When Microsoft’s Brad Smith testified against Google at a House subcommittee hearing, the online giant lashed out in a way that can only be described as unhinged.
“While Google and Facebook have gained the most revenue from the shift to digital advertising, Google in multiple ways is unique,” Microsoft president Brad Smith’s written testimony to the House Committee on the Judiciary, Subcommittee on Antitrust, Commercial, and Administrative Law reads. “Google has been the biggest winner, capturing about a third of all digital advertising revenue in U.S. in the last year. Indeed, since its founding just over twenty years ago, Google has grown its global ad revenue to approximately $147 billion.”
Mr. Smith used the word “Google” 75 times in his written testimony, which was directed at an investigation into the negative impact on online advertising on journalism and our democracy. He noted that Google plays “multiple roles” in our online lives thanks to its dominance, and that Google has subverted journalism by stealing content that it thinks of as “food that feeds its search and advertising network” from those that create that content.
“Google has effectively transformed itself into the ‘front page’ for news, owning the reader relationship and relegating news content on their properties to a commodity input,” he testified. “The advertising revenue of the nation’s newspapers fell from $49.4 billion in 2005 to $14.3 billion in 2018. During this same time, Google’s advertising revenue rose from $6.1 billion to $116 billion. This is not a coincidence.”
Smith pointed at the success of Australia in getting Google to finally pay for the content it has, to date, stolen, and said that it was “proving effective” and could be used as a model for similar regulations around the globe. “We’re sensitive to the argument that we must avoid enacting a law that would ‘break the Internet’,” Smith added. “We would not have endorsed the Australian law if we believed there was any real merit to Google’s argument that the country’s legislation would have done that.”
Google’s reaction to this testimony is rather interesting, and it reminds me very much of Amazon’s unhinged reaction to Microsoft’s Joint Enterprise Defense Infrastructure (JEDI) contract award almost a year ago. That is, maybe it should have sat on this one for a day and thought it over.
“This important debate should be about the substance of the issue, and not derailed by naked corporate opportunism, which brings us to Microsoft’s sudden interest in this discussion,” Google’s Kent Walker rants in an op-ed in the Google Keyword blog. “We respect Microsoft’s success and we compete hard with them in cloud computing, search, productivity apps, video conferencing, email[,] and many other areas. Unfortunately, as competition in these areas intensifies, they are reverting to their familiar playbook of attacking rivals and lobbying for regulations that benefit their own interests. They are now making self-serving claims and are even willing to break the way the open web works in an effort to undercut a rival. And their claims about our business and how we work with news publishers are just plain wrong.”
Mr. Walker’s assertions that Microsoft taking a stand against it are “naked corporate opportunism” and “self-serving” are inflammatory, but they’re also hilarious. Of course, Microsoft is looking for a self-serving opportunity. It’s a corporation. That’s what corporations do.
But where Walker really loses the script is with the following bit in which he claims that Microsoft is only going down this path to draw attention away from the SolarWinds attacks. Yes, really.
“It’s no coincidence that Microsoft’s newfound interest in attacking us comes on the heels of the SolarWinds attack and at a moment when they’ve allowed tens of thousands of their customers — including government agencies in the U.S., NATO allies, banks, nonprofits, telecommunications providers, public utilities, police, fire and rescue units, hospitals and, presumably, news organizations — to be actively hacked via major Microsoft vulnerabilities,” Walker claims. “Microsoft was warned about the vulnerabilities in their system, knew they were being exploited, and are now doing damage control while their customers scramble to pick up the pieces from what has been dubbed the Great Email Robbery. So maybe it’s not surprising to see them dusting off the old diversionary Scroogled playbook.”
Actually, it is coincidental. That Google is being questioned about its destruction of journalism and being asked and perhaps forced to pay for news content that it had been stealing in the same rough time period as whatever Microsoft events is, of course, not of Microsoft’s doing. It literally is a coincidence.
As I’ve pointed out in the past, Microsoft can make these complaints because it, unlike Google, does not rely on advertising for a huge chunk (~80 percent) of its revenues. That’s doesn’t make Microsoft a “better” company than Google—a lot more goes into that—but it does mean that Microsoft is uniquely positioned to take this stance. And that it should want to take down one of a handful of major gatekeepers in Big Tech is, of course, likewise understandable. Per the earlier point, corporations compete with each other.
Tagged with Antitrust