[September 17, 2014] |
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News Corp Opposed Google's European Commission Settlement Offer; Welcomed Competition Commission Reconsideration
NEW YORK --(Business Wire)--
Early last week, in a letter to European Commissioner for Competition
Joaquín Almunia, News Corp Chief Executive Robert Thomson (News - Alert) opposed
Google's settlement offer with the European Commission, saying the
internet giant is "willing to exploit its dominant market position to
stifle competition."
Mr. Thomson said News Corp (News - Alert) also opposed the proposed five year term of a
settlement, noting that "five years is an eternity in internet time."
Citing Google's (News - Alert) "egregious aggregation" of content, Mr. Thomson said
that, along with serious commercial damage, there is a "profound social
cost" to Google's actions. "The internet should be a canvas for freedom
of expression and for high quality content of enduring value.
Undermining the basic business model of professional content creators
will lead to a less informed, more vexatious level of dialogue in our
society."
"Your decision to reconsider Google's settlement offer comes at a
crucial moment in the history of the free flow of information and of a
healthy media in Europe and beyond," Mr. Thomson wrote.
The full text of Mr. Thomson's letter to Vice-President Almunia follows:
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September 8, 2014
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Dear Vice-President Almunia,
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Your decision to reconsider Google's settlement offer comes at a
crucial moment in the history of the free flow of information and of
a healthy media in Europe and beyond. There is no doubt that the
case is one of profound significance for many media companies in
Europe but also for the people of Europe, whose ability to access
information, independently and meaningfully, is put at risk by the
overwhelming power of Google. The company has evolved from a
wonderfully feisty, creative Silicon Valley startup to a vast,
powerful, often unaccountable bureaucracy, which is sometimes
contemptuous of intellectual property and routinely configures its
search results in a manner that is far from objective.
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News Corp has significant interests in Europe, including The Times,
The Sun and The Wall Street Journal Europe, and a network of local
language business newswires, as well as the HarperCollins book
publishing business. We are not a small company, and we do use
Google products and partner with the company on various projects (it
would be impossible not to given the scale and influence of Google)
but our cherished content is vulnerable to exploitation. Benefitting
significantly from the efforts and investments of others, Google
must do more to ensure that rights are respected and that its
powerful search platform is not abused to eliminate competition.
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While there are many, many honorable and thoroughly professional
individuals working at Google, we have learned not to be naïve about
the company. The shining vision of Google's founders has been
replaced by a cynical management, which offers advertisers
impressively precise data about users and content usage, but has
been a platform for piracy and the spread of malicious networks, all
while driving more traffic and online advertising dollars to Google.
A company that boasts about its ability to track traffic chooses to
ignore the unlawful and unsavoury content that surfaces after the
simplest of searches. Google has been remarkably successful in its
ability to monetize users, but has not shown the willingness, even
though it clearly has the ability, to respect fundamental property
rights.
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Sudden changes are made to the ranking and display of Google search
results, which inevitably maximise income for Google and yet punish
small companies that have become dependent on Google for their
livelihood. Meanwhile, in recent months, Google has developed a
"certification" process for Android (News - Alert)-related products which allows it
to delay or deny content companies and other businesses access to
the mobile operating system, while giving itself the freedom to
develop competing products. This development reflects the
exponential evolution of Google from a company that is "open" to one
that is selectively closed and willing to exploit its dominant
market position to stifle competition.
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It is worth pausing for a moment to contemplate how the world of
content has evolved, and why five years is an eternity in internet
time. Virtually every newspaper in Europe is in the midst of
upheaval, and some will surely not exist five years from now, in
part because of their own flawed strategy and lack of leadership,
but also because the value of serious content has been commodified
by Google. The uniqueness of news sites has been undermined by
aggregation of content which transfers the front page to the Google
home page. Readers have been socialized into accepting this
egregious aggregation as the norm. The second phase of aggregation
is that of the audience. By tracking readers and exploiting its
dominance in online advertising, Google is commodifying the audience
of specialist publishers and limiting their ability to generate
advertising revenue. Data aggregators attempt to sell audiences at a
steep discount to the original source, for example, access to 75 per
cent of The Wall Street Journal demographic at 25 per cent of the
price, thus undermining the business model of the content creator.
This process is at a relatively early stage and needs constant
monitoring to ensure that abuses are halted and that there is a fair
return for newspapers, publishers and other investors in original
content.
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Clearly this habitual appropriation of content and audiences does
serious commercial damage, but there is also a profound social cost.
The internet should be a canvas for freedom of expression and for
high quality content of enduring value. Undermining the basic
business model of professional content creators will lead to a less
informed, more vexatious level of dialogue in our society. There
will be no shortage of opinions, in fact, opinions will proliferate,
but they will be based on ever flimsier foundations. The quality of
discourse will inevitably deteriorate and the intemperate trends we
are already seeing in much of Europe will proliferate.
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"Internet idealism" is used by Google and certain other digital
companies as an injudicious justification for inappropriate business
practices. Specifically on search, there is clear evidence that
Google systematically diverts users away from relevant sites to its
own related sites for commercial reasons. Google's illustrious
founders, Larry Page and Sergey Brin (News - Alert), sagely stated that "since it
is very difficult even for experts to evaluate search engines,
search engine bias is particularly insidious". Unfortunately, Google
no longer heeds that wisdom and warning (a search for "insidious"
quickly lead to pirate sites where the film of that name can be
viewed illegally). With video, Google routinely displays YouTube
results at the top of its search pages, even if YouTube is not the
original source of that content - the reason for that bias is that
YouTube gets a cut of the revenue and takes income away from the
company or person who created and posted that video.
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We genuinely respect the sincere and arduous work that you have
undertaken on the case, but our close examination of the proposed
remedies suggests that they will not resolve existing problems yet
alone deal with fast-developing challenges that will inevitably
become serious issues over coming years. The company's power
increases with each passing day, so to allow it five years to
fashion the future of content and to abuse its dominance in search
would be a mistake of magnitude. Google will certainly be the
winner, and among the losers will be those who create content and,
undoubtedly, the people of Europe.
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As you continue the investigation, we would be delighted to share
with your team our expertise and experience in search and on other
matters related to the Google case. We can provide both detail and
context that would lead to a fuller understanding of the short and
long-term consequences of the Commission's profoundly important
decision.
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Thank you for your serious consideration.
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About News Corp
News Corp (NASDAQ:NWS)(NASDAQ:NWSA) (ASX:NWS)(ASX:NWSLV) is a global,
diversified media and information services company focused on creating
and distributing authoritative and engaging content to consumers
throughout the world. The company comprises businesses across a range of
media, including: news and information services, cable network
programming in Australia, digital real estate services, book publishing,
digital education, and pay-TV distribution in Australia. Headquartered
in New York, the activities of News Corp are conducted primarily in the
United States, Australia, and the United Kingdom. More information: www.newscorp.com.
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