GoogleClaims about the value it creates for UK news publishers are “false”, a leading academic specializing in the digital economy has found.
While the news sector is estimated to generate up to £850m in revenue for the tech giant, Professor Annabelle Gawer estimates that it generates less than £75m a year in return.
In an article published today by the News Media Association, she argues that a much higher figure previously cited by Google was unreliable because it was based on outdated research.
Professor Gawer, director of Surrey’s Center for the Digital Economy, said it was also likely to be substantially lower because the quality of web traffic that the search engine provided to news publishers had become less and less valuable.
The findings are being billed as laws to empower a new online regulator to control the domain of tech giants like Facebook and Google that return to Parliament tomorrow.
The Google logo is seen during the annual Google I/O developer conference at the Shoreline Amphitheater in Mountain View, California on May 10, 2023.
Google CEO Sundar Pichai speaks onstage during the Google I/O main session at the Google Developer Conference in Mountain View, California on May 10, 2023.
One of the purposes of the new Digital Markets Unit is to ensure that media companies receive fair and reasonable compensation from the platforms for the distribution of their content.
The calculation of this payment will be based on accurate estimates of how much value news publishers and technology platforms bring to each other, Professor Gawer said.
Owen Meredith, chief executive of the NMA, which represents local, regional and national publishers, said: “For years publishers have had to operate in completely unfair circumstances where they are forced to accept unfair and unequal payment terms from technological platforms.
‘It’s time for this to end. With the publication of the Digital Markets, Competition and Consumers Bill, we have an opportunity to correct the balance and offer a fair reward for news publishers, paving the way for a truly sustainable future for high-quality journalism.”
Conservative MP Damian Collins said similar measures introduced in Australia helped “save smaller news titles and allowed publishers to recruit more journalists”. The former online safety minister, who is running to be chairman of the Culture, Media and Sport Select Committee, added: “We need to see these reforms enacted in the UK as soon as possible.”
Last year, Cambridge University economics professor Matt Elliott found that the value of news content to technology platforms was around £1 billion a year, of which Google received between £60 and 85 percent.
In return, Google cited 2019 Deloitte research suggesting web traffic delivered to news publishers by third parties, including itself and Facebook, was worth £370m a year.
Professor Gawer has disputed this figure. First, he said it was based on estimates that web traffic generates £500m a year for news publishers, whereas now it was £400m.
Second, news websites’ own apps now drive an increasing proportion of traffic, with Google referrals now contributing at most £140m a year.
Thirdly, this direct traffic is much more valuable to publishers as less than a quarter of the pages are read by visitors when they arrive via Google, bringing its value down to around £75m.
Google worker Shaquille holds a sign at a demonstration against alleged union breaking and the risk of redundancies outside Kings Cross headquarters in London, Britain, on April 4, 2023.
Google workers hold signs, including a reference to the company’s “Don’t be evil” code of conduct phrase, as they demonstrate outside Kings Cross headquarters in London on April 4.
Professor Gawer found that many users only used Google as a navigation tool, simply entering the name of the news publisher in the search bar, in which case Google offered little value.
He also estimated that more value would be lost because some users would only read snippets in the search results and not continue on the website, or search for a topic using the news publishers name in the search bar but click on a link that would take in their place, take them somewhere else.
However, a lack of research means it is too difficult to quantify these effects, but it is likely to drop the £75m figure substantially, it found.
Google said it was “proud to be one of the largest financial backers of journalism in the world”, adding that it supported 285 UK news outlets through its news showcase function and had supported projects leading to the readers directly to news websites.
A spokesperson said: “Both publishers and readers get real value from the presence of links to news sources in Google search.”