The only thing worse than a Big Tech company having a monopoly on the online advertising market would be if that same Big Tech company teamed up with the government to pour money into what they both consider to be real “journalism.”
This was proposed in California last week.
Google is a monopoly. A federal court found earlier this month that Google has a monopoly in online search, and another federal court rejected Google’s attempt to avoid a trial on whether the company also has a monopoly in the online advertising market. That trial will begin on September 9. Considering that Meta and Google together control 60% of all online advertising dollars, the outcome of this trial does not look good for Google.
Enforcing antitrust laws in federal court takes time, and Google has enough money to drag out cases and appeals for years. At the federal level, Congress has tried to legislate to repair the damage caused by Google’s monopoly on online advertising, but the tech giant has spent millions of dollars on lobbyists to thwart those efforts.
Google owes its power over online advertising to its purchase of DoubleClick in 2007, which allowed the search engine monopolist to infiltrate as an intermediary between online advertisers and publishers. As one Google executive put it: “The analogy would be if Goldman or Citibank owned the New York Stock Exchange.”
By abusing this market power, Google can capture half of all online advertising dollars. This means that if Dave’s Donuts spends $1,000 on advertising in the online version of the Dayton Daily NewsGoogle receives $500 and the newspaper receives $500. Thanks to Google’s rent-seeking, news organizations’ revenues have fallen dramatically.
The Journalism Competition and Preservation Act would have created a temporary antitrust haven for publishers, including the Washington Examinerto work together and negotiate a fair advertising contract with Google and Facebook. Similar laws have been successfully passed and implemented in Australia and Canada.
California Democrats introduced their own version of this bill last year, the California Journalism Preservation Act. Again, Google fought back with lobbyists, and again the lobbyists won.
This time, however, Google did not simply defeat the law, but instead struck a deal with California Democrats that is far worse for journalism and democracy.
Under the agreement, Google and Meta would each send $55 million to the University of California, Berkeley, over five years. California taxpayers would then contribute $70 million. UC Berkeley would use that money to award grants to local news organizations, particularly those serving “news deserts” and “underserved and underrepresented communities.” In other words, left-wing professors at a left-wing university would funnel the money to left-wing organizations that support the Democratic Party, which already controls every statewide office in California.
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Governor Gavin Newsom (D-Calif.) is excited about the deal because, he said, it “not only secures funding for hundreds of new journalists, but also helps build a robust and dynamic California press for years to come.” Of course, a slush fund funded primarily by the largest technology companies would actually only give the Democratic Party a “robust and dynamic” news machine.
California Republicans have little hope of defeating this Google-Meta-Democratic cartel. But this outrageous conspiracy should spur conservatives to redouble their efforts to pass the Journalism Competition and Preservation Act, which would repeal California’s outrageous legislation.
