Gannett sues Google, alleges online ad monopoly

[June 21, 2023]  By Jonathan Stempel

NEW YORK (Reuters) -Gannett, the largest U.S. newspaper chain and publisher of USA Today, on Tuesday sued Google for trying to corner the market for online advertising by monopolizing ad technology.

In a complaint filed in Manhattan federal court, Gannett, which has more than 200 daily newspapers, said Google's control over tools for buying and selling online ads forces publishers to sell more cheap ad space to the Alphabet Inc unit.

Gannett said this leaves Google with "exorbitant monopoly profits," and "dramatically less revenue" for publishers and its ad technology rivals.

"Digital advertising is the lifeblood of the online economy," Gannett Chief Executive Mike Reed said in an opinion published in USA Today. "Without free and fair competition for digital ad space, publishers cannot invest in their newsrooms."

Dan Taylor, vice president of Google Ads, said in a statement: "These claims are simply wrong." He added that publishers have many options for advertising technology, and "keep the vast majority of revenue" when they use Google.

Gannett said it wants "very substantial" actual, punitive and triple damages.

The lawsuit adds to legal pressure on Mountain View, California-based Alphabet, already in the crosshairs of regulators on two continents.
 

On June 14, the European Union brought a similar lawsuit, and said Google might have to sell some of its ad technology.

Five months earlier, the U.S. Department of Justice brought its own case against Google, now joined by 17 U.S. states. Another group of states led by Texas is also suing.

The logo for Google LLC is seen at the Google Store Chelsea in Manhattan, New York City, U.S., November 17, 2021. REUTERS/Andrew Kelly/File Photo

In 2022, Google generated $224.5 billion of advertising revenue, accounting for nearly 80% of Alphabet's overall revenue and a major driver of Alphabet's overall $60 billion profit.

Advertising lets Google offer many services for free, including email, Android and much of its YouTube video platform.

Google's first-quarter ad revenue was $54.5 billion, little changed from a year earlier.

Like many newspaper publishers, McLean, Virginia-based Gannett has struggled with falling ad revenue as an estimated 86% of Americans now get news online.

Gannett said digital advertising is a $200 billion business, up nearly eightfold since 2009, but newspaper ad revenue fell nearly 70% over that time.

The company said print circulation at its newspapers fell nearly 20% in 2020 and 2021, and that it has shut more than 170 publications since 2019, when it merged with GateHouse Media.

Gannett shares closed Tuesday down 1 cent at $1.86. They have fallen 70% since the merger closed in November 2019.

The case is Gannett Co v Google LLC et al, U.S. District Court, Southern District of New York, No. 23-05177.

(Reporting by Jonathan Stempel in New York; Editing by Louise Heavens, Jonathan Oatis, Richard Chang and Sonali Paul)

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