Last July, my CDD wrote to the Department of Justice Antitrust Division raising a number of concerns about the proposed consolidation between Google and Yahoo! In particular, we were concerned about the impact the deal melding together the two leading online ad companies for newspapers would have on that imperiled business. Now, the World Association of Newspapers has issued a statement opposing the deal, citing many of the same issues. Here’s a link and the first few graphs of their important communique:
For over 60 years, the World Association of Newspapers [W.A.N.] has vigorously defended the freedom of the press. From its beginning, W.A.N. has recognized that newspaper journalism can be truly free only if newspaper publishers are economically independent. This means having the freedom to decide what news to publish, where to publish it, and the ability to build sustainably profitable businesses around it. As newspaper publishers endeavor to adapt to the Internet, their independence increasingly hinges on their ability to monetize news through online advertising.
In this pursuit, one company – Google – has emerged as the significant market power in online advertising. Google has built a very impressive business in 10 years, generating billions of dollars by indexing and linking to online content, then profiting from it through Googleâ€™s own ads. However, of the very impressive $48 billion in online advertising revenue that Google has amassed since 2001, less than one third of that has been returned to online publishers (1), and a much tinier fraction has benefitted the news and content generation industries. As such, most publishers are acutely aware that Googleâ€™s ever-tightening grip on internet traffic, its unbridled use of online content, and its dominance in online advertising poses a very real threat to the continued viability of the independent content generation industry.
It should be pointed out that most of W.A.N.â€™s 18,000 newspaper title members are, in fact, regular customers of Google (and to a lesser extent, Yahoo). These publishers depend on Google (and Yahoo) for a significant portion of their online advertising revenue and rely on each companyâ€™s respective search engines (both their paid search ads and their natural search results) to drive traffic to their websites. To date, competition between both these two search companies has provided a necessary check to any potential market abuses, and has helped to ensure that publishers and content generators are capable of earning an equitable and fair return on their content.
It is in that context that W.A.N. believes that the competition that currently exists between Google and Yahoo is absolutely essential to ensuring that our member titles receive competitive returns for online advertising on their sites, and for obtaining competitive prices when they purchase paid search advertising. In our view, the proposed advertising deal between Google and Yahoo would seriously weaken that competition, resulting in less revenues and higher prices for our members. W.A.N. is also concerned that this deal would give Google unwarranted market power over important segments of online advertising.
While Google and Yahoo have stated that their proposed agreement is limited in scope to North America, W.A.N. believes it will have a significant and adverse effect on all newspaper publishers worldwide, as it could have the potential of reducing the incentive for Yahoo to vigorously compete against Google across the globe.