There’s an old maxim in the news business: Stories in which a dog bites a man are uninteresting. But a man biting a dog? Now that’s worth writing up!
Last week Google released a report on the value of news to its business. Its conclusions minced no words. Here’s the money quote: “…news content in Search has no measurable impact on ad revenue for Google.”
On first glance, Google’s experiment feels like a Dog Bites Man story – everyone knows news doesn’t drive advertising revenue – hell, I lived that truth most of my career, most recently with The Recount, which attempted to convince advertisers to support high-quality news coverage across video and social media (we couldn’t). But look a bit closer, and you might just see a Man Bites Dog story after all.
To understand why, we’ll need to go into a bit of background (those of you already deep in this story, you can skip the next few grafs.) The news business has had a tortured relationship to the tech industry for decades – first as it attempted to adapt to the Internet, then as it realized in doing so, it had been disintermediated, first by Google, and later by social media (and Apple’s iOS). The reasons for the news’ industry’s decline are too numerous to review here, but the results are clear: Overall, the sector is losing outlets, practitioners, revenue, and audience.
This has caused considerable alarm both inside the industry and within (certain) governments. The most notable of these is the European Union, which passed legislation in 2019 that mandated Google (and other intermediaries) share revenues with the news industry (the specific portion of the law that impacts Google’s revenues is Article 15, also known as “the snippet tax.”)
Google claims that when it shows a portion of a news article to its users, it’s doing both the user and the publisher a service. Publishers claim that by showing that snippet, Google subverts their business model, poaching the customer’s attention, relationship, and resultant revenue that the publisher would otherwise enjoy.
To prove otherwise, Google’s report details an experiment (PDF download) that, for 1% of its users, removed all European news content from Google’s Search, Discover, and News products over a period of roughly three months. The idea was to determine whether the loss of this content had any impact on Google’s overall revenue.
The answer, as we’ve already seen, is no.
Despite being passed more than five years ago, implementation (read “how money will change hands”) of the EU legislation is still being negotiated. Google’s report is intended to impact those negotiations with “proof” that a snippet tax is based on faulty logic. How can you tax Google for stealing news revenues when news generates no revenue for Google?
This is where the story veers into “Man Bites Dog” territory. Google’s logic seems straightforward. But its argument is a classic example of a false dilemma (with a side of grading-your-own-homework tossed in for good measure).
Sure, Google might not make money from news. But is news worthless to Google? Hardly. To the assertion that news has no value because news doesn’t add revenue to Google’s bottom line, I call bullsh*t.
Let’s start with the fact that Google has not one, but two major products that depend on “news.” (So does Apple, for what it’s worth). Both companies even call their product News! Google’s second product is Discover, which for those of you who aren’t on Android phones, is the river of stories that comes up when you “swipe right” from the home screen (it’s also known as “left of home.”) Both News and Discover are massive engagement honeypots for Google. They might not drive a ton of direct advertising revenue, but they are crucial to both companies’ overall product satisfaction. Why would either Google or Apple even build and maintain these products if “they have no value?” The answer is they wouldn’t.
If you dig into the data that came out of Google’s experiment, you can see why. Daily Active Users (DAU) remained constant for Search users, but declined significantly – nearly 6% – for the company’s Discover product. Put another way, when Google yanked “real news” out of its Discover product, a fair number of people stopped using it. That didn’t happen with Search (down just .77%) or Google News – which in fact showed a significant uptick of 1.54%. Why?
Well, as a serious user of all three products, I have a pretty strong opinion. As it stands today, Discover is a crappy, ad-filled Instagram clone, only with more news content (Instagram and its parent Meta have spent the past few years eliminating fact-checking and down-ranking news in its feeds). The only reason I engage with Discover is for the often-pleasant surprise of a news story that is relevant to me. Take those out, and I’d use Discover a lot less.
Google’s News product, on the other hand, is filled with mostly “quality news” stories (and no ads). Take out all the European news, and what do you have left? Well, loads of content from non-EU based news publishers, as well as any engagement bait that makes it through Google’s “real news” filters.
In effect, Google “Instagram-ified” Discover when it eliminated all reputable European news, and it also “globalized” its News product (and likely added a side of clickbait). Users were likely initially confused by this, but they acted rationally: Those who went to Discover because it featured European local news started to abandon the product.
Those who went to Google News, on the other hand, found other reputable news sources (there are plenty) and probably didn’t notice the lack of local news, at least initially. They might have even enjoyed seeing stuff they usually miss, given their European identities. But one thing is certain: They went to a site dedicated to news, and they got news.
It’s hard to say exactly what happened here, because the report didn’t go into much detail. But Google did report where people went after they engaged with these two lobotomized products. The top outbound domains were, according to a footnote in the report: youtube.com, infobae.com, facebook.com, wikipedia.org, and pinterest.com. This makes sense. YouTube is fast replacing traditional news as an information source. Infobae is a fast-growing Spanish-language news site based in Argentina. That probably explains what happened in Spain. Facebook? Anybody’s guess what that’s all about, but since I’m writing this post, I’m going to guess Facebook’s famous engagement bait won the day there. Wikipedia is a famously trusted source of truth on the Internet. Pinterest?! ¯\_(ツ)_/¯
Pulling back, I think it’s fair to say that Google’s experiment falls somewhere between “vaguely well-intentioned” and “deeply cynical.” The company set out to prove something it already knew: It makes almost no direct revenue from news content. But it spun the resulting data into a narrative that it believes will allow the company to avoid sharing revenue with real news outlets under the EU directive.
“In other words,” Google’s report concluded, “the experiment worked as intended.” Yes, Google, it did.
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