Photo Credit: Koshiro K/

Australian leaders want Google to pay news outlets for articles the tech giant serves up to users. In response, Google threatened to pull its search engine from the entire country.

Not just news, but democracy is at stake.

Google’s threat sounds absurd. But it actually happened. And Google wasn’t alone: Facebook also threatened to prevent Australians from sharing links to news articles if the country’s pay-for-news effort is successful. The standoff is coming to a head now, as Australian lawmakers debate legislation to which the tech giants are opposed.

That these threats can be made at all is evidence that saving a beleaguered journalism industry the world over means breaking the power of massive corporations such as Google and Facebook. Up to this point, many lawmakers across the world have simply looked for ways to cajole, not force, these corporate giants into providing compensation for the news content from which they benefit. Google’s threat shows why that course of action is insufficient to the challenge.

Finding a way to have big tech pay for news is a popular solution among lawmakers and journalists to stave off the collapse of print journalism in several countries, including the U.S. The sentiment makes sense. It’s undeniable that Google and Facebook, in particular, have done serious harm to the journalism industry by taking the money that used to sustain it, especially at the local level, where subscription-based models have been less viable and where private equity financiers have been stripping papers for spare parts.

Google and Facebook accomplished their dominance of news distribution in two major ways. First, they hoovered up the advertising revenue that once supported newspapers and magazines. In the U.S. currently, about 60 percent of digital ad revenue goes to Google and Facebook, with Amazon and a few others accounting for another 15 percent.

At best, print publications are now fighting each other over 25 percent of total ad spending. which means their lifeblood has been effectively choked off. Where once there were classified ads in the local paper, there are now Google ads.

Facebook and Google are able to command that percentage of ad traffic because of their dominance over social media, search engine optimization, and digital advertising. In Australia and the U.S., Google is responsible for more than 90 percent of internet searches. Companies claim they would barely notice if their listings were suspended on alternative search engines, but that suspension by Google would be an existential threat.

Google also commands nearly every step of the digital advertising system. Publishers find it next to impossible to sell ads without interacting with Google in some way, meaning Google can take a cut at every phase. Facebook, meanwhile, constitutes the bulk of social media traffic between its main site and others it owns, such as WhatsApp and Instagram.

This dominance over the internet – which has drawn antitrust lawsuits from the Department of Justice and state attorneys general – gives Google and Facebook the ability to “target” ads to specific user profiles in a way that traditional publications simply can’t. Their size, the scope of their data collection – and in the case of Google the ability to steer advertisers toward its own huge advertising property, YouTube – give them a massive leg up over any publisher.

The destruction of legacy journalism isn’t solely about ads. The second way Google and Facebook have harmed the journalism industry is by hijacking news consumers, using the Google News, Google Discover, and Facebook News platforms to aggregate content in a way that often renders clicking through to a publisher’s site unnecessary.

To be sure, Google and Facebook are responsible for driving traffic to news publishers. But they don’t do so willingly. Their business models are ultimately built on selling more advertising, which, crucially, means making their own sites sticky. Where once there were links to news articles on social media, now there are boxes with pictures, article leads, and “snippets” that serve up the gist of a piece right there on Google or Facebook. (Twitter, too, is guilty of purloining readers this way.)

These companies also leverage changes in their platforms to squeeze publishers into helping build their own walled gardens. For example, Google threatened to cut off referrals to publishers that didn’t adopt the platform’s Accelerated Mobile Pages format, which uses cached pages to keep users within the Google ecosystem rather than sending them through to the publishers’ own sites.

The profits – siphoned away from companies that actually invest in journalism – are enormous. In 2018 alone, Google made $4.7 billion on content generated by news outlets, according to an analysis by the News Media Alliance, not a dime of which was shared with those publications.

Essentially, Google and Facebook are the gateway to the internet for scores of users everywhere, and therefore act as toll booths, if not stop signs, between a news publication and its readers.

To be sure, both Google and Facebook make a big show of providing some payments, even as large as a $1 billion fund proposed by Google, to publishers. They suggest that they’re open to paying even more. But, as Joshua Benton explained at Nieman Lab, “you have to remember: Google’s interactions with the news industry are always fundamentally about its interests, not publishers.” When Google inked a deal to pay French publishers for content, it avoided key parts of Australia’s plan, such as a robust process for settling disputes between publishers and Google, as well as giving news organizations warning about algorithmic changes that would affect them.

Were the United States to suggest a similar plan to Australia’s, there’s little reason to think Google and Facebook wouldn’t play the same kind of hardball here. Indeed, the tech titans’ payments and grants to small news organizations, insignificant in the grand sweep of the global news industry, are likely meant to forestall more forceful action by governments to rein in and redistribute their power.

What does redistributing that power look like? Releasing Big Tech’s hold over the key communication lanes upon which people all over the world depend means breaking them up and imposing changes to their ability to target ads to individual users, as well as making them more liable for harms their platforms cause. Until this occurs, the 21st century equivalent of breaking up Big Oil or AT&T, Google and Facebook will always have the ability to hold a sword over local news outlets, specific users, and even entire countries.

But more is at stake than the consumer economy that was constrained by these earlier industrial and communications monopolies. Ultimately, saving local news is really about saving democracy. The vacuum left by local news outlets has increasingly been filled by hyper-partisan “news” sites that are explicitly pay to play for politicians. In areas that lose local news outlets, democratic participation falls and political polarization increases, as voters transpose divisive national issues onto their own community’s political debates. School and community board meetings come and go with no one in the community knowing that they have even occurred, much less what decisions were made. Financing local projects also becomes more expensive:  investors fear that fewer eyeballs on local officials will lead to worse stewardship of their money.

No corporation should be so big or systemically important  that it can credibly threaten to cut off an entire nation should lawmakers do something it doesn’t like. Australia’s experience should be a warning to everyone else that saving local news – and democracy along with it – requires reducing the power of the corporations that would make themselves governments in all but name.

Pat Garofalo is the author of The Billionaire Boondoggle: How Our Politicians Let Corporations and Bigwigs Steal Our Money and Jobs, the Boondoggle newsletter, and the director of state and local policy at the American Economic Liberties Project.