Gannett Files Lawsuit Against Google: The Battle Over Online Ad Monopoly

In a bold move that mirrors the ongoing legal battle between the Department of Justice and Google, Gannett, the country's largest newspaper publisher, has filed a lawsuit against the tech giant. Gannett accuses Google of illegally monopolizing the technology that powers online advertising, claiming that this has led to a decline in revenue for publishers and the closure of numerous news outlets.

Google's Alleged Monopolistic Practices

Gannett's complaint, filed in New York federal court, alleges that Google has been engaging in a sophisticated and deceptive scheme for over a decade. The company claims that Google controls the tools used by publishers and advertisers to buy and sell online ad space, taking a monopolistic cut of revenue in the process. This, according to Gannett, has resulted in underinvestment in newsrooms and the closure of newspapers.

According to the complaint, while the online ad market generates a staggering $200 billion annually, publishers have experienced a nearly 70 percent drop in revenue since 2009. Gannett points out that 170 of its publications have shuttered in the past four years alone. Gannett's CEO, Mike Reed, emphasizes that Google made $30 billion in 2022 alone from manipulating ad space auctions, which is six times more revenue than all U.S. news publications combined.

Google's Response

Google, however, disputes these allegations. Dan Taylor, Vice President of Google Ads, states that the claims made by Gannett are simply wrong. He argues that publishers have multiple options to choose from when it comes to using advertising technology, including Google's competitors. Taylor also emphasizes that publishers retain the majority of revenue generated through Google's advertising products, which, in turn, helps fund their content online.

The Ongoing Legal Battle

This lawsuit is just the latest in a series of legal challenges that Google is facing regarding its ad business. In January, the government and 17 state attorneys general filed an antitrust complaint against Google, seeking to break up the company. The European Commission has also recently joined in on the action. Additionally, U.K. antitrust enforcers have found that Google's practices harm publishers by favoring its own sources of supply and demand.

Gannett's Allegations Against Google

Gannett's complaint focuses on two key areas where it claims Google exerts its monopolistic control: the publisher ad server market and the ad exchange market. The publisher ad server is the platform used by publishers to sell their ad slots. Gannett alleges that Google's acquisition of DoubleClick in 2007, which gave the company access to the leading publisher ad server at the time, has resulted in Google now controlling over 90 percent of the market.

The ad exchange market, which facilitates real-time auctions for ad space, is also under scrutiny. Gannett claims that Google's exchange controls over 60 percent of the market, while competitors only have single-digit shares. Gannett argues that Google effectively bars buyers using its exchange from participating in others, ensuring that publishers have to go through Google to reach the majority of buyers.

Accusations of Bid Rigging

Gannett further accuses Google of rigging bids in its exchange by trading on inside information obtained from its ad server. The complaint highlights that Google prohibits publishers from sharing data about readers with rival exchanges, resulting in lower bids from competitors. Google's DoubleClick Ad Exchange then returns bids that are only slightly higher, despite originally receiving substantially higher bids for the same ad slot. This alleged practice allows Google to secure more inventory at depressed prices.

Gannett asserts that Google's string of acquisitions, including AdMob, Invite Media, and AdMeld, were aimed at solidifying its position as the dominant intermediary between advertisers and publishers. These acquisitions have given Google direct access to publishers' ad inventory, advertisers, and agencies.

Impact on Newsrooms and Journalists

The consequences of Google's alleged monopolistic practices are far-reaching. Gannett's lawsuit highlights the impact on newsrooms and journalists, with deep cuts to newsrooms and low pay being major concerns. In June, hundreds of journalists across two dozen newspapers owned by Gannett went on strike to protest these issues. They argued that the merger between Gannett and GateHouse Media, which occurred in 2019, resulted in significant debt and forced massive cost-cutting measures.

Despite these challenges, Gannett reported generating a profit of $10.3 million in its first-quarter earnings report and surpassing two million digital subscriptions.

Conclusion

The lawsuit filed by Gannett against Google adds another layer to the ongoing legal battle surrounding Google's dominance in the digital ad market. Gannett accuses Google of monopolistic practices that have led to a decline in revenue for publishers and the closure of news outlets. Google, on the other hand, disputes these claims and emphasizes the options available to publishers in the advertising technology space. As the legal proceedings unfold, the outcome of this battle will have far-reaching implications for the future of online advertising and the news publishing industry.