Google Drops Fight Against $694 Million Fine Over News Ad Revenue

Google Drops Fight Against $694 Million Fine Over News Ad Revenue
Photo: Alastair Pike, Getty Images

After Google fought tooth-and-nail to weasel out of paying news publishers more ad revenue, journalists in France claimed victory on Tuesday. The Silicon Valley giant agreed to a new slate of licensing deals with publishers across the country and even quietly dropped its attempt to appeal a fine by the country’s competition authority of more than $US500 ($694) million.

In a Tuesday press release about Google’s pledge and the rescinded appeal, Benoît Cœuré, President of the French Competition Authority, noted that the agency “welcomes” Google’s new commitments, saying that the country will finally have a digital media landscape with “guarantees of fairness for publishers and press agencies.”

The blog post Google France’s managing director and VP, Sébastien Missoffe, doesn’t mention the fine the company’s being forced to pay. Instead, Missoffe notes that the company has “worked hard to agree on a negotiation framework with publishers and the French Competition Authority,” and that it “already [has] agreements with more than 150 publications,” ranging from massive press agencies to online blogs. The blog also notes that Google will appoint an “independent trustee,” to keep tabs on how Google’s agreements with said publishers.

The French press’ victory is nearly a decade in the making. To understand how it came about, you need to understand the extremely rocky relationship between Google and the modern day news apparatus.

In a nutshell: Google owns the world’s predominant search engine and one of the most popular news aggregators out there, Google News, which means any news outlet — from small local papers to massive media chains — are forced to play ball with the company in order to be featured in either. And playing ball with the company means surrendering a not insignificant bit of ad revenue to Google with every story published.

Considering how Google continues to swallow hundreds of billions of ad dollars annually while newsrooms around the world are fighting to survive, it stands to reason some of them would try to revolt. Here in the U.S., for example, we’re seeing an ongoing suit between 200 news publishers and Google, along with fellow ad giant Facebook, over allegations that the companies unfairly tilted the ad market and gutted their publications in the process.

In Europe, things work a bit differently. At the start of 2019, EU lawmakers agreed to back a new copyright bill that would — among other things — force news aggregators and search engines like Google to pay publishers for showing off snippets from their sites. At the time, the company noted that the bill “will still lead to legal uncertainty and will hurt Europe’s creative and digital economies.” And to be fair, that’s exactly what we’d seen when other revenue-sharing bills had passed before.

When Spain passed a similar law back in 2014, for example, the company abruptly shut down Google News across the country, meaning that Spanish news publishers were blocked off from any traffic the aggregator could provide. And because profits depend almost entirely on traffic in the digital publishing world, when those numbers plummeted, earnings plummeted too; one study estimated Spanish news outlets lost the equivalent of roughly $US11 ($15) million in the immediate aftermath of the law going through. Google News would eventually return to the country seven years later after Spain took a somewhat softer stance on copyright law which allowed publishers — not lawmakers — to decide how their revenue sharing agreements would shake out.

When French authorities adopted the EU’s new copyright directive back in 2019, Google at first tried to follow a similar playbook. The company tweaked the way it showed French news snippets in search results and in its aggregator, successfully finding a loophole that would let it evade paying local publishers.

Less than a year later though, the country’s antitrust authority stepped in to let the company know that it couldn’t get out things that easily, and ordered Google to negotiate with publishers over paying for their content, on the grounds that the company was punching down in a sector where it clearly had the upper hand.

Google complied by cutting deals with French publishers, who were quick to point out that these deals were less than ideal for a number of reasons, which drew another crackdown from French regulators in the summer of last year. The the country’s competition authority imposed a fine of half a billion euros — roughly $US527 ($732) million — against the search giant, over allegations that the company was pulling tricks like withholding vital information from publishers during negotiations, and excluding certain outlets from their negotiations entirely.

Google tried appealing the fine the following fall, on the grounds that the half-a-billion dollar slap was “disproportionate to [Google’s] efforts to reach an agreement and comply with the new law.” Just to put things in perspective, the company pulled in $US258 ($358) billion the same year it fired off this appeal. The fine was literally 0.2% of Google’s overall bottom line for 2021. So it’s worth taking the “disproportionate” claim with a grain of salt.

That brings us to the present day, where apparently the search giant agreed that the appeals were more of a hassle than this drop in its revenue bucket was worth. In the press release discussing Google’s decision, the French authority noted that the company won’t only be coughing up a hefty sum to the authority — it will also be following through on certain commitments it’s made to publishers; these include passing relevant intel back to publishers in a timely fashion, and using “transparent, objective and non-discriminatory criteria” in its ongoing negotiations with those players. According to the Authority’s announcements, these commitments “are likely” to put an end to the competition concerns that led to this whole mess in the first place.

“These commitments illustrate our desire to move forward and to remunerate publishers and press agencies for their neighbouring rights,” Google VP Missoffe wrote. “We are determined to contribute to the news ecosystem, and will continue to work on securing more agreements with eligible French publishers and news agencies to further support journalism in France.”

Great! Now do journalism in America next.