Google and Facebook owe US$13 billion annually to the US media, says study – 11/13/2023 – Tech

The Institute for Policy Dialogue, linked to Columbia University, released this Monday (13) a study that estimates that the Google search service and the social network Facebook should pass on approximately US$ 13 billion to news outlets in the United States (R $64 billion) annually.

The amount rounds off the range between US$11.9 billion and US$13.9 billion that the work reached. The breakdown is $10-12 billion owed by Google, and $1.9 billion by Facebook.

Led by Anya Schiffrin, senior lecturer at the New York university, and Haaris Mateen, professor at the University of Houston, in Texas, the report seeks to counter the lack of transparency in the agreements that have been reached between the two big techs and some journalistic groups Americans.

“The best thing would be for Google and Facebook to share this data with researchers and regulators, perhaps not publicly, but through some method, so that we can all study and understand the value of the news,” says Mateen, the study’s lead economist, a graduate of engineering from the Indian Institute of Technology and a doctorate in economics from Columbia.

He says the report reflects “the best information available” and outlines the three steps taken to arrive at the estimate.

The first was to define that advertising revenue would be considered and restrict the focus to Google and Facebook and the American market, then collecting the data. Other platforms owned by both groups, such as YouTube and Instagram, were left out.

In the second step, the report sought to define the proportion of users for whom the presence of news is essential, starting with Google and an experiment by FehrAdvice, a Swiss behavioral economics consultancy.

Half of the users in the experiment used a version of Google without news, the other half used the original. “And Fehr came up with a number: 35% of users need news content, without which Google loses significant value to them,” describes Mateen.

For Facebook, the basis was a recent study in the academic journal American Economic Review, which analyzed patterns of use of the social network in the USA, gathering a large amount of data.

“We downloaded the data, cleaned it, processed everything and discovered that users spend 13% of their time on Facebook consuming news,” he says.

The third step was to define that both sides benefit from the use of news by the platforms and seek a division. “The idea is that Google and Facebook win because users want trustworthy content, and the outlets win because they can share their content with lots of people,” says Mateen.

“We calculate the economic value generated by the combination of services and determine how this value should be divided, fairly, between vehicles and technology companies”, says economist Patrick Holder, from the Brattle Group consultancy, who also worked on the survey.

The proportion they arrived at was half and half (50/50). With this, the report reached a transfer of between US$ 11.9 billion and US$ 13.9 billion annually.

The methodology is detailed in the report, according to Anya Schiffrin, partly so that it can be replicated in other countries. “We focus on the US, but you can do this exercise in Brazil,” says Mateen. “Obviously, the numbers would change, but it’s just a matter of finding what is applicable for each country, the methodology is flexible.”

In a message sent to the American website Semafor, Google rejected the data presented in the report and the methodology.

“Less than 2% of all searches are news-related,” said its advisor, adding that the platform generates “enormous value for news outlets, sending more than 24 billion visitors to their websites – at no cost to them – that they can monetize.”

The team that produced the report is already moving to adapt the methodology to also estimate the transfer to be made through the use of news in artificial intelligence tools, which are beginning to become popular.

American outlets, such as The New York Times, would already be negotiating directly with new technology companies, such as OpenAI, which launched ChatGPT a year ago. As with agreements with current platforms, there is no transparency about figures or calculations.

“We’ve already started working on it, because it’s the next advancement,” says Mateen. “Technology moves fast, so do we. It’s obvious they’re using news content, so they have to pay reporters something. I hope to respond in a few months.”

He and Schiffrin, according to the report, did not receive funding to carry out the study. Holder and another economist from the Brattle group, Haris Tabakovic, were partially sponsored by eBay founder Pierre Omidyar’s Omidyar Network.