In a move meant to blunt escalating European Union action against Google's (NASDAQ:GOOG) (NASDAQ:GOOGL) marketplace dominance, Google will, on Friday, announce a €150 million partnership, to be spent over three years, in support of something called the Digital News Initiative (DNI), I've learned through several confidential sources.
At the conference, Google president EMEA and strategic relationships Carlo D'Asaro Biondo is scheduled to kick off and keynote the program, which will be followed by a Google press release and a well-placed op-ed column. Biondo has been a key player in Google's efforts to reset its troubled relationship with many European publishers, with this initiative as a centerpiece.
At least eight major European publishers have signed on to the initiative. They include The Financial Times, The Guardian, Italy's La Stampa, France's Les Echos, Germany's Zeit and Frankfurter Allgemeine, Spain's El Païs and Netherlands' N.R.C. Organizers consider the program an "open" one, so expect more publishers to join as well. It is a distinctly Eurocentric initiative, with no U.S.-based publishers as initial signatories, though the architects of the initiative expect its fruits to be globally useful for new companies.
Neither the publishers nor Google offered any immediate comment on the announcement.
The Digital News Initiative starts with three streams:
1) €150 million Google commitment toward news innovation. That's, of course, the stream that will catch the most attention. The work will focus on product and platform improvement.
2) A "Product Council," made up of publishers, will give direction to the initiative.
3) Google will also fund Reuters to widen news research in Europe. Expect to see more Europe-centric news research, à la the kind of analytic insights offered by the Pew Research Center in the U.S.
The timing of the announcement isn't incidental. Just two weeks ago, the European Union, through its Competition Commissioner Margrethe Vestager, formally accused Google of using its marketplace dominance in Europe unfairly and illegally. Google's European dominance - at 90 percent market share for search-related activity - surpasses its market-making North American strength. The E.U. antitrust case, which has been bouncing around in various forms for years, focuses most specifically on Google Shopping, though a probe of its Android business is also included.
More broadly, though, many continental publishers feel the digital deck is stacked too highly and unfairly against them by U.S.-based companies that dominate the global digital business. While Google has served as a continuing target, Facebook's (FB) parallel dominance (through its combination of social, mobile and great ad growth) now prompts similar concerns.
Google's marketplace sway is not a new topic, of course. Lawmakers made and regulators interpreted anti-trust laws by the standards of another, industrial, age, not our digital one. In the U.S., publishers long ago made uneasy peace with the legality of Google's snippetizing of stories (under "fair use").
In the area in which Google has supremely dominated - plain old advertising sales ("The newsonomics of Google (Ad) Singularity") - regulation and laws have long found themselves ill fitting to real-world realities. (Some, including former W.S.J. publisher Gordon Crovitz, decry Europe's actions as conservative ones, out of touch with the nature of modern innovation and consumer choice.)
In a recent Guardian column, Julia Powles well encapsulates ("Europe is targeting Google under antitrust laws but missing the bigger picture") the wider issues of Google's dominance - and ones that the EU's anti-trust case won't, and maybe can't, take on.
Within Google, the question of what to do about the "European problem" - other lawsuits and actions have dogged the company there as well - has consumed much conversation. While co-founder and now CEO Larry Page has long been seen as the head of aggressive, full-speed-ahead wing, the accommodationists appear ascendant. Biondo, the keynoter, has reorganized Europe-based partnership operations, making listening and collaboration a key strategy. London-based Madhav Chinappa, ex of the BBC and now head of international partnerships for Google, has been instrumental in putting together this initiative.
Likely to have been a key publisher player in putting together the initiative is David Gehring. Gehring took on the post of head of partnerships at the Guardian in September, after working publisher partnerships at Google for three and a half years. As such, he's a tweener, a bridge between two worlds ‑ Google and news publishers - that have spoken different languages for a long time.
It's important to distinguish this initiative from other news-publisher consortia, a new round of which have been blossoming on both sides of the Atlantic. Most of those focus on increasing advertising rates, through building publishers' networks of greater scale, and ones that better use first-party customer data to target customers. In the U.S., the Local Media Consortium fills that role. In Europe, a parallel group of large news publishers, including some of the DNI partners FT and Guardian, recently announced a beta launch of Pangaea, a "global ad alliance." In January, the U.K.'s Association of Online Publishers announced its own new digital network.
In advertising, publishers find Google one of their biggest competitors. The Digital News Initiative puts that competition on another burner, while trying to heat up tech-led publishing innovation. It will take at least a couple of years to see whether this push does better than past ones. It could turn out to be a boundary-breaking exercise helping publishers themselves find new keys to digital gold. Or, it may simply be a good Google investment in countering regulators and dividing publishers.
Sources tell me that the specifics of what the Digital News Initiative will tackle haven't yet been worked out, but will focus on "core industry issues." Here, we may revisit an Internet truism: You can't get the answers you need until you figure out the right questions.
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