Google's representatives in South Africa revealed some aspects of the company's operations during a public hearing held by the Competition Commission.
News queries accounted for less than 2% of search queries in South Africa, resulting in only about R35m in revenue in 2022, the search giant claimed during a public hearing in South Africa which is part of the Competition Commission's Media and Digital Platforms Market Inquiry.
The Commission welcomed Google Search's participation in the Inquiry, but during the discussions, the Commission's chief economist, James Hodge, accused company representatives of being overly defensive and evasive in their responses to questions around privacy concerns, its tech, how much information it stored on users and the profits it gleaned off the media.
The executives told the inquiry that Google Search’s features aimed to enhance the user experience and trust in search results, such as a dedicated carousel for local news and improved ranking algorithms, and also partnered with the news industry by investing in the sector and fostering a sustainable and diverse news ecosystem through the Google News Initiative. In South Africa, the initiative supports independent news publishers through training programmes, partnerships and commercial engagements.
A Matter of Innovation
Sulina Connal, Managing Director of News Partnerships EMEA, told the hearing that technology was developing rapidly, so it required constant innovation.
She said Google built products to serve a diverse array of reliable information, including news, to its news users, which drove traffic to publishers.
“Search and discover are not news aggregators. They provide links in response to people’s queries or their anticipated interests, and direct them to the original sources.”
According to Connal, Google shared and encouraged innovation through the Google News initiative (GNI) through numerous bespoke joint initiatives with publishers, broadcasters and civil society around the world.
“Google is one of the leading private funders of journalism globally. We have a deep respect for the difficult and very important work of journalism but don’t think that the answer lies in short-term transactional solutions, which result in publishers becoming financially dependent on payments from private companies. All stakeholders, including the government, need to work together.”
According to the company, Google in South Africa is focused on how to enable digital transformation, growth and competitiveness: “Our investment approach is anchored on … digital infrastructure investment, digital skills, new technologies and product localisation.”
As stated by Erin Simon, Google's Senior Counsel for Knowledge and Information, Google’s search operations, including crawling and indexing, query understanding and ranking algorithms helped optimise search results.
“Fundamentally, that is what the search engine does. We seek to display a diverse set of reliable relevant results to the user. And those results are primarily links. We don’t host content from the web. We give users a path to find that content where it lives on the website or the publisher’s website.”
Marianne Erasmus, News Partner Lead for SSA, denied that Google reaped substantial revenue from news. According to her, in 2022, news queries in South Africa accounted for less than 2% of people’s search queries in South Africa. The ads placed on those pages resulted in less than R35-million in ad revenue for Google.
“In contrast, Google sent 600 million free referral clicks to South African publishers from Google Search and Google News, that publishers could then in turn monetise on their websites through advertising or subscriptions.”
In 2018, the company launched the Google News initiative to support the global news ecosystem, including products and programmes to help publishers better monetise, such as Google Analytics, Subscribe with Google and Google News showcase, a $1-billion product licensing programme for publishers.
State of SA Media
Questioning whether Google was aware of the state of the media in South Africa, in which an estimated 700 journalists were unemployed, committee chair James Hodge said Google’s latest financials indicated the company made nearly $283-billion in revenue. It had expenses of $208- billion and a net profit of $71-billion before tax (about 25% of revenue).
“But I think what’s interesting is if you look at Google Services, which is Search, YouTube and ad tech, and take out some of the ‘other bets’ and cloud which are losing money, that accounts for the bulk of the revenues of $254-billion in operating income… profit of $87-billion or a 34% profit margin.”
Last week, Media24 (owns a host of print and digital publications, including News24, and is part of the Naspers group) CEO Ishmet Davidson told the inquiry that Google, not the government, was the biggest threat to media freedom in South Africa.
Citing statistics from the Independent Advertising Bureau, Davidson said Google and Meta were “absolutely dominant with 97% market share, leaving publishers with the crumbs”.
Google’s representatives declined to comment on those estimates, saying they did not disclose certain information publicly.
Davidson said:
“What’s particularly concerning is that in 2015, publishers had an 8% market share, which by 2022 had declined to 3%. On the other hand, during this time, Google’s dominance grew from 67% to 78% of the digital advertising market (with close to 100% of the search market).”
The CEO of South African news site Daily Maverick, Styli Charalambous, told the Inquiry that Google dominated the advertising marketplace, playing multiple roles and owning the ad tech stack almost entirely used by publishers and media buyers.
He noted the opaqueness of Google's online advertising business and emphasized that the relationship between news publishers and digital giants was often complex. In particular, Charalambous recognized that the Google News Initiative stood out as a signal of Google’s recognition of the vital role news played in society and, by extension, its business ecosystem.
Source: Daily Maverick
