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Publishers must focus on Microsoft as Google begins killing them with code

The 20-year slow drip of Google monopoly and publisher myopia is ending, and now the search giant is getting nasty to try to stay ahead. This opinion piece was first published on Future Media’s Substack and is republished with kind permission of the author Ricky Sutton.

A few years ago, Australia’s Fairfax Media was envied as a progressive publisher that pushed the digital envelope from its eye-catching headquarters on Sydney’s harbour.

Executives and directors openly boasted of being the best digital publisher in the world. I was part of the leadership team, and I watched, and listened.

My desk overlooked a park where colleagues played football at lunchtime, and locals walked their dogs. On the far side was Google’s offices. And I was troubled.

One day, I gathered the Fairfax commercial team together and asked them who they worked for. A long and baffled silence followed.

I explained: “I watch you arrive every day and log into Google. You check your Google stats, then check your campaigns are delivering, again using Google’s data.

“Then, you author reports to show how we are performing, citing Google as the source of truth.

“Later, our 80-strong direct sales team will spend the day preparing decks for ad clients filled with pages of facts from Google, which you believe without challenge.

“Those clients are then promised their campaigns will be run in Google’s ad server, because their internal marketing teams, or external agency, use Google too.

“Then, behind us just over there, are our ad ops and programmatic teams. They twiddle dials and knobs to manage campaigns using Google ads, and Google tools.

“The outcome is that everything we do here, every dollar we earn, we do through Google. Or put another way, we do for Google, as they take a clip on everything

“Your salaries come out of our P&L, yet you spend every minute working in Google. You only use Google tools, Google data, and we pay them every step of the way.

“So, can you understand why I might think that you actually work for Google?”

There was a lot more silence, some surprise, several angry jitters, as well as some grudging agreement.

The trillionaire paperboy

Viewed through my lens, publishers spend fortunes on creating the stuff that people want and earn peanuts for it. The techies who distribute it, bag trillions.

Does that add up? Or has a 20-year slow drip of Google monopoly and publisher myopia inverted the economics of creativity and delivery?

In my view, Google has been allowed to become a trillionaire paperboy. Plain and simple. And finally, I’m not alone.

Governments are waking up, and sometime next year, this will be the keystone of Google’s third antitrust action. I’ll be there to watch and report.

People who know me know I have a love hate relationship with Google. I hate them. They love bomb me to try to shut up.

On rare occasions, they have tried to explain themselves. Here are some examples.

  • “Ricky, think of Google as a giant bear. We love you, but we are so big we just can’t help killing entire industries sometimes. Imagine we’re in bed together, and in the night, I roll over and accidentally smother you. I didn’t mean to. I’m distraught, but that’s what we’re like.” No joke, no irony, and said with an empathetic smile.

This next one was more recent when an exec rang me from Google HQ.

  • “There’s a debate within Google. Some believe we should be nicer and find a way to create a sustainable future with publishers so we can avoid antitrust and carry on for 30 more years. Others believe that it’s inevitable that antitrust will break us up, so our focus must be on making as much as we can while we can.”

The truth is that you can’t blame Google for this. CEO Sundar Pichai is ex-McKinsey, and Google is a listed for-profit company with demanding shareholders. It does amazing work, has created world changing products, and generated trillions in value.

The buck stops at antitrust

Playing nice cannot be allowed to trump their profit motive, so the buck only stops at antitrust, which is what the law is for, and that is the main point of this post.

Publishers need to wake up to the danger they are in. This is a race for survival, because Google can feel the antitrust clock ticking, and it is tightening its noose.

One of the few publishers systematically tracking how Google is using its algorithms to influence publishers is the UK’s Press Gazette.

It reported this week that US and UK news publishers have been “profoundly affected” by a string of Google search and Discover updates since September.

They have been “noticeably more impactful” than previous updates, and the pace they are being rolled out is very clearly accelerating.

One publisher said they “simply disappeared” from some search after the November update. “The business has completely collapsed. Years of hard work turned to ashes.”

Press Gazette reported a survey of 150 global publishers that saw:

  • 73% experienced their Google Discover traffic dropping to zero.
  • 72% of articles disappeared from Google’s Top Stories, and
  • More were downgraded in Google News.

“Websites with a focus on scale, built with SEO articles, appear to be among the hardest hit,” it reported.

Let’s be real. This is Google systematically shifting from being a search engine into becoming the publisher of all content on the web.

A publisher homicide

And it is not an update. It’s what Danielle Coffey, CEO of the News/Media Alliance trade group, described as “a homicide” for publishing.

Google would most likely have avoided being so provocative were it not for two unprecedented threats to its 20-year dominance: Antitrust and AI.

Most analysts believe Google will lose its recently concluded search antitrust case. It has another trial over the app store underway, then the ad case next year.

And they are falling further behind on AI. Microsoft’s masterstroke to take control of OpenAI after the board shenanigans has only increased the pressure on Pichai.

With antitrust out of their control, and AI a must-win-or-wilter proposition, Google’s gloves are off, and anything goes.

That means that publishers simply cannot rely on ads to fund their future, and as subscriptions plateau, they urgently need a Plan B.

For me, that’s Microsoft.

CEO Satya Nadella has the whip hand on AI and the future of content and distribution through OpenAI and ChatGPT.

He recognises that he needs publisher partnerships to build it better than what he described as “Google’s web” which is now beginning to show its age.

Here’s a model for how AI can be the gamechanger of a generation for publishers.

  1. Publishers remove themselves from Google search. There’s no reason to resist now, Google is doing it for them anyway.
  2. Publishers provide their content exclusively to Microsoft under an annual licence fee of $1 billion a year. Here’s why it is $1 billion.
  3. They then hitch a ride on Microsoft’s AI rocket by being paid each time ChatGPT is queried on relevant content. This is how to do that.

This refloats the publishing industry for the AI era with a Big Tech partner that has a personal stake in their ongoing success.

The outcome is a win win win:

  • The consumer gets the content they want and knows where it came from.
  • Microsoft builds trust into its GenAI vision, which makes its products more valuable, and
  • Publishers are paid a sustainable wage for what they do best and make more.

Everyone wins. Except Google, and this is why I don’t care.

Remember those lovely Fairfax offices I mentioned earlier?

Soon after my questions made the commercial team so uneasy, Fairfax signed an exclusive deal with Google to sell all their ads. Many in the sales team were let go.

I’d left by then, but I watched as Google moved a small team into the building, then grew it, then they took over a floor (and moved in a train carriage as a gimmick).

Then they expanded to more floors, before they finally pushed Fairfax out altogether.

It’s how a monopolist works. It’s time to wake up and realise that failure cannot end if change is not allowed to start.

Ricky Sutton
Author of Future Media, Founder at Oovvuu

Ricky Sutton is an award-winning journalist, news executive, tech leader and founder of global video AI leader Oovvuu. He has spent his career reporting the news to hundreds of millions of people and building innovative technologies for news media and Big Tech. His Substack, Future Media, is a newsletter that experiments, shares, and teases out what’s next for news sharing.