Posted on

Ad Council’s Challenge: Persuade Skeptics to Believe in Covid Vaccines

With coronavirus cases on the rise and communities returning to lockdown across the country, a marketing push is underway to persuade skeptical Americans to immunize themselves once vaccines are ready.

The federal government, which has sent mixed messages about a pandemic that has caused more than 250,000 deaths nationwide, is not leading the charge. Instead, the private sector is backing a planned $50 million campaign to persuade people to protect themselves at a time when polls have suggested that more than 40 percent of adult Americans are not confident in a potential vaccine.

The Ad Council, a nonprofit advertising group, led a similar effort in the 1950s, when it urged Americans to get vaccinated against polio. Its Covid-19 vaccination push will be one of the largest public education crusades in history, the group said. On Monday, the Ad Council will announce the new campaign and start testing messaging. It will start rolling out public service announcements across airwaves, publications and social media next year, when vaccines are expected to be approved and made available to the public.

Image

Credit…Ad Council

The White House has collaborated with the Ad Council on previous public health efforts, but it is not currently involved in this one.

“Frankly, this is the biggest public health crisis we’ve ever faced, and we don’t have time to waste,” said Lisa Sherman, the group’s chief executive. “We’re working in advance, so that once those vaccines are proven to be safe and approved by all the right people, we’re ready to go.”

While the pharmaceutical companies Pfizer and Moderna have announced promising updates on the vaccines they are developing, President-elect Joseph R. Biden Jr. has blamed President Trump for causing anxiety about the safety of potential immunization efforts. Anti-vaccine sentiment has been growing for decades, driven in part by a backlash against pharmaceutical companies.

Fifty-eight percent of American adults said they were willing to take a coronavirus vaccine, according to a Gallup poll conducted between Oct. 19 and Nov. 1. Another poll, conducted last month by Ipsos and the World Economic Forum, found that 85 percent of Chinese adults, 79 percent of British adults and 76 percent of Canadian adults planned to be vaccinated, compared to 64 percent of Americans.

The Ad Council has joined with a coalition of experts known as the Covid Collaborative, which concluded through its own survey that only one-third of Americans plan to get vaccinated.

Researchers from the University of Pennsylvania conducted a study during a measles outbreak last year and concluded that “a relatively high number of individuals are at least somewhat misinformed about vaccines,” often expressing mistaken beliefs about the treatments’ association with autism and toxins. The researchers also found a correlation between belief in vaccine misinformation and low trust in medical authorities, as well as exposure to material about vaccines on social media.

Steve Danehy, a Pfizer spokesman, said in an email that “public education around the need for vaccination, as well as the rigorous process by which the vaccines have been developed, is critical.”

Public messaging campaigns can be instrumental in persuading people to act in a health crisis. Travel advisories kept many pregnant tourists and business travelers away from areas struggling to contain the Zika epidemic in 2016, for instance.

The marketing plan for a coronavirus vaccine must persuade people that the treatment is safe and effective, while also providing practical instructions on where people can get vaccinated and how they can schedule appointments, said Dolores Albarracin, a psychology, business and medicine professor at the University of Illinois at Urbana-Champaign.

“If you do not introduce information about how to achieve vaccination, simply a favorable attitude will not take people to the vaccination site,” she said. “Without an understanding of the psychological and socio-structural processes leading to vaccination, it’s going to be difficult to get the 47 percent of people who don’t intend to vaccinate to do it.”

Research by the Covid Collaborative suggests that fewer than 20 percent of Black Americans believe that a vaccine will be safe or effective. Many respondents stated that they had little faith in the government’s ability to look after their interests or cited distrust stemming from past ethics violations, such as the infamous Tuskegee study, which tracked Black men infected with syphilis but did not treat them.

“In these highly vulnerable communities that are disproportionately affected by Covid, it’s a big, big trust-building exercise from the ground up,” said John Bridgeland, one of the founders and the chief executive of the Covid Collaborative. “They trust their physicians, their pharmacists, and so we have to go very local in having trusted messengers.”

Mr. Bridgeland said that working to defeat the virus was a “historically big moment” that required moving beyond “our political divisions and the difficulties that have undermined trust in our government.”

“Our job as a country is to increase the uptake of the vaccine so Americans are actually engaged in their own recovery,” he said.

Read More

Posted on

BuzzFeed is Buying HuffPost

After falling prey to some of the same business difficulties that have plagued newspapers and magazines, the digital-media giants BuzzFeed and HuffPost have decided to join forces, the companies announced on Thursday.

Under the plan, BuzzFeed will acquire HuffPost from its owner, Verizon Media, as part of a larger stock deal, the companies said. The BuzzFeed and HuffPost websites will remain distinct, each with its own editorial staff. The BuzzFeed founder Jonah Peretti, who helped found HuffPost 15 years ago, will serve as the chief executive.

As part of the arrangement, Verizon Media will become a minority shareholder in BuzzFeed, the companies said, but it will not have a seat on BuzzFeed’s board.

“We’re excited about our partnership with Verizon Media, and mutual benefits that will come from syndicating content across each other’s properties, collaborating on innovative ad products and the future of commerce, and tapping into the strength and creativity of Verizon Media Immersive,” Mr. Peretti said in a statement.

BuzzFeed and HuffPost have struggled, with both having gone through rounds of layoffs in recent years. Mr. Peretti believes that getting bigger is the right move for his business.

Digital media, a relatively open territory when HuffPost started in 2005, has grown crowded and more competitive. Google and Facebook have grabbed huge chunks of ad revenue from publishers; Twitter, Facebook, YouTube and Twitch are taking would-be readers’ attention; and many legacy media outlets have gotten the hang of the web while also figuring out how to persuade readers to pay for content.

The deal between BuzzFeed and HuffPost marks the fourth significant merger among name-brand digital publishers, following the combination of Vox Media and New York Magazine, Vice Media’s acquisition of Refinery29, and Group Nine’s merger with PopSugar. Digital journalism needs size to survive — and even these deals may not be enough to sustain their operations.

Because BuzzFeed and HuffPost appeal to different readerships, they should complement each other as part of the same company, Mr. Peretti said in an interview on Thursday.

“We want HuffPost to be more HuffPosty, and BuzzFeed to be more BuzzFeedy — there’s not much audience overlap,” he said. “These are different audiences they serve. On the editorial side and the consumer side, we want to have a lot of independence and autonomy for HuffPost and for it to determine its own brand.”

Mr. Peretti, 46, also said HuffPost will have a new editor in chief. The site’s previous top editor, from 2016 until March of this year, was Lydia Polgreen, a former New York Times editor. She left HuffPost to become the head of content at the podcasting company Gimlet Media, and a successor has yet to be named. On the business side, operations are likely to be combined.

Mr. Peretti approached Verizon on several occasions about a possible HuffPost acquisition, he said in the interview. In 2018, shortly after Hans E. Vestberg was named Verizon’s chief executive, Mr. Peretti made an overture, only to be rebuffed.

He said he found a willing ear in January at the Consumer Electronics Show in Las Vegas, the convention that draws digital publishers, tech companies and major advertisers who meet to broker multimillion-dollar marketing agreements between games of craps and blackjack.

In a suite at the Aria Resort and Casino on the 35th floor overlooking the Vegas Strip, Mr. Peretti met with Guru Gowrappan, the Verizon Media chief executive, who reports to Mr. Vestberg, to discuss ways the two companies could work together.

At first, they discussed how Verizon Media could help BuzzFeed with its ad technology, as well as the possibility of entering into a content-sharing arrangement. Some months later, the talk turned to an acquisition, Mr. Peretti said.

“While considering opportunities to work together, naturally, Jonah and I also discussed the property he co-founded, HuffPost,” Mr. Gowrappan said in a statement. “We quickly realized BuzzFeed’s strategy would complement HuffPost’s road map, injecting it with new energy and growing the brand into the future.”

HuffPost had seen a large drop in revenue because of the coronavirus pandemic, according to two people with knowledge of the company, who were not authorized to discuss it publicly. In an interview, Mr. Gowrappan said that the company believed in Mr. Peretti’s approach, which persuaded him that a merger deal would add value.

Once the deal goes through, BuzzFeed will have to find ways to cut costs, the two people said. Mr. Peretti’s company was on track to turn a profit this year, but the addition of HuffPost will add more costs starting next year. The deal includes some cash from Verizon that will help BuzzFeed pay for severance for possible layoffs and other costs associated with the merger, the two people said.

Both outlets share DNA. Along with the political power player Arianna Huffington and the investor Kenneth Lerer, Mr. Peretti was part of the team that created the original Huffington Post, as it was then known, in 2005. The driving idea was to build a liberal version of Drudge Report — an online gathering spot for readers fed up with the George W. Bush administration.

The site benefited from Ms. Huffington’s Rolodex, back when Rolodexes were still a thing: She was able to charm big-name contributors from Hollywood and the Beltway to write for free. Steeped in the Google algorithm, Mr. Peretti, the site’s chief technology officer, along with its editors, helped make Huffington Post into an online force, one that featured a new brand of journalism — unapologetically web-native, complete with slide shows, hot-take opinion pieces and curiosity-inducing headlines — that drew millions of clicks in the years before Twitter and other social media platforms took charge of the internet discourse.

In 2006, Mr. Peretti, a scientist of the web with a perennial interest in which pieces of online content proved most engaging to readers, started BuzzFeed while he was still HuffPost’s chief technology officer. At first, it was an experimental project that he ran out of a small office in Manhattan’s Chinatown. Mr. Peretti left HuffPost in 2011, after it was sold to AOL for $315 million, and with the help of $35 million from corporate investors, he transformed his side gig into a stand-alone media company.

BuzzFeed caught on as a website filled with features aimed at a largely millennial audience, things like “21 Pictures That Will Restore Your Faith in Humanity” and a video of BuzzFeeders trying to make a watermelon explode. As the site matured, it went deep into current-events coverage and investigative articles under BuzzFeed News, a division that was led for eight years by its founding editor, Ben Smith, before he joined The Times as its media columnist, and is now run by Mark Schoofs.

But struggles lay ahead.

In 2017, BuzzFeed cut 100 employees after missing revenue targets. Last year, it laid off more than 220 employees, or 15 percent of its work force. Amid the cost-cutting measures, BuzzFeed added banner ads, a form of advertising it once eschewed. It even expanded into the retail business, with branded products, including a recent partnership to create sex toys.

HuffPost cut 39 employees during a round of layoffs in 2017. In early 2019, Verizon said it would cut 800 positions, or 7 percent of its media divisions. Later that year, HuffPost let 11 video employees go.

In a 2018 interview with The Times, Mr. Peretti dropped huge hints that his site would be better off as part of a larger entity. “If BuzzFeed and five of the other biggest companies were combined into a bigger digital media company,” he said at the time, “you would probably be able to get paid more money.”

In the interview on Thursday, Mr. Peretti did not rule out another merger.

“We will continually look at opportunities, but I haven’t taken the approach of trying to rush it,” he said just before hopping off the call to lead an all-hands meeting of the HuffPost staff. “We’re building a real platform for digital media to get more value from content operations that we own, that everyone should be getting.”

Posted on

Big Tech Continues Its Surge Ahead of the Rest of the Economy

While the rest of the U.S. economy languished earlier this year, the tech industry’s biggest companies seemed immune to the downturn, surging as the country worked, learned and shopped from home.

On Thursday, as the economy is showing signs of improvement, Amazon, Apple, Alphabet and Facebook reported profits that highlighted how a recovery may provide another catalyst to help them generate a level of wealth that hasn’t been seen in a single industry in generations.

With an entrenched audience of users and the financial resources to press their leads in areas like cloud computing, e-commerce and digital advertising, the companies demonstrated again that economic malaise, upstart competitors and feisty antitrust regulators have had little impact on their bottom line.

Combined, the four companies reported a quarterly net profit of $38 billion.

Amazon reported record sales, and an almost 200 percent rise in profits, as the pandemic accelerated the transition to online shopping. Despite a boycott of its advertising over the summer, Facebook had another blockbuster quarter. Alphabet’s record quarterly net profit was up 59 percent, as marketers plowed money into advertisements for Google search and YouTube. And Apple’s sales rose even though the pandemic forced it to push back the iPhone 12’s release to October, in the current quarter.

On Tuesday, Microsoft, Amazon’s closest competitor in cloud computing, also reported its most profitable quarter, growing 30 percent from a year earlier.

“The scene that’s playing out fundamentally is that these tech stalwarts are gaining more market share by the day,” said Dan Ives, managing director of equity research at Wedbush Securities. “It’s ‘A Tale of Two Cities’ for this group of tech companies and everyone else.”

The results were strong despite increasing antitrust scrutiny from regulators. Last week, the Justice Department filed a lawsuit accusing Google of cementing the dominance of its search engine through anticompetitive agreements with device makers and mobile carriers. Facebook faces a possible antitrust case from the Federal Trade Commission.

The companies’ advantages are becoming more pronounced in an economy starting to dig out from the coronavirus pandemic. On Thursday, the Commerce Department said U.S. economic output grew 7.4 percent last quarter, the fastest pace on record, but remained below where it was in the last pre-pandemic quarter.

That slow return to health is also providing momentum to companies that suffered early in the pandemic, like Twitter, which reported on Thursday that revenue rose 14 percent in the third quarter as advertisers started to return. Twitter’s stock dropped about 14 percent in after-hours trading on Thursday, a reaction that analysts attributed to slow user growth.

Big Tech’s third-quarter boom could look modest when compared with the final quarter of the year. For Apple, it’s when consumers buy newly released iPhones. And the year-end shopping peak means lots of customers turning to Amazon for gifts, while advertisers rely on Google and Facebook for digital ads during the holidays.

The pandemic-fueled surge in online shopping pushed Amazon to a record for both sales and profits in the latest quarter.

Sales were $96.1 billion, up 37 percent from a year earlier, and profits rose to $6.3 billion.

The quarter did not include the usual boost from Prime Day, Amazon’s yearly deal bonanza, which was delayed to October. And the profit increased during a building boom, with Amazon expanding its fulfillment infrastructure by 50 percent this year. The company added almost 250,000 employees in the quarter, for the first time surpassing more than a million workers.

The lucrative Amazon Web Services division grew 29 percent as companies continued their shift to cloud computing.

Amazon said sales could reach $121 billion in the fourth quarter because of the confluence of Prime Day, the holiday shopping season and the turn to online spending.

The delay in the iPhone 12’s release meant Apple would face a tough comparison with the same quarter last year, which included sales of the iPhone 11. As a result, iPhone sales dropped more than 20 percent in the quarter.

Image
Credit…Michael M. Santiago/Getty Images

Yet Apple’s overall sales still rose 1 percent to $64.7 billion, showing the increasing strength of other parts of the company’s business.

Apple’s services segment, which includes revenues from the App Store and offerings like Apple Music, increased 16 percent to $14.5 billion. Sales rose 46 percent for iPads, 29 percent for Mac computers and 21 percent for wearables.

Profits fell 7 percent to $12.7 billion, partly because the company spent more on research and development.

“There are lots going on here, and everything is going incredibly well,” Luca Maestri, Apple’s finance chief, said in an interview.

Facebook’s revenue for the third quarter rose 22 percent from a year earlier, to $21.2 billion, while profits jumped 29 percent to $7.84 billion. The results surpassed analysts’ estimates of $19.8 billion in revenue and profits of $5.53 billion, according to data provided by FactSet.

Facebook had strong results despite a wide-ranging boycott by advertisers this summer over issues of hate and toxic speech on the site. Though the grass-roots campaign, Stop Hate for Profit, rallied many of the top advertisers on Facebook to reduce their spending, the overall effects were brief.

The company continued gaining users as well. More than 1.82 billion people used the Facebook app every day, up 12 percent from a year earlier, it said. More than 2.54 billion people now use one or more of Facebook’s family of apps — Instagram, WhatsApp, Messenger or Facebook — daily, up 15 percent from a year earlier.

After its first-ever decline in quarterly revenue in the second quarter, Alphabet rebounded with its highest-ever profit. The strength came from across Google, with search advertising revenue growing 6 percent and YouTube ad spending rising 32 percent. Google’s cloud computing business grew 45 percent.

When advertisers slowed spending with Google this year as Covid-19 started to spread, Alphabet’s business took a significant hit. But as the economy has improved and businesses found their footing, advertisers have returned.

Alphabet posted a net profit of $11.25 billion in the third quarter as revenue rose 14 percent to $46.1 billion. Ruth Porat, Alphabet’s chief financial officer, said the improved profitability reflected efforts to cut costs during the economic downturn, including a hiring slowdown.

Posted on

Justice Department Files Antitrust Lawsuit Against Google

WASHINGTON — The Justice Department accused Google of illegally protecting its monopoly over search and search advertising in a lawsuit filed on Tuesday, the government’s most significant legal challenge to a tech company’s market power in a generation.

In a 57-page complaint, filed in the U.S. District Court in the District of Columbia, the agency accused Google of locking out competition in search by obtaining several exclusive business contracts and agreements. Google’s deals with Apple, mobile carriers and other handset makers to place its search engine as the default option for consumers accounted for most of its dominant market share in search, the agency said, a figure that it put at around 80 percent.

“For many years,” the suit said, “Google has used anticompetitive tactics to maintain and extend its monopolies in the markets for general search services, search advertising and general search text advertising — the cornerstones of its empire.”

[embedded content]

The suit reflects the pushback against the power of the nation’s largest corporations, and especially technology giants like Google, Amazon, Facebook and Apple. Conservatives like President Trump and liberals like Senator Elizabeth Warren have been highly critical of the concentration of power in a handful of tech behemoths.

Attorney General William P. Barr, who was appointed by Mr. Trump, has played an unusually active role in the investigation. He pushed career Justice Department attorneys to bring the case by the end of September, prompting pushback from lawyers who wanted more time and complained of political influence. Mr. Barr has spoken publicly about the inquiry for months and set tight deadlines for the prosecutors leading the effort.

The lawsuit may stretch on for years and could set off a cascade of other antitrust lawsuits from state attorneys general. About four dozen states and jurisdictions have conducted parallel investigations and are expected to bring separate complaints against the company’s grip on technology for online advertising. Eleven state attorneys generals, all Republicans, signed on to support the federal lawsuit.

A victory for the government could remake one of America’s most recognizable companies and the internet economy that it has helped define since it was founded by two Stanford University graduate students in 1998. The Justice Department will not immediately put forward remedies, such as selling off parts of the company, in the lawsuit, the officials said. Such actions are typically pursued in later stages of a case.

Ryan Shores, an associate deputy attorney general, said “nothing is off the table” in terms of remedies.

Google has long denied accusations of antitrust violations, and the company is expected to fight the government’s efforts by using its global network of lawyers, economists and lobbyists. Alphabet, valued at $1.04 trillion and with cash reserves of $120 billion, has fought similar antitrust lawsuits in Europe. The company spent $12.7 million lobbying in the United States in 2019, making it one of the top corporate spenders in Washington.

The company says it has strong competition in the search market, with more people finding information on sites like Amazon. It says its services have been a boon for small businesses.

“Today’s lawsuit by the Department of Justice is deeply flawed,” Kent Walker, the company’s chief legal officer, said in a blog post. “People use Google because they choose to, not because they’re forced to, or because they can’t find alternatives.”

Mr. Walker said the lawsuit would do “nothing to help consumers. To the contrary, it would artificially prop up lower-quality search alternatives, raise phone prices and make it harder for people to get the search services they want to use.”

Democratic lawmakers on the House Judiciary Committee released a sprawling report on the tech giants two weeks ago, also accusing Google of controlling a monopoly over online search and the ads that come up when users enter a query.

“A significant number of entities — spanning major public corporations, small businesses and entrepreneurs — depend on Google for traffic, and no alternate search engine serves as a substitute,” the report said. The lawmakers also accused Apple, Amazon and Facebook of abusing their market power. They called for more aggressive enforcement of antitrust laws, and for Congress to consider strengthening them.

The scrutiny reflects how Google has become a dominant player in communications, commerce and media over the last two decades. That business is lucrative: Last year, Google brought in $34.3 billion in search revenue in the United States, according to the research firm eMarketer. That figure is expected to grow to $42.5 billion by 2022, the firm said.

In its complaint, the Justice Department said that Google’s actions had hurt consumers by stifling innovation, reducing choice and diminishing the quality of search services, including consumer data privacy. It also said that advertisers that use its products “must pay a toll to Google’s search advertising and general search text advertising monopolies.”

The lawsuit is the result of an investigation that has stretched for more than a year. Prosecutors have spoken with Google’s rivals in technology and media, collecting information and documents that could be used to build a case.

The Justice Department also investigated Google’s behavior and acquisitions in the overall market for digital advertising, which includes search, web display and video ads.

But the search case is the most straightforward, giving the government its best chance to win. To prevail, the Justice Department has to show two things: that Google is dominant in search, and that its deals with Apple and other companies hobble competition in the search market.

Gene Kimmelman, a former senior antitrust official at the agency, said the case focused on how Google’s lock on search allowed it to “control a treasure trove of user data and deny access to competitors.” He said the focus on contracts was significant because some were made when Microsoft’s Bing and Yahoo posed a competitive threat to Google’s search.

In its blog post, Google argued that there is nothing wrong with its agreements with Apple, other handset manufacturers and carriers, comparing them to cereal brands paying for prominent placement on store shelves. It also said it was not difficult for consumers to switch default settings from Google to another search engine.

Mr. Barr, a former telecom executive at Verizon who once argued an antitrust case before the Supreme Court, signaled that he would put the tech giants under new scrutiny at his confirmation hearing in early 2019. He said that “a lot of people wonder how such huge behemoths that now exist in Silicon Valley have taken shape under the nose of the antitrust enforcers.”

He put the investigation under the control of his deputy, Jeffrey Rosen, who in turn hired an aide from a major law firm to oversee the case and other technology matters. Mr. Barr’s grip over the investigation tightened when the head of the Justice Department’s antitrust division, Makan Delrahim, recused himself from the investigation because he represented Google in its acquisition of the ad service DoubleClick in 2007.

Image
Credit…Anna Moneymaker for The New York Times

Mr. Barr pushed prosecutors to wrap up their inquiries — and decide whether to bring a case — before Election Day. While Justice Department officials are usually tight-lipped about their investigations until a case is filed, Mr. Barr publicly declared his intention to make a decision on the Google matter by the end of the summer.

This year, most of the roughly 40 lawyers building the case said they opposed bringing a complaint by Mr. Barr’s Sept. 30 deadline. Some said they would not sign the complaint, and several left the case this summer.

In a call with reporters on Tuesday, the agency’s lawyers were guarded about many aspects of the investigation, such as whether they considered building out the case to other parts of Google’s business or about their conversations with the company. They specifically avoided answering a question about whether the agency spoke to Larry Page, Google’s co-founder and former chief executive of its parent company, Alphabet.

Google last faced serious scrutiny from an American antitrust regulator nearly a decade ago, when the Federal Trade Commission investigated whether it had abused its power over the search market. The agency’s staff recommended bringing charges against the company, according to a memo reported on by The Wall Street Journal. But the agency’s five commissioners voted in 2013 not to bring a case.

Other governments have been more aggressive toward the big tech companies. The European Union has brought three antitrust cases against Google in recent years, focused on its search engine, advertising business and Android mobile operating system. Regulators in Britain and Australia are examining the digital advertising market, in inquiries that could ultimately implicate the company.

“It’s the most newsworthy monopolization action brought by the government since the Microsoft case in the late ‘90s,” said Bill Baer, a former chief of the Justice Department’s antitrust division. “It’s significant in that the government believes that a highly successful tech platform has engaged in conduct that maintains its monopoly power unlawfully, and as a result injures consumers and competition.”

Google and its allies will likely criticize the suit as politically motivated. The Trump administration has attacked Google, which owns YouTube, and other online platform companies as being slanted against conservative views.

The lawsuit will likely outlast the Trump administration. The Justice Department spent more than a decade taking on Microsoft. The agency filed its lawsuit against the company in 1998 and the settlement was approved in 2002.

Google’s representatives said they anticipated that it would be at least a year before the case went to trial.

While it is possible that a new Democratic administration would review the strategy behind the case, experts said it was unlikely that it would be withdrawn under new leadership.

Steve Lohr contributed reporting

Posted on

What Is Happening With the Antitrust Suit Against Google?

The Justice Department sued Google on Tuesday, accusing the company of illegally abusing its dominance in internet search in ways that harm competitors and consumers.

The suit is the first antitrust action against the company, owned by Alphabet, to result from investigations by the Justice Department, Congress and 50 states and territories. State attorneys general and federal officials have also been investigating Google’s behavior in the market for online advertising. And a group of states is exploring a broader search case against Google.

Here is what you need to know about the suit.

This is one step against a single company. But it is also a response to the policy question of what measures, if any, should be taken to curb today’s tech giants, which hold the power to shape markets, communication and even public opinion.

Politics steered the timing and shape of this suit. Attorney General William P. Barr wanted to move quickly to take action before the election, making good on President Trump’s pledge to take on Big Tech. Eleven states joined the suit.

This is a monopoly defense case. The government says that Google is illegally protecting its dominant position in the market for search and search advertising with the deals it has struck with companies like Apple. Google pays Apple billions of dollars a year to have its search engine set as the default option on iPhones and other devices.

The Justice Department is also challenging contracts Google has with smartphone makers that use Google’s Android operating system, requiring them to install its search engine as the default.

The Justice Department also investigated Google’s behavior and acquisitions in the overall market for digital advertising, which includes search, web display and video ads. Online advertising was the source of virtually all of Alphabet’s $34 billion in profit last year.

But the search case is the most straightforward, giving the government its best chance to win. To prevail, the Justice Department has to show two things — that Google is dominant in search, and that its deals with Apple and other companies hobble competition in the search market.

In short: We’re not dominant and competition on the internet is just “one click away.”

That is the essence of recent testimony in Congress by Google executives. Google’s share of the search market in the United States is about 80 percent. But looking only at the market for “general” search, the company says, is myopic. Nearly half of online shopping searches, it notes, begin on Amazon.

Next, Google says the deals the Justice Department is citing are entirely legal. Such company-to-company deals violate antitrust law only if they can be shown to exclude competition. Users can freely switch to other search engines, like Microsoft’s Bing or Yahoo Search, anytime they want, Google insists. Its search service, Google says, is the runaway market leader because people prefer it.

Consumer harm, the government argues, can result in several ways. Less competition in a market means less innovation and less consumer choice in the long run. That, in theory, could close the market to rivals that collect less data for targeted advertising than Google. Enhanced privacy, for example, would be a consumer benefit.

Goods that are free to consumers are not exempt from antitrust oversight. In the landmark Microsoft case of the late 1990s, the software giant bundled its web browser for free into its dominant Windows operating system. Microsoft lost because, using restrictive contracts, it bullied personal computer makers and others to try to prevent them from offering competing web browser software — competition that could have undermined the Windows monopoly.

Unless the government and Google reach a settlement, they’re headed to court. Trials and appeals in such cases can take years.

Whatever the outcome, one thing is certain: Google will face continued scrutiny for a long time.

Posted on

Motel 6 and Home Depot Drop Ad Agency After Its Founder Calls Ad ‘Too Black’

Motel 6, Home Depot and Keurig Dr Pepper have cut ties with the Richards Group, an advertising agency in Dallas, after a report that its founder had made racist remarks in a meeting last week.

During a Zoom gathering of more than three dozen Richards Group employees on Thursday, a creative team working on the Motel 6 account presented an idea for an ad to Stan Richards, who founded the Richards Group in 1976. Mr. Richards responded to the idea by saying, “It’s too Black,” according to a person at the meeting, who said the ad would have featured Black, white and Hispanic guests. Mr. Richards, who is white, added that the ad might offend or alienate Motel 6’s “white supremacist constituents,” the person said.

A Richards Group spokeswoman confirmed that Mr. Richards, 87, had made the “too Black” remark, but said in an email that he was trying to convey that the proposed ad “was not multiculturally inclusive enough.”

When asked about Mr. Richards’ comment on white supremacists, which was first reported by the publication AdAge, the agency spokeswoman said, “Although his comments did reference that group, that quote is not correct.” Mr. Richards apologized to hundreds of the agency’s employees on a Zoom call on Friday.

Motel 6, which is owned by the private equity firm Blackstone Group and has more than 1,400 locations in North America, terminated its relationship with the Richards Group on Monday, saying in a statement that it was “outraged” by Mr. Richards’ remarks.

Home Depot, a Richards Group client for more than 25 years, was the next company to cut ties with the agency, saying on Wednesday that it had “immediately begun the process of finding a new advertising agency.” Keurig Dr Pepper also said that it was ending its relationship with the agency, which has worked with beverage brands such as A&W, Clamato, Crush and Dr Pepper.

The Salvation Army, another client, said that it was “deeply concerned” by the comments but “encouraged by the fact that Mr. Richards has made an apology.”

The Richards Group, which describes itself as the nation’s largest independent ad agency, also has worked with the grocery chain H-E-B and the retailer Hobby Lobby.

Glenn Dady, a creative director who was tapped in December as Mr. Richards’ eventual successor, will immediately take control of the company’s operations, the agency said on Wednesday. Mr. Richards, whose name is on the University of Texas at Austin’s advertising school, will remain the agency’s owner.

“We understand and regret the pain and concerns of all those who were deeply troubled by the words our founder spoke,” Mr. Dady said in a statement. “He can’t take them back. We can only ask for forgiveness and promise to learn and be better.”

Motel 6 said it will continue to use its famous slogan — “We’ll leave the light on for you” — which was coined more than three decades ago by the radio personality Tom Bodett after the Richards Group recruited him to be the Motel 6 spokesman.

The roadside chain agreed last year to pay $12 million, mostly in damages, after its employees were found to have provided Immigration and Customs Enforcement agents with information on 80,000 guests.

Read More