Google refuses to disclose its news-related profits but claims it is a pittance.
The hostility between South Africa’s leading publishers and Google regarding the profits the tech giant makes from republishing their news content is heading for a full-scale war.
Google recently bluntly refused to disclose how much money it makes from aggregating the publishers’ content despite claiming its financial benefit is chicken feed.
The publishers hit back, stating that Google is earning significant money from their content and not paying for it. They believe Google is acting in bad faith and trying to protect its dominant position, which threatens the financial viability of the media industry and press freedom.
The latest salvo is Google’s blunt rejection of applications by Caxton, Media24 and Anton Harber’s Campaign for Free Expression (CFE) filed in terms of the Promotion of Access to Information Act (PAIA). The parties formally requested Google disclose detailed financial information related to the revenue it earns from aggregating news content, which they claim is critical for fair negotiations.
However, a day before it rejected the PAIA applications, it claimed in a letter to the broad South African media industry that it derives little financial benefit from news content.
These interactions took place on the sidelines of the Competition Commission’s Media and Digital Platforms Market Inquiry (MDPMI), which is investigating the extent of Google and other digital platforms’ negative impact on the media sector in South Africa.
This ongoing process is set to culminate in a final report due in May next year.
Similar investigations in other countries worldwide have seen governments forcing Google, Meta (banned and designated as extremist in Russia)and others to pay billions for the news content they aggregate.
Background to the conflict
The relationship between Google and the publishers quickly deteriorated last year when Google approached the industry to negotiate a commercial settlement. The negotiations failed dismally when Google’s eventual financial offers were deemed “insultingly low”. The industry then claimed that Google had negotiated in bad faith.
The publishers then asked Google for detailed financial information, arguing that they could not negotiate if they didn’t know the extent of Google’s financial benefits from using their content.
Google declined to disclose the information, which led Caxton, Media24 and CFE to submit the PAIA applications.
The parties addressed the PAIA applications to three Google companies: Google LCC (the international holding company), Google Ireland (Google’s European office), and Google ZA (Google’s operation in South Africa).
Google LCC and Google Ireland rejected the applications, stating that they are based internationally and that the PAIA cannot be enforced in their jurisdictions.
Google ZA, which has an office in Johannesburg, also rejected the applications. It claimed it doesn’t do business in South Africa as it only provides administrative and support services to Google Ireland.
South African media representatives saw Google's behavior as an attempt to sidestep accountability.
“It again demonstrates their lack of transparency and willingness to commit to fairly compensating the media for using their content,”
said Ishmet Davidson, CEO of Media24.
Paul Jenkins, Caxton chair, said the rejection of the PAIA applications is disappointing but not surprising.
“Google’s approach worldwide is to delay and obfuscate whilst claiming to be a supporter of the free press,”
said Jenkins.
Anton Harber of the CFE noted that digital platforms have a huge impact on society, being the gatekeepers of the information media sector and yet accepting little accountability.
“They refer us to their international operation and say our law does not apply there. How is it that they can operate here, earn good money here, and yet pay no tax and not accept the sovereignty of our law? This is very wrong.”
In its letter to news publishers, Google was supposed to explain its decision to reject the applications. The company claimed that it creates significantly more value for publishers than the revenue it earns from using their content.
Google argued that it could not disclose the financial information sought, as it believed the data would be used in “flawed methodologies” to calculate the monetary benefit it derives.
This relates to a methodology developed by the consulting group Fehr Advice that 40% of the revenue Google earns comes from aggregating and monetising publishers’ news content.
Fehr Advice’s research focused on the Swiss media industry and found that Google should have paid publishers CHF 154 million (R3.1 billion) for monetising their news.
However, Google states that Fehr’s research is “deeply flawed,” citing research from consulting firm Compass Lexecon. The research is included as an annexure to the letter.
Google disputed statements made during the MDPMI hearings that “news is the cornerstone of the internet”. It stated that estimates from Oxford University’s Reuters Institute show that people only spend 3% of their time online consuming news content, which “aligns broadly with the user behaviour we see on Google Search in South Africa.”
Google goes on to state that only 0.95% of searches in South Africa in 2023 were queries for news content. “We earned just over $900 000 (around R18 million) from advertising clicks on ads displayed in response to these queries.”
South African news publishers believe that Google is interested in claiming that it makes little money from news. In their opinion, the only way to resolve this issue is to have the information that could inform an independent assessment, but Google refuses to share it.
Source: Moneyweb
