The post Google’s $250 Million ‘Gift’ to California News – Is It Really a Gift or Just a Clever Tax Dodge? appeared first on AdMonsters.
]]>In what could only be described as a Hail Mary pass, Google has agreed to cough up $250 million over five years to fund journalism and AI research in California. This deal was announced with much fanfare, and some might say a dash of self-congratulation. But before we start throwing confetti, let’s take a closer look at what’s really going on here.
On the surface, this deal looks like a lifeline for local journalism. California’s newsrooms have been on life support for years, hemorrhaging jobs and revenue as the digital era reshaped the media landscape. The fund, administered by UC Berkeley’s Graduate School of Journalism, promises to inject much-needed cash into these struggling institutions.
It helps Google paint itself as the savior of the free press while avoiding a dreaded “link tax” that could have forced the tech giant to pay publishers for linking to their content. This brings to mind California’s Journalism Preservation Act, which proposed to make Big Tech pay for news.
But here’s the kicker: $250 million over five years sounds like a lot until you consider that Google’s ad empire rakes in over $200 billion annually. To put it bluntly, this deal is a drop in the ocean for Google — a PR move dressed up as corporate responsibility.
For years, publishers have watched in horror as their ad revenues dried up while Google and Meta (Facebook’s parent company) turned into digital juggernauts. The relationship between tech platforms and news publishers has always been lopsided. Publishers create the content that drives traffic, but the platforms get the lion’s share of the ad dollars. This new deal doesn’t change that dynamic; it merely delays the inevitable.
The idea of a “link tax” has been gaining traction globally, with Australia and Canada leading the charge. In those countries, Google and Meta were initially resistant, but eventually, they caved — well, sort of. In Australia, Google opted to pay selected publishers, while Meta briefly blocked news altogether before returning to the table. In Canada, Google agreed to pay $74 million annually to keep news content in its search results, while Meta decided to go the nuclear route and block news links entirely. The global push for Big Tech to pay for news mirrors what’s happening in California.
Google’s deal with the state allows the tech behemoth to avoid the more stringent regulations that would have come with the now-shelved CJPA. The CJPA would have forced Google and other tech giants to hand percentages of their ad revenue over to news publishers. Instead, we get a voluntary fund that’s easier for Google to swallow and far less beneficial for the publishers who need it most. The CJPA could have significantly shifted the balance of power, much like similar legislation in other regions.
Then there’s the $62.5 million earmarked for AI research. Let’s not kid ourselves — this deal might seem like a bonus, but it’s worth asking whether it is really about saving journalism. Could it be more about Google bolstering its AI capabilities under the guise of public good? While the idea of using AI to solve “real world problems” sounds noble, including AI funding in this deal is more about securing Google’s future dominance than helping the news industry.
As Google continues refining its AI-driven search features — like its Search Generative Experience — publishers are experiencing a decrease in traffic from organic search results, directly impacting their revenue. The rise of AI in search is reshaping the landscape, with AI-powered engines like Perplexity.ai offering revenue-sharing models that starkly contrast Google’s approach.
Google’s move to include AI in this deal is less about journalism and more about maintaining its dominance in the search market. As Scott Messer recently pointed out in his analysis of Google’s latest SEO shake-ups, Google is playing a different game altogether. The company is not optimizing for sending traffic to publishers; instead, it’s focusing on maximizing its ad revenues, often at the expense of the very content creators it claims to support.
Critics, including journalists and labor unions, have called out the deal for what it really is: a backroom agreement that benefits Google far more than it does the struggling newsrooms of California. The Media Guild of the West, representing journalists in Southern California, Arizona, and Texas, was notably excluded from the negotiations, leading them to denounce the agreement as a “shakedown.” This isn’t the first time Google has been suspected of using its financial might to navigate legislative pressures.
For publishers, this deal is a double-edged sword. On one hand, any funding is better than none, especially in an industry that’s been in a death spiral for years. On the other hand, this deal sets a dangerous precedent. By allowing Google to dictate the terms of its support for journalism, California has effectively ceded control to a tech giant with little incentive to change the status quo.
Publishers should be wary of becoming too dependent on these kinds of deals. The digital landscape is shifting rapidly, and while Google’s money might keep some newsrooms afloat for now, it won’t fix the underlying issues that have led to the decline of local journalism. With AI companies like Perplexity.ai and OpenAI entering the scene with revenue-sharing models, publishers might need to start exploring these alternative sources of revenue to stay afloat — or, maybe not. The real solutions could lean more towards finding sustainable business models that don’t rely on the whims of Silicon Valley.
So, what’s the takeaway? Google has once again managed to sidestep regulation while presenting itself as a benefactor of the public good. The $250 million might help some newsrooms in the short term, but it does little to address long-term challenges. This deal is more of a Band-Aid than a cure.
As the dust settles, it’s clear that Google got the better end of this bargain. By agreeing to a voluntary fund, the tech giant has avoided the much larger financial obligations that would have come with the CJPA. Meanwhile, California’s newsrooms are left to grapple with an uncertain future, their fate still largely in the hands of the very platforms profiting from their decline.
In the end, this deal is a stark reminder of the power imbalance between tech platforms and the news industry. Until that changes, we’re likely to see more deals like this — ones that look good on paper but ultimately fail to address the real issues at play.
The post Google’s $250 Million ‘Gift’ to California News – Is It Really a Gift or Just a Clever Tax Dodge? appeared first on AdMonsters.
]]>The post Back to the Future of Search: Google’s Loss In The Search Antitrust Trial Unlocks Innovation appeared first on AdMonsters.
]]>Twenty-five years ago, search transformed the digital world.
At its inception, Google was a fledgling company that revolutionized the Internet with its search engine. It built and expanded its empire thanks, in part, to the ruling in the antitrust case against Microsoft. The tables have turned today, and Google is on the other side of the bench.
In early August, Google’s loss in the search antitrust case decision marks a landmark moment for the search industry. As it stands, Google forces user searches to be funneled to its search results page, squashing innovation and extracting tens of billions from search advertisers and publishers in the process.
The industry now awaits proposed remedies to bring competition to the search market. The door is finally open for browsers and other search properties to innovate and improve the consumer search experience in search advertising by shaping consumer intent.
In 1998, Larry Page and his Stanford friends invented a brilliant search engine that allowed anyone with a web browser to access relevant results to any query instantly and for free. Google now dominates search and most of Big Tech.
At the time, the company’s algorithms were so much better than competing search engines that the word “Google” became a verb that was, and still is, synonymous with “search.”
As Google grew, went public, and eventually added free software like Gmail, Maps, and Chrome, it extended its digital advertising empire. At the time, the only losers seemed to be the news and editorial publications who traded analog ad dollars for digital pennies when they raced to give away content for traffic.
However, to grow search ad revenue, Google began locking out competitors, raising ad rates, and extracting value from the user experience. As it extended its monopoly into new markets over the last ten years, Google’s search revenue has grown fivefold.
Google’s stronghold on the search advertising market is largely due to its exclusive search distribution contracts, which force partnerships like Apple to outsource search experiences to Google, making it the default search engine.
Conversely, “Search on the Open Web” is when a person searches for relevant results outside the search engine, such as on the homepage of a privacy browser like Firefox or through a shopping app like Klarna. In 2023, the size of the Open Web search advertising market was $90-100 billion. Over 90% of that revenue went to Google, according to evidence revealed in the U.S. v. Google antitrust trial.
Judge Amit P. Mehta of the U.S. District Court for Washington D.C. determined that Google’s exclusivity prevents the largest Open Web search properties from controlling ad selection or experimenting with their results. The tech conglomerate is also guilty of removing search results and ads provided by Google.
Now that Google has been found liable, the door to competition, innovation, and experimentation has opened. Most importantly, the consumer will benefit because the industry is entering a new era of curated search results.
Search on the Open Web opens the door to innovative, generative AI solutions. When Open Web search properties compete to experiment with search, consumers benefit from a more modern, personalized, relevant, and dynamic experience. With a curated search experience, users can find the best result or offer from the browser or property they are searching on and skip the SERP altogether.
Google’s exclusivity contracts currently prohibit this innovation. As a result, Open Web search properties generate less than 10% of total Open Web search revenue. Today, few Open Web search properties can refuse to forgo Google ad revenue altogether — but that is poised to change.
The Court is poised to require Google to compete in search to create incentives for open Web search properties to innovate the search experience. Breaking Google’s exclusivity would bring transparency and efficiency to advertisers, as publishers could show their search results or ads or curate those from direct sources.
Whether it’s privacy search or Generative AI, everyone from DuckDuckGo to Apple Safari to your favorite shopping app could show Google and their own search results and make revenue from their search media.
For advertisers, tens of billions of dollars in wasted ad spend is at stake – as well as the return of transparency and control over their budgets. With Google’s exclusivity deals prohibited, these advertisers can “go direct,” reducing costs and gaining transparency.
Search on the Open Web will more effectively serve the needs of consumers in today’s increasingly fragmented and modernized search journey.
The Court’s decision suggests that it will fashion the remedy most likely to create competition in the search results and ad markets, similar to the Microsoft remedy in the early 2000s.
A potential structural remedy, such as the divestiture of Chrome and Android, would incentivize Google to participate in search markets where competitors produce innovative user search experiences and deliver transparency and efficiency to advertisers.
However, the remedy phase plays out, and one thing remains certain: the future of search will be built around valuable moments of consumer intent that can open up the market for $500 billion in consumer spending.
The post Back to the Future of Search: Google’s Loss In The Search Antitrust Trial Unlocks Innovation appeared first on AdMonsters.
]]>The post Surviving the SEO Shake-Up: Publishers vs. Google’s New Game appeared first on AdMonsters.
]]>Is Google Search broken? Definitely not, and that’s the wrong question to ask.
Two weeks ago, a beleaguered product review site, HouseFresh, dropped an update about their battle, and frustration with Google Search and the state of SEO competition overall. Similarly, SEO experts like Lily Ray and Glenn Gabe have been documenting the rollercoaster of the latest algorithm updates that have walloped publishers across the board.
We are all used to competition and tough days, but it is impossible to prepare for the agony of a foundational shift. The speed of change is accelerating, so it may be helpful to climb a bit higher on the mountain and gain some perspective. Here are my takeaways:
And that’s the hardest part. Everything that publishers have held holy about traffic is suddenly upside down. The traffic walls are closing in, and few exit routes are available.
For most of us, the rules of the traffic game are set by the search and social platform giants. We spent countless hours obsessing over the Facebook and Google Search “guidelines” to find exploitable advantages. When the preferences of these benefactors shifted whimsically, publishers were quick to adapt, pivot, or die.
Publishers learned early that building empires on borrowed traffic was risky, but compared to social media’s turbulence, Google felt like a predictable bedfellow. Conquering search was hard but meaningful. It was an artful dance of scaling quality content, or at least being of enough quality to win a coveted first position on a search results page. It was one of the few areas in digital publishing where your “library” held a residual value.
We live in a relatively free capitalistic society, and as such, anyone is allowed to enter the ring and play the game. Kudos to my publisher comrades for finding that angle, that wedge, that thing that made your scale possible. Perhaps we were jealous of those gains, but we were never mad at you for doing them.
As Brian Morrissey so eloquently put it, everything in media is a “racket.” The pursuit of traffic is a hustle, and the monetization of that traffic is a racket. It’s survival of the fittest, but fitness is subjective to the rules of the game.
Desperate for success and strong on the scent of promised pageviews, publishers doubled down on perilous traffic games. Some flourished in influencer videos, native articles, social games, or long-tail SEO. Some ended in a bang, but many are bleeding out from a thousand paper cuts. Yet, scores of publishers find a way to carry on.
This publisher resiliency, however, comes at the price of polluting our resources. The distribution platforms (search, social, reader apps) are curators of content, responsible for delivering its customers an experience far from the garbage of the web. But we can’t have nice things, and we tilted these platforms beyond their intended capabilities. So did we break Google Search? Not really, but kinda.
The Pandemic broke Google Search. The recent SEO content explosion and resulting chaos were a perfect storm that Google wasn’t ready for. The surge in online shopping meant the world needed a gazillion more “best of” articles, and every gadget needed a review. Simultaneously, scaled SEO tools were being democratized, enabling just about anyone to find the right topics and keywords for expansion or attacking competitors. Throw in some zero-interest financing, AI-powered content generation, SEO-threadbois and a social-traffic squeeze, and you get an unmitigated overgrowth of…crap.
The Tsunami of Crap, however, is part of a much larger weather pattern known as “the Enshittification.” By that logic, Google’s prerogative to dominate the ads business may summon its demise. The internet’s recent pivot to SEO ushered in hundreds of high-powered competitors of varying quality to the SERP battles. Content volume was metastasizing at unfathomable rates, and it was harming the utility of Google’s search results. Searchers resorted to manually adding “in Reddit” to queries or leaving Google entirely and using non-Google AI chatbots. I don’t think Google panics very often, but I’m pretty sure someone said, “I think we have a problem.”
In typical fashion, the Google Search team rolled out a steady barrage of ranking algorithm updates. They prioritized Reddit and Quora posts and other pre-filtered sources like Instagram and Twitter. Google launched Search Generative Experience(SGE) to stem the tide and flex some anti-competitive muscles. In their latest rounds of updates, Google handed out the dreaded manual action to publishers, a certain death knell for most.
Unphased, Google marches forward, as if this were all part of the plan. Amidst the chaos, the revenue teams were busy carving up the SERP page. Ads, SGE, and more ads.
Google is playing a fundamentally different game than everyone else in Search. Without a doubt, Google’s top prize is its “Google Ads” products. They are optimizing for their outcomes, which explicitly do not include sending traffic to publishers.
If you think that Google is optimizing for making revenue on your GAM account, think again. In 2023, Google pulled in 56.9% of its ad revenue ($175 BILLION) from “Google Search & Other,” and only 10.2% of revenue ($31 billion) from the Network.
They gained $12.6 billion in Search revenue YoY, and only lost $1.5 billion in the Google Network. Google footnotes that the “The overall growth [in Search & other revenue] was driven by interrelated factors including increases in search queries resulting from growth in user adoption and usage on mobile devices; growth in advertiser spending; and improvements we have made in ad formats and delivery.” (emphasis mine)
Got that last part? You’re not going crazy. Total search queries are up, traffic to publishers is down, and Search revenue is up. Google is here for the ads, their own ads.
Google Ad’s job is to sell products and take credit for it. Google will fight relentlessly to disintermediate anything that stands between a user and the product Google is promoting on behalf of a paying client. Generative AI searches will do this very well, as the service will synthesize myriad sources (including Reddit) to return a sourceless result and a well-placed carousel of ads. Raptive posits that SGE will cost creators $2B in revenue, and others predict traffic losses of 10%-25% and higher by 2026.
In a recent interview on Bloomberg Originals, Google CEO Sundar Pichai discusses the shift in search and answers if Google Search is broken. Spoiler alert: he doesn’t think it’s broken but he does acknowledge that the AI boom created a glut of content and it’s Google’s responsibility to provide users with a quality experience.
It’s not about digital web publishers. Consumers are Google’s customers, and advertisers are their clients – everyone else is just expendable. HouseFresh is right about many things, especially that “Google doesn’t owe HouseFresh traffic.” Despite all that publishers, content creators and the general public have given to Google (ahem, structured data), Google doesn’t owe any of us anything.
A media company’s mission is to create and monetize their intellectual property. Under that lens, there is so much possibility, but it all starts with good IP and a plan. Endurance comes from adaptability. And that’s the hardest part.
It’s not easy to just uproot your business and find a new game to play, let alone be successful at it. Not everyone can be a direct traffic destination, and not everyone has the momentum to upstart a newsletter business. Sure, there are successful media companies that found a different game at their inception, but it’s unreasonable to expect that everyone can find a new niche.
I am truly empathetic for brands that will not survive, and I know that journalism, fair democracy, and so much more are at stake here. The internet is forever, but how it works will always change. But humans crave information and diversion, and thus media will endure.
As creators, we must always look forward and anticipate change. Make unforeseen pivots a planned part of the business plan. We must make investments based on their future return value, not based on justifying the sunk costs of our past. Let it go.
It’s time to take a long look out on the horizon and start to chart your new course. It’s out there for us, but we must work hard to find it. Godspeed to all.
The post Surviving the SEO Shake-Up: Publishers vs. Google’s New Game appeared first on AdMonsters.
]]>