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Sep 15, 2008

Newspapers Worldwide (Minus U.S.) Oppose Google-Yahoo Deal

Newspapers Worldwide (Minus U.S.) Oppose Google-Yahoo Deal

In the early hours of Monday morning, the World Association of Newspapers posted a lengthy communique on its Web site calling the Google-Yahoo advertising partnership anti-competitive and urging regulators to block the deal. According to its Web site, the World Association of Newspapers represents 76 national newspaper associations and more than 18,000 publications in five continents. Its communique led to flurry of headlines that essentially said “Newspapers Around World Oppose Yahoo-Google Ad Deal.”

But hours later, the U.S.-based Newspaper Association of America, a member of the World Association of Newspapers, issued a communique of its own (they called it a press release). In it, John F. Sturm, president of the association said: “While NAA is a member of the World Association of Newspapers (WAN), I would like to clarify that the NAA Board of Directors has taken no position on the proposed advertising partnership between Google and Yahoo.” The association represents more than 2000 newspapers in the United States and Canada. Its members account for 90 percent of the daily circulation of newspapers in the United States.

The NAA’s views are important here because the Google-Yahoo partnership is limited to the United States and Canada. The views of U.S.-based newspapers are likely to be given special weight by regulators, as they are the publishers who will be most affected by the deal.

That said, there are no guarantees that the probe of the Google-Yahoo deal will be limited to the United States. On Monday, antitrust regulators in Europe said they were conducting a “preliminary investigation” into the partnership. That’s not good news for either Google or Yahoo and it comes just days after news that the Justice Department hired a prominent antitrust lawyer to examine, and perhaps challenge, the deal.

Perhaps what was most striking, and what may be most worrisome to Google in the long term, was the harsh tone of the World Association of Newspapers communique, and what it said about the hostility that many in industry feel toward the Internet search giant:

Most publishers are acutely aware that Google’s ever-tightening grip on internet traffic, its unbridled use of online content, and its dominance in online advertising poses a very real threat to the continued viability of the independent content generation industry.
Perhaps never in the history of newspaper publishing has a single, commercial entity threatened to exert this much control over the destiny of the press.
It is particularly worrisome that this consolidation of power is occurring at the same time that Google increasingly takes positions that are adverse to newspapers and other content creators. Google already owns several content sites that directly compete with content developed by newspapers and other creators - often by simply copying others’ content without authorization. Usually, Google alone profits from this misappropriation. Take, for example, the case of Google News, which a Google senior executive recently admitted drives $100 million in advertising revenue to Google itself yet provides nothing - not a penny - to the newspaper companies whose works appear on those pages.

While the WAN acknowledges that many of its members are Google customers, those are not the words of happy customers. And regardless of whether regulators do or do not attempt to block the Google-Yahoo deal, as Google’s power in online advertising grows, this kind of sentiment could well herald new regulatory headaches for Google down the road.

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