Gannett Blames Google for Newspapers Shuttering in Digital Advertising Monopoly Lawsuit

Winston Cho
·5 min read

Gannett, the country’s largest newspaper publisher, has sued Google, accusing the tech giant of having an illegal monopoly over the technology that powers online advertising. The allegations, which mirror those lodged by the Department of Justice in a suit that seeks to break up the Alphabet-owned company, opens another front in a sprawling legal battle Google is fighting across the globe over its dominance in the digital ad market.

In the complaint filed Tuesday in New York federal court, Gannett says Google has “carried out a sophisticated, anticompetitive, and deceptive scheme for well over a decade” to control the tools that publishers and advertisers use to buy and sell online ad space. The company alleges Google is taking a monopolistic cut of revenue, leading to underinvestment in newsrooms and newspapers going out of business. While the online ad market generates $200 billion a year, publishers have seen revenue drop by nearly 70 percent since 2009, according to the complaint, which notes that 170 Gannett publications have shuttered in the past four years.

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“In 2022 alone, Google made $30 billion from manipulating auctions for ad space across the internet,” states the suit. “That is six times more revenue than every single U.S. news publication made from digital advertising, combined. Google, as middleman, has dwarfed the content creators that invest in journalists, editors, photographers, and many others to produce important news content.”

The complaint is the latest in a series of suits Google faces over its ad business. In January, the government and 17 state attorneys general filed an antitrust complaint against Google looking to split up the company, as did the European Commission last week. U.K. antitrust enforcers have found that Google’s ad practices harm publishers, pointing to its ability and incentive to “exploit its position on both sides of a transaction to favour its own sources of supply and demand.”

In a statement, Dan Taylor, vice president of Google Ads, disputed the allegations. “These claims are simply wrong,” he says. “Publishers have many options to choose from when it comes to using advertising technology to monetize — in fact, Gannett uses dozens of competing ad services, including Google Ad Manager.” While stressing that publishers keep the “vast majority” of revenue, he adds, “We’ll show the court how our advertising products benefit publishers and help them fund their content online.”

Google made $209 billion in ad sales in 2021, accounting for 81 percent of its revenue, according to the complaint filed by the Justice Department.

“The core of the case and our position is that Google abuses its control over the ad server monopoly to make it increasingly difficult for rival exchanges to run competitive auctions,” said Gannett CEO Mike Reed in opinion piece published Tuesday by company-owned USA Today. “Further, Google’s exchange rigs its own auctions so Google’s advertisers can buy ad space at bargain prices. That means less investment in online content and fewer ad slots for publishers to sell and advertisers to buy. Google always wins because it takes a growing share of that shrinking pie.”

Virtually every publisher in the country uses an ad server to manage their inventory of ad space, or so-called impressions. The ad server identifies when an impression is available for sale, solicits bids and chooses the winning offer. By controlling the platform publishers use to sell their ad slots, Google forces them to “sell growing shares of that ad space at depressed prices,” Gannet alleges.

Google in 2007 paid $3.1 billion to acquire DoubleClick, which had the industry-leading publisher ad server at the time of its purchase. The deal provided Google with direct access to website publishers, including their ad inventory, in addition to a significant presence with advertisers. DoubleClick now controls over 90 percent of the publisher ad server market, according to the complaint.

Gannett also claims Google controls the ad exchange market, which organizes real-time auctions among potential buyers for ad space. While Google’s exchange controls more than 60 percent of the market, competitors have shares in the single digits, the suit says. Gannett alleges that Google largely bars buyers using its exchange from participating in any others. By tying its services together, Google has effectively ensured that publishers have to go through the company to reach the majority of buyers, according to the complaint.

Additionally, Gannett accuses Google of rigging bids in its exchange by “trading on inside information” from its ad server.

“To take one example: Google prohibits publishers from communicating publisher-owned data about readers to rival exchanges, which results in rival exchanges returning substantially lower bids,” the suit states. “Then, [DoubleClick Ad Exchange] trades on those depressed bids by returning bids that are a penny higher, even though [DoubleClick] buyers originally submitted substantially higher bids to [DoubleClick] for the same ad slot. That means Google wins more inventory at depressed prices.”

Gannett argues Google pursued a string of acquisitions to cement its position as the dominant intermediary between advertisers and publishers. Since 2009, Google has acquired AdMob, which allows mobile app publishers to sell ads; Invite Media, which enables advertisers and agencies to bid in real time on display ad space; and AdMeld, which helps publishers field ad offers from advertisers.

In June, hundreds of journalists across two dozen newspapers owned by Gannett walked off the job to protest deep cuts to their newsrooms and low pay. They criticized the company’s merger with GateHouse Media in 2019, urging a vote of no confidence against Reed to company shareholders in a letter that stressed his sky-high pay of $7.7 million in 2021. The deal loaded Gannett up with debt and forced it to slash hundreds of millions of dollars off its books. In its first quarter earnings report, Gannett said it generated $10.3 million in profit and surpassed two million digital subscriptions.

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