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Gannett, Google Lawsuit: What You Need to Know

The nation’s largest newspaper chain sued Google on Tuesday, arguing that the search giant’s dominance of the digital ad marketplace is suffocating the struggling local news industry.

The complaint by Gannett, filed in federal court in New York, alleges violations of antitrust and consumer protection laws. It’s just the latest challenge to Google and its parent company Alphabet on this front, following actions by the US Department of Justice, the government of Australia and even a group of small weekly newspapers from West Virginia.

In an article published in Gannett’s national newspaper, USA Today, the company’s CEO Mike Reed claimed that Google “has monopolized the markets for essential software and technology products that publishers and advertisers use to buy and sell ad space.” As a result, he wrote, even as browser numbers are on the rise, newspapers are reaping little of the $200 billion market for online ads.

“Gannett’s lawsuit seeks to restore fair competition in the digital advertising market that Google has destroyed,” he said in a separate press release. “Digital advertising is the lifeblood of the online economy. Without free and fair competition for digital advertising space, publishers cannot invest in their newsrooms.”

In a statement on Tuesday, Google Ads vice president Dan Taylor vehemently denied the claims made against the company.

“Publishers have many options to choose from when it comes to using ad technology to make money,” he said, adding that Gannett uses dozens of competing ad services. He argued that Google’s ad services allow publishers to keep most of their revenue.

Google’s competitors and critics have long accused Google of using its position in the advertising world to favor its own products over those of others. The advertising ecosystem is staggeringly complex, comprising hundreds of companies that offer a variety of services, such as helping design ads and tracking whether someone has clicked on them.

But over the course of two decades, Google has steadily expanded its footprint in the ad business by acquiring other companies—to the point where, unlike its competitors, it operates products at nearly every step of the advertising process, selling tools to both advertisers and publishers and also acts as an intermediary between the two. Today, it controls several of the world’s most important advertising platforms, including YouTube and Google Search.

In 2020, a group of state attorneys sued the company for using unfair practices in the space. Earlier this year, the Ministry of Justice followed suit with its own lawsuit. And last week, the European Union unveiled a separate complaint seeking to force Google to sell parts of its ad tech empire.

Two years ago, Australia led a push to get Google and Facebook — another formidable player in the online advertising market — to pay media organizations for all the links shared. In response, Facebook blocked all news sharing in Australia, and Google threatened to pull its search engine from the country. (Google later signed deals with major publishers there that helped it avoid the strictest parts of the law.)

HD Media, which owns several weekly newspapers in West Virginia, also filed suit against Facebook and Google two years ago — asking other news publishers to join what managing partner Doug Reynolds called a fight for “the future of the press, but also the preservation of our democracy.”

Los Angeles antitrust attorney Camron Dowlatshahi said the actions suggest companies are frustrated that they are unable to thrive in the digital age. “These companies depend on [Google] for their survival, he said. “And maybe they judge at this point that they are not able to survive.”

Omar Ochoa, an antitrust and class action lawyer, said the latest lawsuit by Gannett could “significantly increase the prospects” of the lawsuits by the states and the Justice Department.

Earlier this year, the New York Times went a different route, signing a deal with Google worth about $100 million over three years that allows Times content to appear on multiple platforms owned by Alphabet, according to the Wall Street Journal.

The Gannett suit comes as the chain faces a series of financial challenges, which many employees have blamed on Reed, the CEO. The company has closed or sold several newspapers since its 2019 merger with the GateHouse chain, which executives had touted for its cost-saving potential.

In August, the company announced a loss of $53.7 million on $748.7 million in revenue amid inflation and rising printing costs. Dozens of employees were laid off, including some who had been the last to work in their newsrooms.

This month, shortly after Reed touted the cuts and other “cost-control initiatives” that had saved the company millions, hundreds of employees across 24 Gannett newspapers walked off the job and decided not to show up, losing pay and assignments . Their strike aimed to spotlight budget cuts and increase pressure on shareholders to vote no confidence in Reed.

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