Gannett, the largest newspaper chain in the United States and the publisher of USA Today, has initiated legal action against Google, alleging that the tech giant has monopolized ad technology and is seeking to dominate the online advertising industry. In a complaint filed in a federal court in Manhattan, Gannett, which owns more than 200 daily newspapers, claims that Google’s control over tools for buying and selling online ads forces publishers to sell ad space at lower prices to Google, thereby enabling the Alphabet-owned company to generate “exorbitant monopoly profits” while causing significant revenue reductions for publishers and its ad technology competitors.
Gannett’s CEO, Mike Reed, emphasized the vital role of digital advertising in the online economy and argued in an op-ed published in USA Today that “without free and fair competition for digital ad space, publishers cannot invest in their newsrooms.” The lawsuit seeks substantial damages, including actual, punitive, and triple damages, as Gannett aims to address what it perceives as an unfair advantage held by Google in the advertising market.
Google Ads Vice President Dan Taylor responded to the allegations made by Gannett, stating that the claims are baseless. Taylor argued that publishers have multiple options available to them in terms of advertising technology and that they retain the majority of their revenue when they choose to use Google’s services. This lawsuit adds to the existing legal pressure on Alphabet, Google’s parent company, which is already facing regulatory scrutiny in various jurisdictions. On June 14, the European Union filed a similar lawsuit against Google, indicating that the company may be required to divest some of its ad technology. Furthermore, the US Department of Justice, along with 17 states, previously initiated a separate case against Google, while another group of states led by Texas is also pursuing legal action.
In 2022, Google’s advertising revenue reached $224.5 billion, accounting for around 80 percent of Alphabet’s total revenue and playing a significant role in generating Alphabet’s $60 billion profit. The income generated from advertising enables Google to provide a range of free services, including email, Android, and a significant portion of its YouTube video platform. During the first quarter of this year, Google’s ad revenue remained stable at $54.5 billion compared to the previous year.
Gannett, based in McLean, Virginia, has faced similar challenges as other newspaper publishers due to the decline in advertising revenue. With approximately 86 percent of Americans now consuming news online, Gannett has experienced a decline in print circulation, which dropped by nearly 20 percent in 2020 and 2021. This has led to the closure of over 170 publications since its merger with GateHouse Media in 2019. While the digital advertising industry has grown significantly, reaching a value of $200 billion (almost eight times its 2009 value), newspaper ad revenue has experienced a steep decline of nearly 70 percent during the same period.
Following the completion of its merger in November 2019, Gannett’s stock closed at $1.86 recently, reflecting a significant decline of 70 percent.
