Google News Showcase Antitrust Probe in Germany

Google Modifies News Showcase in Germany Amid Antitrust Scrutiny

Recent regulatory challenges for major technology companies in Europe have led Google to propose changes to its news licensing product, News Showcase, in Germany. The company is offering to refrain from integrating News Showcase “story panels” into its standard search results.

German Antitrust Concerns and Proposed Solutions

The German Federal Cartel Office (FCO) revealed today that Google has submitted several measures to address ongoing antitrust concerns. These measures also aim to clearly delineate News Showcase contracts from separate negotiations with publishers regarding copyright licensing, specifically concerning “neighbouring rights” for news content.

According to both EU and German legislation, Google is obligated to compensate news publishers for displaying excerpts of their articles. This requirement stems from a 2019 EU copyright reform, which was implemented into German law in May 2021.

Historical Context: Previous Attempts at Licensing Fees

Approximately a decade ago, German lawmakers attempted to compel Google to pay licensing fees to local publishers for displaying snippets in Google News. However, Google circumvented these efforts by transitioning Google News to an opt-in aggregator.

Ultimately, a pan-European directive, coupled with local antitrust intervention, has been necessary to enforce Google’s compliance on this issue, preventing the company from altering its operations to avoid payments.

Ongoing Compliance Challenges and Previous Fines

While Google is working towards compliance with EU copyright law, progress has been slow. The company has already faced a fine exceeding $500 million in France due to its approach to news licensing, which remains under close regulatory observation.

Germany is currently investigating Google’s negotiations with local publishers and, as of today, is securing operational concessions regarding the operation of News Showcase.

Concerns Regarding Self-Preferencing and Publisher Disadvantage

The FCO expressed concern that integrating News Showcase into general search results could lead to Google favoring its own services or “impeding services offered by competing third parties”.

Furthermore, the regulator is assessing whether the terms of News Showcase contracts “unreasonably disadvantage” participating publishers, particularly by making it “disproportionately difficult for them to enforce their general ancillary copyright when participating in Google News Showcase”.

Review of Access Conditions

The FCO is also reviewing Google’s conditions for access to News Showcase to ensure non-discriminatory access for all publishers.

New Powers for the FCO

It is noteworthy that the FCO recently confirmed its authority to implement special measures against Google, leveraging powers to address digital market giants enacted by local lawmakers last year. This reduces the timeframe for regulatory action and limits Google’s ability to evade FCO orders.

Similar Reforms in the U.K. and EU

Comparable copyright reforms are also underway in the U.K., and the EU is progressing towards adopting ex ante rules for gatekeeping giants through the Digital Markets Act. Consequently, the operational constraints on Big Tech in Europe are expected to increase.

Google’s Concessions and Contract Modifications

In addition to refraining from expanding the display of licensed content to general search results in Germany, Google has informed the FCO that it has “already changed some of the practices under examination and declared its willingness to address any remaining ambiguities and concerns by modifying the Showcase contracts and providing clarifying statements”.

Specifically, Showcase contracts will be clearly separated from ongoing negotiations concerning other ancillary copyright payments between Google and publishers or their collecting societies.

The Launch of News Showcase

Google initially announced the global News Showcase product in October 2020, pledging to allocate $1 billion collectively to license news content for display in “story panels” across Google products.

This initiative emerged as Google faced increasing legal demands in various jurisdictions regarding remuneration for displaying news content. Australia, for example, developed its own legislative framework in August 2020 to compel Google and Facebook to compensate news organizations for content reuse.

Strategic Intentions Behind News Showcase

The News Showcase initiative appeared to be a strategic maneuver by Google to mitigate potential revenue losses while simultaneously leveraging its market dominance to maximize benefits for its ad-monetizing content business.

Closed-door commercial agreements for News Showcase allowed Google to offer licensing payments and create competition among publishers, potentially pressuring them to accept its terms and reduce legally mandated licensing fees.

Expansion of Content Display

Initially, News Showcase content appeared in story panels within the Google News app on mobile devices. Google subsequently expanded the display to include its News aggregator on desktop and a personalized content feed on mobile devices, known as Google Discover.

The company reportedly intended to further expand the reach of licensed content, including integrating News Showcase into search results.

Regulatory Challenges in Europe

However, in Europe, Google’s plan encountered regulatory obstacles due to competition concerns, given its dominant position in the search engine market.

Incentives for Publisher Participation

News Showcase offers participating publishers increased visibility by featuring their content to Google users across multiple platforms, including allowing mobile users to follow publishers and receive more of their content in personalized feeds. This creates a strong incentive for publishers to collaborate with Google, granting the company leverage in content licensing negotiations.

Publishers may be motivated to participate in News Showcase to avoid missing out on potential traffic, potentially leading them to agree to broader licensing terms that could waive or reduce copyright-based licensing fees.

Regulator Concerns and Publisher Complaints

European competition regulators have not been persuaded by Google’s attempt to use News Showcase and commercial terms to circumvent copyright compliance. They have instead responded to publisher complaints that Google is not acting fairly. The FCO probe, for instance, was initiated following a complaint filed by the collecting society Corint Media.

French Competition Watchdog’s Findings

The French competition watchdog issued a substantial sanction last summer, stating that Google had attempted to unilaterally impose its global news licensing product in negotiations with publishers, seeking to incorporate the legal neighbouring right as “an ancillary component with no separate financial valuation”.

The investigation is ongoing, but has already resulted in a $592 million fine for Google for violating a previous order.

Germany’s Approach and Google’s Response

Germany has not yet imposed any sanctions, but with the FCO’s enhanced powers to address abusive digital giants, the threat remains. This prompted Google’s swift offer of modifications to its News Showcase operations in Germany, following the FCO’s initiation of the T&C probe last summer.

Google’s Dominance and Antitrust Enforcements

Google’s dominance in the European market for general search has led to numerous antitrust enforcements in recent years, both at the EU and national levels. However, EU Member States’ competition watchdogs have been particularly responsive to concerns raised by news publishers.

Germany was among the first markets to adopt News Showcase, which likely contributed to the FCO’s relatively rapid scrutiny of the product. France, meanwhile, was quicker to transpose the EU copyright reform into national law, and its competition watchdog has closely monitored Google’s compliance with the neighbouring right requirement and the details of its negotiations with news publishers.

French Regulator’s Proposal

In December, the French regulator announced that Google had made a series of commitments regarding good-faith negotiations, proposing that they apply for a period of five years.

France’s watchdog is currently consulting on Google’s proposal and will decide whether to accept it or require additional measures by the end of the month.

Ongoing Consultations and Future Outlook

The German FCO is also consulting locally on Google’s operational offers regarding News Showcase.

In a statement, Bundeskartellamt president Andreas Mundt said: “Google has proposed measures to respond to our competition concerns relating to Google News Showcase. The company no longer plans to include Showcase content in the general search results. The conditions for participating in Google News Showcase are not intended to prevent publishers from enforcing their general ancillary copyright. Access to Google News Showcase is based on objective criteria. We rely on the assessment of the market players affected to ensure that the measures proposed by Google are effective. In view of the wide variety of interests the publishers may have we are thus conducting broader consultations in the sector.”

He further noted that the regulator is closely monitoring Google’s negotiations with publishers over copyright fees, adding: “Parallel to the Google News Showcase proceeding we are closely monitoring the negotiations on ancillary copyright fees.”

In another recent regulatory intervention, Google’s plan to deprecate third-party tracking cookies and introduce the Privacy Sandbox is under scrutiny by the U.K.’s competition watchdog, leading Google to propose a series of commitments. Additionally, France’s competition watchdog fined Google $268 million for self-preferencing its adtech, resulting in another behavioral offer from the company, consisting of interoperability commitments.

Update: A Google spokesperson has now sent this statement on its News Showcase proposals in Germany: