The news industry has the opportunity to reset its relationship with big tech and grow without Google in the age of generative AI.
This is the view of journalist turned tech entrepreneur Ricky Sutton. Over the past year Sydney-based Sutton, a former head of online at the News of the World, has stepped back from running his video technology company Oovvuu.
In addition to running a Substack newsletter called Future Media he now provides strategic advice to publishers and tech companies.
He told Press Gazette’s podcast that the era of Google being the biggest tech partner for publishers may be drawing to a close after a year in which online ad revenue has drained out of the news industry and thousands of newsroom jobs have been cut in the UK and US.
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Sutton believes salvation could come from striking deals with Microsoft to license content to feed its AI platforms and with Amazon to help grow its advertising business.
This week US website Semafor launched an AI-generated breaking news feed called Signals which is sponsored by Microsoft. And Reach signed a deal to sell advertising on its sites via Amazon Ads by sharing first-party reader data with the tech giant.
Sutton has become a strident critic of how Google has leveraged its dominance over search and online advertising on his newsletter in recent months, but he believes the future could be brighter for publishers.
“Where I am seeing some optimism is it is a choice to work with Google, it is not a requirement. At the moment Google controls the vast majority of everything: the number of ads being supplied, the programmatic platform, the pipes, the data, the delivery, the measurement, all of it.
“Google has reached a point of total dominance. It is so comprehensive that it has now scared American politicians. The only thing that can stop a monopoly where it gets that big is anti-trust.
“We need $4bn to reoxygenate the industry and that is nothing to these tech companies. I think regulators realise that is a trade worth making.”
Generative AI companies need news businesses
Sutton believes that in the age of generative AI, publishers have a strong role to play because they produce the reliable information that large language models like ChatGPT need to train on.
He said: “The big tech companies are also trying to find a way to exist and grow and thrive themselves in the world of generative AI.”
He noted that ChatGPT’s largest investor Microsoft is some way out in front compared to the other tech giants with a market cap of $3tn, with Apple just behind (also worth about $3tn) then Amazon ($1.8tn) and Alphabet ($1.8tn) then Meta ($1.2tn).
He said: “Microsoft owns AI and it will spend money.” And he noted that Amazon’s advertising business grew by 27% last year and is already heading towards $100bn of revenue.
“The era of Meta being a friend of publishers ended a couple of years ago, the era of Google being a friend of publishers is ending now. Two friends are the people who need publishers most: Amazon and Microsoft.
“The online shopping business is very expensive. Amazon’s highest-yielding businesses are advertising and cloud computing. Their next growth engine is going to be ads and it’s going to be biting away at Google.”
But isn’t there a cycle of tech giants, like Meta, befriending the news business only to later toss it aside?
Sutton said: “We have to find a way to coexist in a sustainable manner with these people because they have all the money. AI is an opportunity to reset and set down what we need. They now need us as well.
“There is a window for publishing to do deals now. And if Amazon and Microsoft both want to do deals, in licensing and advertising, then those deals need to be done fairly quickly with a view that any deal grows over time.
“There is enough money out there to sustain our industry and for it to be four or five times bigger than it is. The AIs need us now as much as we need them, so the balance of power has shifted.”
Sutton spoke of visiting one famous US daily newspaper where the newsroom had dwindled to handful of staff and the owner wanted to sell the business for a dollar. He said the editor looked defeated.
“The management of the industry has got so used to losing that I think we are addicted to it. We have to remember who we are, get off the floor, regain our confidence.
“Those of us that have the momentum and belief can stare down and do a deal. If you genuinely think you have already lost you won’t – but that is not the market or big tech’s fault, that is your fault.”
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