Could Google’s advertising monopoly be destroying journalism? Trial reveals shocking details

Antitrust lawsuit against Google: In a high-profile antitrust trial, a top DailyMail.com executive testified that Google’s dominance in online display advertising is significantly damaging the financial health of news organizations. Matthew Wheatland, DailyMail.com’s chief digital officer, shared his thoughts during the eighth day of the trial led by the U.S. Department of Justice (DOJ). He argued that Google’s control over advertising revenue limits news publishers’ ability to invest in journalism, ultimately affecting the quality and quantity of news content available to the public.

Google’s alleged monopoly is revealed

The trial, overseen by Judge Leonie Brinkema in Alexandria, Virginia, has revealed troubling allegations against Google. The Justice Department alleges that the tech giant is engaged in monopolistic practices by forcing customers to use its products, stifling competition and depriving the publishing industry of hundreds of millions of dollars in revenue. Wheatland stressed that Google’s practices are not just a business strategy but a serious threat to the future of journalism.

Financial impact on news organizations

Wheatland explained that DailyMail.com relies heavily on display advertising to fund its operations. He stated: “Google reducing prices for publishers ultimately reduces publisher revenues, which in turn means we don’t invest in journalism in a way that we potentially could otherwise.” This statement underscores the direct impact that advertising revenue has on the ability of news organizations to produce quality journalism.

The mechanics of online advertising

The case centers on the way online ads are sold, particularly through a process called programmatic advertising. Every day, billions of ads are bought and sold through automated auctions that occur in just milliseconds. The Justice Department alleges that Google manipulates these auctions to favor its own products, thereby gaming the system in its favor.

How Google controls the market

Wheatland also described the complex advertising ecosystem that includes an ad server used by publishers, an ad network for advertisers, and an ad exchange that combines the two. Google controls all three components, allowing it to charge higher fees and keep a substantial share of ad revenue. The court heard that Google keeps up to 36 cents of every dollar spent on ads, and that its AdX exchange charges a hefty 20% commission — significantly higher than its smaller competitors.

Editors face tough decisions

DailyMail.com has considered moving away from Google’s ad server, but found that doing so would result in a staggering 28% loss of its programmatic advertising revenue. Wheatland said: “We can’t change ad servers because that would mean we’d have to give up that revenue. It’s not financially viable.” This highlights the tight grip Google has on news publishers’ advertising revenue streams.

Unresolved tension

Wheatland’s testimony also addressed Google’s unified pricing rules, a system that is supposed to monetize ad inventory more aggressively but has not translated into increased revenue for publishers. He noted that publishers are unhappy with this system, further indicating that Google’s practices are squeezing news organizations’ financial resources.

What’s next for journalism?

As the trial progresses, the implications of Google’s actions on journalism are becoming increasingly clear. If Judge Brinkema determines that Google is operating as a monopoly, she could force the company to divest parts of its advertising business, which could ultimately reshape the online advertising landscape and its impact on the media industry. The outcome of this case could determine the future of journalism as we know it.