News is an essential part of our lives. With the emergence of technology and the ever-increasing reach of the internet, it has become very easy to find and access any type of information that we need at our fingertips by using our mobile phones, laptops, desktops, etc.
Due to the fast need for information to be easily available, news websites have increasingly been expanding their horizons. It has now even expanded to news channels on TV reporting live current happenings 24/7, news apps on phones, laptops, and desktops providing articles, slideshows, editorials, user-submitted articles, and various other forms of reporting events to users.
Moreover, search engines such as Google, Yahoo, Bing, etc. also act as aggregators of news information by providing the latest news to users based on their searches conducted via these engines. These are done via the use of advertisements, where companies pay Google to rank their searches on a higher number than others, due to which news websites can gain larger amounts of online traffic, which can keep their website functional and also expand their reach among the population.
A glimpse into the dominance of tech giants in our life
With the COVID-19 pandemic severely affecting the traditional channels, almost every industry has become a participant in the race to digitize their business models to cater to customers’ increasing preferences in the digital domain of life.
If a company unfairly leverages its dominance in the digital domain, creating an unequal platform and leading to a loss of revenue amongst news companies, which led to a complaint being filed against Alphabet, the company that owns Google, Google India, Google LLC, and Google Ireland by the Digital News Publishers Association, an organization which protects the interests of various Indian digital media companies.
The complaint was filed under Section 19(1)(a) of the Competition Act, 2002(“Act”), which states that the Competition Commission of India(“CCI”) can inquire into any alleged contravention of any competition rules enshrined under Section 4 of the Act on receipt of a complaint from a person, consumer or trade association. Section 4 of the Act includes various sub-sections which define abuse of dominant position, predatory pricing, limiting market access, etc.
The complaint alleged that Google’s parent company Alphabet has a revenue of $116 billion, out of which almost 84% comes from advertising. This is evident since Alphabet was the top performing tech firm in 2021, where its shares had risen by 68%, which was largely due to a high income via Google’s large and widely-used framework of applications such as Google search engine, advertisements on YouTube and increased usage of Google’s cloud infrastructure services.
The impact of tech giants on news agencies
Due to the COVID-19 pandemic, a high number of industries were affected due to the sudden onset of a complete shutdown in the physical domain, which necessitated a hasty transition for organizations, especially news companies, to digitize and monetize their content via e-papers, earning through advertising on their websites, subscriptions and increasing their website traffic via advertising on search engines.
The Digital News Publishers Association has alleged that more than 50% of the total traffic on news websites comes from Google and its algorithms, which direct a user to a particular website based on their searches, controlled by Google due to their dominance provided by an extremely wide user base for their search engine.
The News Publishers Association alleged that Google was also a major stakeholder in the digital advertising space and that it holds a dominant position and thus decides the amount to be paid to digital news creators for advertisements on their sites.
The association said that website publishers only got 51% of the funds given by advertisers for ads on their websites, implying that almost half of the advertising revenue of a website is lost due to Google’s policies. These can cause a great economic loss to smaller, more independent news channels, which may not have the financial backing or content reach that established news corporations have.
These unfair advertising rules, combined with increasing costs for news companies to train journalists, maintain websites, invest in production for providing credible news have increased the burden on news companies. Another contributing factor is the low number of people subscribing to news companies and lockdowns, which has led to the stunt of physical delivery and purchase of newspapers, impacting the news industry significantly.
The News Publishers Association also alleged that Google did not pay news channels fairly for using snippets of their content with opaque and arbitrary advertising revenue policies which did not give news publishers any say in the matter. This has been exacerbated by a substantial increase in zero-click results between January and December 2020, a time when the COVID-19 pandemic was at its peak and almost the entire population of the world was advised to stay in their homes.
Zero-click results mean that user queries were answered on the results page itself, from the snippets of information extracted by Google from news websites. This has led to a substantial loss of internet traffic to news websites, since many users had their queries answered by information aggregated by Google from the website, without ever visiting the website itself. The loss of users visiting the website leads to a loss in revenue from advertising, which can have disastrous consequences for news companies, especially in today’s sensitive times.
Keeping these instances in mind, the CCI gave its verdict that there existed a prima facie violation of the Competition Act on the grounds that some of the practices followed by Google with regard to digital news were unfair. This included not reimbursing news channels for content used in Google’s snippets, opaque and arbitrary advertising, and revenue rules for publishers, all of which would be probed via an investigation by the DG (Director General) by an order under Section 26(1) of the Competition Act.
The CCI also cited the case of Google entering into licensing agreements for using the content of French news publishing companies. This came after it was fined over $592 million in fines over the similar topic of data aggregation via snippets on Google.
A similar step can be followed by Google in India, where it can enter into a licensing agreement with the News Publishing Association to provide a fair reimbursement for using the data of digital news websites, which has been verified and a substantial time and data investment behind it, which would be beneficial for all the parties involved.