Denham Sadler
March 13, 2019

Break up Google, says News Corp

Platforms

Break up Google, says News Corp

Google campus: News Corp wants the digital advertising giant to be structurally separated

Google should be broken up to “clearly and effectively address the harm caused” by the tech behemoth, according to Australia’s biggest media company.

In a submission to the Australian Competition and Consumer Commission’s (ACCC) inquiry into digital platforms, News Corp made the controversial suggestion that Google should divest its search or business units, or be forced to “functionally separate” them.

While acknowledging this would be a drastic and virtually unheard of measure, News Corp said it is necessary due to the “unparalleled power that [Google] currently exerts over news publishers and advertisers alike”.

“Google leverages its market power in both general search services and ad tech services to the detriment of consumers, advertisers and news publishers. To remedy these harms, Google could either sell Google Search, or retain Google Search and divest the rest of its businesses to a third party,” News Corp said in its submission.

“Divestment remedies are the most comprehensive type of remedy that would clearly and effectively address the harm caused by Google.”

News Corp is the publisher of a number of Australian newspapers, including The Australian and The Daily Telegraph, and is the majority owner of Foxtel. It argued that the divestment of Google is required to foster competition in the sector.

“Google has established an impenetrable offering for advertisers through its dominance in both ad tech and data,” it said. 

“The barriers to entry for the supply of ad tech services are considerable, since newcomers need to have strong offerings in both ad tech and a considerable amount of data to offer a legitimate competitive alternative, and thereby threat to existing players, which is not foreseeable,” it said.

“News Corp Australia envisages that a marketplace with a divested or functionally separated Google would breed competition, innovation and ultimately benefit consumers and advertisers.”

News Corp said this could be achieved through ACCC making a formal recommendation to the federal government, and that this should only apply to Google and not other tech firms like Facebook.

While a functionally separation of Google’s operations would achieve similar results, News Corp argued that divestment “may represent the most effective and conclusive remedy” and has “relatively low monitoring and compliance costs”.

In its own submission, Google denied that it enjoys market domination, claiming that it has a “lot of competition”.

“From an advertising perspective, search advertising is just one of many channels advertisers invest in and we compete directly for advertising dollars with other digital channels, as well as television, print, radio and outdoor advertising,” Google’s submission said.

“The popularity of digital is, in part, due to the unprecedented ability it provides for advertisers to measure the impact of their ad spend and other media channels are fast catching up.

“This is not examined in the preliminary report and we believe there should be further consideration of the competition Google faces for user queries on search and the competition for advertising investment, both among digital providers and other forms of advertising.”

The submission was publicly released by the ACCC just days after US presidential candidate and Democratic Senator Elizabeth Warren made a similar suggestion.
Senator Warren has vowed to break up tech giants like Amazon, Google and Facebook in order to promote competition in the industry.

“We have these giant tech companies that think they rule the earth. I don’t want a government that’s here to work for the giant tech companies. I want a government that’s here to work for the people,” Senator Warren said.

Under the policy, regulators would be nominated to unwind some acquisitions made by these companies, such as Facebook’s purchase of WhatsApp or Google’s purchase of Waze.

“Giants are not allowed to buy out the competition. The competition needs the opportunity to thrive and grow,” Ms Warren said.

In Australia, the ACCC’s preliminary report recommended a range of policies to curb the market dominance of digital platforms, primarily Google and Facebook, but none of them went close to as far as what News Corp is asking for.

The competition watchdog suggested the creation of a new watchdog to monitor, investigate and report on factors impacting the ranking and displaying of advertisements and news content on the platforms.

In it submission, News Corp said these functions should be performed by the ACCC, with a new Digital Platforms Unit to “develop the technical industry knowledge to provide enhanced competition scrutiny”.

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