Imagine if a company could track the online movements of nearly everyone on the planet.
So they knew not just the basic stuff like where they live and work and how old they are, but everything they are interested in and all the things they want to buy and might want to buy but don’t know it yet.
Add to that the ability to serve marketing messages to that individual based on the above information.
What a priceless resource for advertisers and what a sinister concept for the individual? And what an impossibly powerful force for traditional news publishers to compete against when it comes to selling advertising.
This is not some sinister dystopian future, it is where we are in 2017 in the UK and around the rest of the world.
Google and Facebook are the guardians of this information, or user data, and it helps explain why they have been so successful at sucking advertising revenue out of the publishing economy. By Press Gazette’s reckoning the pair currently take £1bn a year directly away from news publishers.
Jason Kint, the chief executive of US trade body Digital Content Next, has been one of the most outspoken critics of the Duopoly. His body is the US equivalent of the UK Association of Online Publishers and represents everyone from the New York Times to News Corp.
Asked whether he supports Press Gazette’s Duopoly campaign to stop the pair destroying journalism he said: “That statement right there? Yeah of course.”
The pair already hoover up for around half of the UK’s £10bn a year online advertising market and around 80 per cent of all new money coming in.
By 2020, that share is expected to grow to 71 per cent, leaving little room for publishers.
Asked why they are so successful, Kint says: “The biggest thing we’ve pointed to as problematic is the data part of the business, they collect data across almost the entirety of the web. It gives them the ability to collect browsing history and behavioural data that fuels an audience-focused kind of direct marketing business, which is what most of the business is.
“You have to get down in the weeds, but if you look at how digital advertising has grown up and how it’s being used, most of it is being used to micro-target individual users for click-based advertising, direct marketing we call it.
“So whoever has the most efficient way to collect data across the web on users is in a very, very privileged position, and those two companies are.”
Why is this a problem?
“You now have an environment where most of the web, the web that was supposed to be open and competitively democratised, most of the consumption of the web is happening through Chrome [Google’s browser] on desktop and through Facebook’s embedded browser on mobile as far as we can tell.
“More people are browsing the web now through Facebook on mobile than they are through an actual web browser so they literally have a privileged position.”
What can publishers do about it?
“It’s difficult isn’t it? The relationships with Google and Facebook are some of the most valuable relationships, right? You shouldn’t have to do business with with Google or Facebook in order to survive in the digital world, but I think that’s where we are as an industry.
“And so any individual publisher is really not in a position to push back in a significant way, which I think is a symptom of the problem. The best thing that’s happening right now I think is the journalists and the reporters in the industry covering the problem including the financial analysis of just the simple fact that 85 per cent in the US of the growth or as high as 100 per cent at one point last year is going to the duopoly.”
Kint is hopeful that the European Union’s General Data Protection regulations could go some way towards creating a more “level the playing field” for publishers to compete with the Duopoly. These are due to come into force in the UK next year and are expected to apply whatever the final terms of Brexit.
“If those regulations are written in a way that Google and Facebook can’t bundle consent across the web, it actually creates a lot of opportunities for publishers and I don’t think that’s being talked about enough.”
Why is the idea of stopping “bundled consent” so important in terms of taming the duopoly?
“The way the GDPR is written is that every single company is going to need to be able to get explicit consent in order to collect user data across the web…
“It means that in order to use Google Chrome or Google search or Youtube or any of the Google products that you would choose to use, Gmail is a really good example, Google’s not going to be able to make it a condition of using Gmail that you also allow them to collect and use your browsing data from across the web through their Google analytics tags that are on almost every publisher’s site across the web.
“If they’re not allowed to do that, they lose their ability to be in that privileged position of seeing the traffic across the web which makes them have to compete on their own products rather than across the entire web, and that’s significant, it’s a big concern to them.
“With Facebook, if you choose to use Facebook’s app or social network then they shouldn’t be allowed to collect data through their like buttons that are on almost every page across the web, which they currently do.
“They collect data through those buttons even when you don’t click on them and they develop a rich history of everything you’re doing and they shouldn’t be able to bundle that consent.”
So for Kint, competing with Google and Facebook as products in their own right is not the issue. It is their monopoly on user data and the somewhat sneaky way in which they collect that information which concerns him.
“It allows them to grow with the entirety of the web, rather than just with their core products. They’re able to collect data from across the web rather than just through their own products, and that’s very powerful.”
What about those who say that publishers should just stick up paywalls or find other ways to make money?
“Some have done that, and to various degrees of success, we’re definitely seeing that happen. But the tragedy of it is that it’s typically the national brands with the most exclusive kind of news entertainment that are the ones that are able to succeed.
“I’m deeply worried about the local news outlets ever being able to use paywalls. I don’t know that Google and Facebook have ever done a very good job of enabling or being cooperative with subscription models or other types of models. They are most cooperative with models that maintain free content that’ll allow them to collect data off of it.
“So, Google search, you know has never really worked very well with subscription sites.”
If publishers collectively tried to remove their content from Google and Facebook, would the two giants be bothered?
“Do they rely on professionally produced entertainment and news? Yes, you know without it then, there are a lot less interesting places to share and to search for for what you’re trying to find.”
Press Gazette has suggested that the answer to the duopoly problem may lie with Google and Facebook themselves. This title has started an online petition urging the companies to share more of their revenue with the publishers upon whose content they rely out of enlightened self interest.
Does Kint think they are open to this argument?
“You would like to think so, I think that argument is accurate. I mean Facebook made $10 billion [profit] last year. So their profit’s significantly higher than total digital revenue for the 80 publishers that I represent, which are most of the publishers of real news and entertainment in the US.
“So they have the ability to change the dynamics of much of the news industry at least here in the US. As much as they benefit from a productive news environment in society at a large then you would think that it would be in their self-interest to do that.
“I think you hear that at the top of their organisations, the challenge is that as they get down to the execution in any individual part of their business, whether it be the ad-tech business or the search business or whatever it is with Google, it becomes more difficult, because they’re all driven by financial interests and goals from Wall Street. Can they actually do it? I don’t know, I guess I’m a little bit sceptical at this point.”