Butler newspaper sues Google, Facebook for harm to ad sales
The Butler Eagle is the latest newspaper to sue Google and Facebook on antitrust grounds, saying the two digital behemoths control most of the digital advertising in the U.S. and are threatening the survival of newspapers by siphoning off ad revenue.
The paper, which does business as Eagle Printing Co. and also publishes the Cranberry Eagle, filed the suit Monday in federal court in Pittsburgh and is asking a judge to enter an order declaring the companies’ actions illegal.
The suit also asks for triple damages for direct harm suffered by the newspaper at the hands of the two giants.
Newspapers around the country have in recent years filed similar suits challenging the dominance of Google and Facebook, with many saying the tradition of a free press in America is at risk without government intervention.
The Butler Eagle suit says newspaper advertising revenue nationally has dropped from $49 billion in 2006 to $16.5 billion in 2017. Nearly 30,000 newspaper jobs disappeared from 1990 to 2016. Many have gone under and others have become “shells — or ‘ghosts’ — of themselves,” the suit says in quoting a study out of the University of North Carolina.
“As a result of these falling revenues,” the complaint says, “the existence of the newspaper industry is threatened.”
The suit blames Google and Facebook and cites antitrust complaints launched by the Federal Trade Commission, the Department of Justice and many state attorneys general.
“If proven to be true, Google and Facebook have monopolized the digital advertising market, thereby strangling a primary source of revenue for newspapers across the country,” the suit says.
The complaint recounts the Eagle’s long history as a community resource, describes its role in Butler County and says the actions of Google and Facebook threaten it and similar newspapers nationwide to the point where many citizens will end up in a “news desert” once newspapers are gone.
“There is no longer a competitive market in which newspapers can fairly compete for online advertising revenue,” the complaint says. “The freedom of the press is not at stake; the press itself is at stake.”
Google has “vertically integrated itself, through hundreds of mergers and acquisitions, to enable dominion over all sellers, buyers and middlemen in the marketplace,” the suit says.
In addition to controlling the advertising market, the complaint says Google and Facebook, while rivals, also conspired to dominate the worldwide digital advertising market in a secret agreement called “Jedi Blue” under which they manipulate online auctions that generate ad revenue.
Under the deal, according to the complaint, Facebook agreed to forgo “its foray into header bidding and would instead bid through Google’s ad server. In exchange,
Google agreed to give Facebook preferential treatment in its auctions.”
The Butler paper’s suit alleges two causes of action on antitrust grounds: Google illegally exercises monopoly power of both search advertising and display advertising in violation of the Sherman Act, and Google and Facebook have teamed up to engage in “anticompetitive conduct” in violation of the Sherman Act.
The Sherman Antitrust Act, passed in 1890, is designed to keep companies or cartels from dominating commerce and reducing economic competition.
In a statement, Google said, “These claims are baseless. The online advertising space is crowded and competitive, our ad tech fees are lower than reported industry averages, and publishers keep the vast majority of revenue earned when using our products. Facebook is one of over 25 partners who participate in our Open Bidding program, which works to increase demand for publishers’ ad space and help them earn more revenue.”
Facebook did not immediately respond to a request for comment on Wednesday.