The only thing worse than a Big Tech company having a monopoly on the online advertising market would be for the same Big Tech company to join forces with the government to send money to what the two of them decide is proper “journalism.”
That is what was proposed last week in California.
Google is a monopoly. A federal court held earlier this month that Google has a monopoly in online search, and a different federal court rejected Google’s attempt to avoid trial over whether the company also has a monopoly in the online advertising market. That trial will begin Sep. 9. Considering that Meta and Google together control 60% of all online advertising dollars, the outcome of that trial does not look good for Google.
Enforcing antitrust laws through federal courts takes time, and Google has all the money in the world to drag out cases and appeals for years. At the federal level, Congress has sought to address harms inflicted by Google’s monopoly power in online advertising through legislation, but the tech company has spent millions of dollars on lobbyists to defeat this effort.
Its power over online advertising comes from its purchase of DoubleClick in 2007, which let the search engine monopolist insert itself as a middleman between online advertisers and publishers. As one Google executive described it, “the analogy would be if Goldman or Citibank owned the New York Stock Exchange.”
Using and abusing this market power, Google is able to skim off half of all online advertising dollars. This means that when Dave’s Donuts spends $1,000 to advertise in the online version of the Dayton Daily News, Google gets $500 and the paper gets $500. Thanks to Google’s rent-seeking, revenue for news organizations has declined dramatically.
The Journalism Competition and Preservation Act would have created a temporary antitrust safe harbor for publishers, including the Washington Examiner, to work together and negotiate a fair advertising deal with Google and Facebook. Similar laws have been successfully passed and implemented in Australia and Canada.
California Democrats introduced their own version of this law, the California Journalism Preservation Act, last year. Again Google fought back with lobbyists, and again the lobbyists won.
This time, however, instead of just defeating the legislation, Google struck a deal with California Democrats that is far, far worse for journalism and democracy.
Under the agreement, Google and Meta would each give $55 million over five years to the University of California, Berkeley. California taxpayers would then chip in $70 million. UC Berkeley would use this money to give grants to local news organizations, particularly those serving “news deserts” and “underserved and underrepresented communities.” In other words, leftist professors at a leftist university would sluice the money to leftist organizations that support the Democratic Party, which already controls every statewide office in California.
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Gov. Gavin Newsom (D-CA) loves the deal because, he said, it “not only provides funding to support hundreds of new journalists but helps rebuild a robust and dynamic California press corps for years to come.” A slush fund funded mainly by the largest tech companies would actually, of course, only yield “a robust and dynamic” messaging machine for the Democratic Party.
California Republicans have little hope of defeating this Google-Meta-Democratic Party cartel, but this egregious plot should spur conservatives to redouble their efforts to pass the Journalism Competition and Preservation Act, a law that would supersede California’s outrageous legislation.