The problem with Google

Greetings from Los Angeles. I survived a sweltering weekend in Geneva without air conditioning.The temperatures hit 98. The upside: You can swim in the Rhone in the middle of the city. The “Europoors” meme is more nuanced in reality.

Cannes is over. I was flattered to be called the “Matt Belloni of the advertising industry” by Ben Smith in Semafor.

Some Cannes conversations:

Reminder: Join me, Vox Media’s Camilla Cho and NucleusLinks CEO Cornelius Frey today at 1pmET to hear how Vox has done more affiliate revenue with less traffic. If you cannot make it live, we will send you a replay link with a summary of the top takeaways. Sign up. 

Publishers love-hate relationship with Google is reaching a breaking point.

Publishing was collateral damage in existential war for control of a technology heralded as on par with nuclear energy. And yet it increasingly feels personal. Google is floating a concept of giving publishers more prominence in AI Overviews in exchange for being free to run wild on their content, which they are already doing. Publishers are getting more vocal in their objections to the current economic bargain.

I’m not a lawyer so I won’t speak to whether a robot memorizing content is fair use. I do know it’s unfair and a raw deal. The symbol of that unfairness is Google’s decision to use a single crawler for search and AI. This is an engineering and business decision. Publishers are hammering this issue because it’s not just garden-variety unfairness but speaks to Google using its market dominance. No single publisher, or even group of publishers, can lay a glove on Google. Governments are a different story.

"Google is under no obligation to send us a single visitor ever, nor has it ever been,” People Inc CEO Neil Vogel said during a live recording of The Rebooting Show at the People Inc villa in Cannes. “But they can't take our content to compete with us and then not send us visitors. The old deal was they use our content to create their business, and then the deal is we get some traffic that we can do whatever we want with, make money from. That deal's long over."

People Inc’s policy is to block all bots by default and then whitelist them based on economics. There’s one exception. "Our current default setting is we block every single bot unless we permission it, obviously except, except Google." 

The “obviously” is doing a lot of work here. Four years ago, Google was 75% of People Inc’s traffic; it is now 25%. Diversifying from Google is so important to the business that it now reports “non-session revenue” as a KPI in its earnings reports. 

USA Today Co CEO Mike Reed went further in a discussion we had at the TRB Studio at Zuma in Cannes. I asked about the state of AI negotiations and expected a mild response. Instead, Mike said USA Today might call Google’s bluff and walk away from it entirely. The declines in search referrals had made this move a reality. Walking away from search would be unthinkable not long ago, and it marks just how far publishing has entered terra incognita.

“The traditional Google search business model is dead. It's broken. That traffic is declining. And Google, through AI summaries, wants to keep everybody on their platform by giving them the full answer. So we are gonna be in a position soon where we have to block Google as well. Right now, Google does not allow us to choose to block the AI summaries and allow content to show up in search. We're getting close now to the point where we'll block Google as well and abandon the traditional search traffic that we get today."

USA Today Co  is already in litigation with Google over its dominance in advertising technology. 

Such a drastic move would have little impact on Google, beyond the reputation hit, and it highlights the lack of tools most publishers have. For all the talk of establishing leverage – Neil laid this out to me during our last Cannes tete a tete – little movement has taken place in establishing a marketplace for AI companies to pay for access to content. 

“I come to that decision because I think that the traditional Google search model is broken,” Mike told me. “And we'd be crazy to sit here and just think that it's gonna get fixed or that this traffic is gonna come to us for the next 10 years. It's not. What we have to do as responsible business executives is create other ways to bring consumers to us."

During a dinner I hosted at Cannes with our partners at EX.CO, a top European news publishing CEO mooted the hope the industry would “band together.” I hear this often, yet it doesn’t come to pass for so many reasons, particularly American antitrust rules. U.S. publishers have a better shot at drafting off the regulation-happy Europeans. The UK’s powerful Competitions and Market Authority ordered Google to give publishers an opt-out of their content’s use in AI Overviews. 

"Regulators understand this as an antitrust issue,” Axios media correspondent Sara Fischer said. “ In the US, our regulators are just a little bit far behind on understanding some of this."

The pessimist in me doesn’t hold out much hope of a good solution coming from the group of people that inflicted GDPR on the world. Better to do a deal based on economic incentives of quality content as an important input, if not on par with compute at least alongside.

“The problem with the marketplace idea is that in the search era, Google was the primary dominant marketplace for search,” Sara said. “In the AI era, without Google's participation in a marketplace, it's very hard to build one. We don't have a two-sided marketplace right now."

“They have no economic incentive to do anything, none,” Neil said of Google. “They need that search ad revenue right now. They get mad when I jump up and down and scream and yell about it, but I'm not the only one jumping up and down and screaming and yelling about it."

The videos of both these conversations will be live shortly on The Rebooting’s new YouTube channel.

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