficient advertising matches — meaning those publishers have fewer resources to create content for internet users,” it said.

Newspaper readers have seen this firsthand as fewer and fewer stories are covered.

While online advertising soared over the last 15 years, a quarter of newspapers failed and their newsrooms lost two-thirds of their journalists. This in turn has reduced civic engagement and frayed democracy.

The journalism crisis isn’t all Google’s fault. The industry is disrupted by the march of technology and changing consumer behavior, and made some strategic errors.

But the DOJ, and Congress and competition authorities in other countries, make a strong case that news outlets were excessively harmed, and their nascent online businesses were throttled, by Google’s anti-competitive business practices.

Among the DOJ’s allegations: Google locked content creators into using Google systems, blocked companies from using rival ad technologies and manipulated auctions of ads and publishers’ digital real estate to benefit Google.

Whether the solution is to break apart Google’s ad business, as the DOJ proposes, remains to be seen.

But even if the case only tempers Google’s conduct, enabling competition that reduces its cut of digital ad sales by say 10%, that would be transformative for the nation’s 6,000 or so news outlets.

Because Google stifled competition it can charge high tolls, averaging 30% of the ad dollars passing through its stack of ad tools, the DOJ alleges.

That means “less advertiser spend makes it to the publishers that internet users rely upon to generate and disseminate important content,” the suit said.

Federal prosecutors made clear in the lawsuit and their Tuesday announcement that Google’s antitrust violations are harming publishers and the American public.

U.S. Attorney General Merrick Garland said that as a result of Google’s conduct, “website creators earn less, and advertisers pay more. That means fewer publishers are able to offer internet users content without subscriptions, paywalls or other forms of monetization.”

This particularly affects newspapers, noted Assistant Attorney General Jonathan Kanter.

“For more than two centuries, advertising in this country has funded newspapers and other avenues of free expression,” Kanter said. “Revenue from advertising has provided critical support for content creation, the sharing of information, and the exchange of viewpoints, which promote a vibrant, free and healthy society.”

Eight states joined the case. I think Washington Attorney General Bob Ferguson should sign on. His office declined to comment but noted he’s joined other suits against Google.

Google disputed the DOJ allegations and said the lawsuit would harm innovation and the ad sector. In a statement, it vowed to “vigorously contest attempts to break tools that are working for publishers, advertisers and people across America.”

The question, though, is not whether the tools work but how Google is behaving.

“Google’s conduct has preserved Google’s dominant market positions at all levels of the ad tech stack and allowed Google to siphon away a supra-competitive portion of advertiser dollars before they can reach website publishers,” the suit said.

Many things are needed to stop the death spiral of local news outlets, stabilize the industry and restore local newsrooms. Publishers need time to develop new business models and wait for antitrust reforms and enforcement.

Two papers a week are failing and widespread layoffs are expected this year. Even The Washington Post announced layoffs this week.

The DOJ lawsuit also strengthens the case for Congress to act now to preserve local journalism.

It helps explain why publishers are struggling so much and lays groundwork for their long-term success — if there are local newspapers left by the time the case is resolved.

NEW COALITION: Steven Waldman, a leader in efforts to sustain local journalism, launched a new nonprofit called the Rebuild Local News Coalition.

The New York-based organization will research and advocate for local, state and national policies to stop and reverse the decline of local news coverage.

The coalition started informally in 2020. Now it’s relaunching with a staff of five and grants of $1 million so far from backers including Microsoft and the Knight Foundation.

“The crisis is just getting worse and the cause is as important as ever and the need for public policy solutions as part of the game plan is more and more important,” Waldman said.

Members include labor, journalism nonprofits and associations of weekly and ethnic newspapers. Trade groups representing daily newspapers are not participating, partly because the coalition won’t support legislation enabling newspapers to collectively bargain content deals with dominant platforms like Google.

Previously Waldman co-founded and led Report for America, a nonprofit that places early career journalists at local news outlets.

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