Germany's FCO Investigates Google News Showcase - Antitrust Concerns

Germany’s Competition Authority Investigates Google News Showcase

The Bundeskartellamt, Germany’s competition authority, is actively utilizing new powers granted this year to address concerns surrounding Big Tech companies. The Federal Cartel Office (FCO) has recently announced a third investigation focusing on Google.

Focus on Google News Showcase

The FCO’s latest competition probe centers on Google News Showcase – a product launched by Google that curates content from third-party publishers. This content appears in story panels on Google News and other Google platforms, with the tech giant providing licensing fees to publishers.

Last year, Google initiated content licensing agreements with publishers globally, allocating a total of $1 billion to fund these arrangements. Germany was among the first countries where these deals were established.

Underlying Motivations

However, Google’s motivation for financially supporting publishers isn’t solely altruistic.

For years, media companies have accused Google of benefiting from their content without compensation. Google consistently responded with denials, asserting that paying for content isn’t standard practice for online aggregation.

Previous Responses and Regulatory Pressure

Google previously offered a digital innovation fund – the Google News Initiative – providing small grants and workshops to publishers. This was seen as an attempt to attribute publishers’ financial difficulties to a lack of innovation, rather than Google’s adtech dominance.

This approach successfully delayed regulatory action for a considerable period. However, increasing political pressure regarding media business models and the dominance of online advertising duopolies prompted legislators to seek solutions to address the power imbalance between publishers and tech giants.

International Responses to News Content

Australia notably passed a news media bargaining code earlier this year. Prior to its enactment, both Facebook and Google cautioned that the law could lead to service disruptions, reduced quality, or usage fees.

While those drastic outcomes didn’t materialize, lawmakers amended the legislation to include a two-month mediation period. This allows digital platforms and publishers to negotiate deals independently before entering arbitration.

Critics argue this amendment allows tech giants to leverage their market power in negotiations, potentially benefiting larger media firms without ensuring media diversity or supporting quality journalism.

EU Copyright Regulations

In the EU, lawmakers acted earlier by extending copyright to include snippets of news content in 2019. Member States were required to implement these rules into national law by June 7th.

France was an early adopter, with its competition watchdog ordering Google to pay for news reuse in 2020 after Google temporarily removed snippets in response to the legislation.

Bundling Payments and Lack of Transparency

Google subsequently agreed to pay French publishers for content reuse and their participation in News Showcase. This bundling of legally required payments with voluntary content licensing deals creates ambiguity regarding the balance between mandatory and commercial arrangements.

Concerns Regarding News Showcase

The primary concern with News Showcase is that licensing arrangements are often conducted privately, preceding relevant legislation and operating under Google’s terms. This raises the risk of exacerbating the power imbalance between Google and publishers facing revenue challenges due to the shift to digital media.

Publishers may be inclined to accept Google’s offers, regardless of the terms. Those who decline risk reduced visibility for their content, given Google’s dominance in search and content discovery.

Competition Implications and FCO Investigation

The competition implications are evident. The Bundeskartellamt’s swift investigation into News Showcase is noteworthy.

The FCO is responding to a complaint from Corint Media, examining whether integrating Google News Showcase into general search results constitutes self-preferencing or hinders competing services.

Specific Areas of Investigation

The investigation will also assess whether contractual conditions include unreasonable terms that disadvantage participating publishers and whether they impede publishers’ ability to enforce ancillary copyright for press publishers, as introduced by German law in May 2021.

Essentially, the FCO is investigating whether Google is using News Showcase to undermine the new EU copyright rights granted to publishers.

The FCO will also examine the criteria for accessing Google’s News Showcase service.

Launch and Expansion of News Showcase in Germany

Google launched News Showcase in Germany on October 1, 2020, initially with 20 media companies and 50 publications. The number of participating entities has since increased.

The “story panels” were initially integrated into the Google News app and are now available on Google News for desktop users. Google plans to integrate these panels into general search results, further intensifying the competitive dynamics.

Statement from Andreas Mundt

Andreas Mundt, president of the Bundeskartellamt, stated: “Cooperating with Google can be an attractive option for publishers and other news providers and offer consumers new or improved information services. However, it must be ensured that this will not result in discrimination between individual publishers. In addition, Google’s strong position in providing access to end customers must not lead to a situation where competing services offered by publishers or other news providers are squeezed out of the market. There must be an adequate balance between the rights and obligations of the content providers participating in Google’s programme.”

Google’s Response

Google provided the following statement through spokesperson Kay Oberbeck:

Ongoing Proceedings

The FCO’s scrutiny of Google News Showcase follows two other Google proceedings initiated last month. One assesses whether Google meets the threshold for Germany’s new competition powers targeting Big Tech, while the other examines its data processing practices. Both investigations are ongoing.

The FCO is also investigating Amazon’s market dominance and considering extending an investigation into Facebook’s Oculus business to determine if it meets the criteria under the new law.

New German Competition Act

An amendment to the German Competition Act, effective in January, grants the FCO greater authority to proactively impose conditions on large digital companies deemed “of paramount significance for competition across markets” to prevent market abuse.

The FCO’s parallel investigations demonstrate its commitment to swiftly addressing competitive issues caused by platform giants.

Ongoing Case Against Facebook

The Bundeskartellamt also has a long-standing case against Facebook’s “superprofiling,” linking privacy concerns to competition issues. This case could significantly restrict Facebook’s ability to profile users and has been referred to Europe’s top court for legal interpretation.