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Media Roundup: Patreon joins unicorn club, Facebook could ban news in Australia, more

Welcome to the very first edition of Extra Crunch’s Media Roundup. Over the past few months, we’ve launched features like Decrypted, Deep Science and The Exchange, which aggregate and analyze the latest news in a given sector, so it seemed overdue to do something similar for media.

The goal is to provide a regular update on what entrepreneurs in the content or advertising business should be thinking about. That doesn’t just mean startup funding — we’ll track the broader landscape, including platform policies that could affect everyone — which is just as important as knowing who’s getting checks.

If you have any thoughts on what you’d like to see included in future roundups, please let me know in the comments below.

Let’s get started.

Facebook may ban news sharing in Australia

This is part of an ongoing dispute between Facebook and the Australian government, which has created a plan that would require Facebook and Google to share revenue with Australian news publishers whose content appears on their services. Both companies have a complicated relationship with the news business, with many publishers both relying on large platforms for traffic while also resenting the fact that those platforms take the vast majority of digital ad revenue.

In an attempt to improve that relationship, Google and Facebook have committed in recent years to investing hundreds of millions of dollars in journalism — and while those efforts are commendable, it’s worth asking whether publishers should be entitled to more by law, not just as a gift.

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Travel startups cry foul over what Google’s doing with their data

As the antitrust drumbeat continues to pound on tech giants, with Reuters reporting comments today from the US Justice Department that it’s moving “full-tilt” on an investigation of platform giants including Google parent Alphabet, startups in Europe’s travel sector are dialling up their allegations of anti-competitive behavior against the search giant.

Google has near complete grip on the search market in Europe, with a regional marketshare in excess of 90% according to Statcounter. Unsurprisingly industry sources say a majority of travel bookings start as a Google search — giving the tech giant huge leverage over the coronavirus-hit sector.

More than half a dozen travel startups in Germany are united in a shared complaint that Google is abusing its search dominance in a number of ways they argue are negatively impacting their businesses.

Complaints we’ve heard from multiple sources in online travel range from Google forcing its own data standards on ad partners to Google unfairly extracting partner data to power its own competing products on the cheap.

Startups are limited in how much detail they can provide about Google’s processes on the record because the company requires advertising partners to sign NDAs to access its ad products. But this week German newspaper Handelsblatt reported on antitrust complaints from a number of local startups — including experience booking platform GetYourGuide and vacation rental search engine HomeToGo — who are accusing the tech giant of stealing content and data.

The group is considering filing a cartel complaint against Google, per its report.

We’ve also heard from multiple sources in the European travel sector that Google has exhibited a pattern of trying to secure the rights to travel partners’ content and data through contracts and service agreements.

One source, who did not wish to be identified for fear of retaliation against their business, told us: “Each travel partner has certain specialities in their business model but overall the strategy of Google has been the same: Grab as much data from your partners and build competing products with that data.”

Not ok, Google

This is now a very familiar complaint against Google. Crowdsourced reviews platform Yelp has been accusing the tech giant of stealing content for years. More recently, Genius got creative with a digital watermark that caught Google redhanded scraping lyrics content from its site which it pays to license (but Google does not). As Lily Allen might put it, it’s really not okay.

Last month’s Congressional antitrust subcommittee hearing kicked off with exactly this accusation too — as chair, David Cicilline, barked at Google and Alphabet CEO, Sundar Pichai: “Why does Google steal content from honest businesses?” Pichai dodged the question by claiming he doesn’t agree with the characterization. But for Google and parent Alphabet there’s no dodging the antitrust drumbeat pounding violently in the company’s backyard.

In Europe, Google’s business already has a clutch of antitrust enforcements against it — starting three years ago, in a case which dated back six years at that point, with a record breaking penalty for anti-competitive behavior in how it operated a product search service called Google Shopping. EU enforcements against Android and AdSense swiftly followed. Google is appealing all three decisions, even as it continues to expand its operations in lucrative verticals like travel.

The Commission’s 2017 finding that Google is dominant in the regional search market carried what lawmakers couch as a “special responsibility” to avoid breaching the bloc’s antitrust rules in any market Google plays in. That finding puts the travel sector squarely in the frame, although not yet under formal probe by EU regulators (although they have opened an active probe of Google’s data collection practices, announced last year).

EU regulators are also examining a range of competition concerns over its proposed acquisition of Fitbit, delaying the merger while they consider whether the deal would further entrench Google’s position in the ad market by giving it access to a trove of Fitbit users’ health data that could be used for increased ad personalization.

But so far, on travel, the Commission has been keeping its powder dry.

Yet for around a decade the tech giant has been building out products that directly compete for travel bookings in growth areas like flight search. More recently it’s added hotels, vacation rentals and experiences — bringing its search tool into direct competition with an increasing range of third party booking platforms which, at least in Europe, have no choice but to advertise on Google’s platform to drive customer acquisition.

One key acquisition underpinning Google’s travel ambitions dates back to 2010 — when it shelled out $700M for ITA, a provider of flight information to airlines, travel agencies and online reservation systems. The same year it also picked up travel guide community, Ruba.

Google beat out a consortium of rivals for ITA, including Microsoft, Kayak, Expedia, and Travelport, who relied upon its data to power their own travel products — and had wanted to prevent Google getting its hands on the data.

Back then travel was already a huge segment of search and online commerce. And it’s continued to grow — worth close to $700BN globally in 2018, per eMarkter (although the coronavirus crisis is likely to impact some recent growth projections, even as the public health crisis accelerates the industry’s transition to digital bookings) — all of which gives Google huge incentive to carve itself a bigger and bigger share of the pie. 

This is what Google is aiming to do by building out ad units that cater to travellers’ searches by offering flights, vacation rentals and trip experiences, searchable without needing to leave Google’s platform. 

Google defends this type of expansion by saying it’s just making life easier for the user by putting sought for information even closer to their search query. But competitors contend the choices it’s making are far more insidious. Simply put, they’re better for Google’s bottom line — and will ultimately result in less choice and innovation for consumers — is the core argument. The key contention is Google is only able to do this because it wields vast monopoly power in search which gives it unfair access to travel rivals’ content and data.

It’s certainly notable that Alphabet hasn’t felt the need to shell out to acquire any of the major travel booking platforms since its ITA acquisition. Instead its market might allows it to repackage and monetize rival travel platforms’ data via an expanding array of its own vertical travel search products. 

One of the German consortia of travel startups with a major beef against Google is Berlin-based HomeToGo. The vacation rentals platform confirmed to TechCrunch it has filed an antitrust complaint against the company with the European Commission.

It told us it’s watched with alarm as Google introduced a new ad unit in search results which promotes a vacation rental search and booking experience — displaying property thumbnails, alongside locations and prices plotted on a map — right from insight Google’s platform.

Screengrab showing Google vacation rental ad unit, populated with content from a range of partners

Discussing the complaint, HomeToGo CEO and co-founder, Dr Patrick Andrae, told us: “Due to the monopoly Google has in horizontal search, just by having this kind of access [to the vast majority of European Internet searchers], they’re so top of the funnel that they theoretically can go into any vertical. And with the power of their monopoly they can turn on products there without doing any prior investment in it.

“Anyone else has to work a lot on SEO strategies and these kind of things to slowly go up in the ranking but Google can just snap its fingers and say, basically, tomorrow I want to have a product.”

The complaint is not just that Google has built a competing ad product in vacation rentals but — following what has become a standard colonizing playbook for seemingly any vertical area Google sees is grabbing traffic — its packaging of the competing product is so fully featured and eye-catching that it results in greater prominence for Google’s ad vs organic search results (or indeed paid ad links) where rivals may appear as plain old blue links.

“They create this giant, colorful super CTA [call-to-action], as we call it — this one-box thing — where everything is clickable and leads you into the Google product,” said Andrae. “They explain that it’s better for the user experience but no one ever said that the user wants to have a one-box there from Google. Or why shouldn’t it be a one-box from HomeToGo? Or why shouldn’t it be a one-box in the flight word from Kayak? Or in the hotel world from Trivago? So why is it just the Google product that’s colorful, nice, and showing up?”

Andrae argues that the design of the unit is intended to give the user the impression that “Google has everything there”, on its platform. So, y’know, why go looking elsewhere for a vertical search engine?

He also points out that the special unit is not available to competitors. “You cannot buy it,” he said. “So even if you would like to have this prominent kind of placement you cannot buy that as a third party company. Even if you would like to pay money for it — I’m not talking about being in the product itself, that’s another topic — but just having the same kind of advertisement, because it is what they do — they advertise their own product there for free — and this is our complaint.”

Pay with your data

In 2017, when the Commission slapped Google with the first record-breaking penalty over its search comparison service — finding it had systematically given prominent placement to its own comparison shopping service over and above rival services in organic search results — competition chief Margrethe Vestager disclosed it had also received complaints about Google’s behavior in the travel sector.

Asked about the sector’s concerns now, some three years later, a Commission spokeswoman told us it’s “monitoring the markets concerned” — but declined to comment on any specific gripes.

Here’s another complaint: GetYourGuide, a Berlin based travel startup that’s created a discovery and booking platform for travel tours and experiences, has similar concerns about Google’s designs on travel experience booking — another travel segment the tech giant is moving into via its own eye-catching ad units flogging experiences.

“They want to create experience products now directly on Google search itself, with the aim that ultimately people can book these type of things on Google,” said GetYourGuide CEO and co-founder Johannes Reck. “What Google tries to do now is they try to get [travel startups’] content and our data in order to create new competitive products on Google.”

The startup is unhappy, for example, that a ‘Things to do’ ad product Google shows in its search results doesn’t link to GetYourGuide’s own search page — which would be the equivalent and competing third party product.

“Google will not allow us to link them into our search but only into the details page so the customer sees even less of our brand,” he said. “Or in Maps, for instance, if you go to Eiffel Tower and press to book tickets you don’t see any of GetYourGuide despite us fulfilling that order.”

He also rejects Google’s claim against this sort of complaint that it’s simply ‘doing the right thing for the user’ by not linking them out to the rival platform. “We do know from our data that users convert better and spend more time on our site and have higher engagement rates when we link them into our search and then deeper down into the funnel,” he told TechCrunch. “What Google is saying is not that it serves the user — it serves Google and it serves their profits. Because the deeper down the funnel that you link, the user will either buy or they will bounce back to Google and search for the next product. If you link into searches — if you don’t verticalize as much — then the user will end up in a different ecosystem and might not bounce back to Google.”

“As a partner [of Google] you have limited choice to participate [in its ad products]. You do need to give Google that content and then Google will try to move as many of the customers to them,” Reck added. “I don’t think there ever will be a world where booking.com or Expedia or GetYourGuide will disappear — rather our brands will start to disappear.

“That is something that I think ultimately is bad for the customer and only serves Google, again, because the customer will, in the long run, have no other choice and no other visibility on how he can get to choice than to go through Google because our brands will basically be hidden behind a Google wall. That will turn Google firmly away from what their original mission was… to steer people to the most relevant content on the web… Now they are trying to be completely the opposite; they’re trying to be the Amazon or Alibaba of travel and try to keep and contain people in their ecosystem.”

During the congressional antitrust subcommittee hearing last month Pichai claimed Google faces fierce competition in travel. Again, Reck contends that’s simply not true. “In Europe more than 75% of travellers go to Google to search for travel and all those users are free,” he said. “Everyone else in the travel industry pays Google top dollar… for these queries. Which competition exactly is he referring to?”

“[Pichai] then claimed that they’re not leveraging partners’ content — that’s not accurate. If you look at Google if you want to be in the top results these days you either pay or you give them data so that they can build their own products into search.”

“This dates back ten years now when they acquired ITA software, which is the leading data provider for flights,” Reck added. “They’ve just paved their way into travel. I think their intent is very clear at this point that they have no interest in their partners — or their customers for that matter, who like the choice that’s being offered on Google.”

“What they want to morph into, basically, is to turn Google into the Amazon of travel where everyone else maybe a content provider or a fulfilment agent but the consumer has no choice but to go through Google. I think that is the key intent here. They want to limit consumer choice. And they want to monopolise the space. We don’t want that and we will fight that. And if that means we need to go to the EU Commission to protect our and the customers’ interests then we’ll do that and we’re currently reviewing that option.”

The looming harm for consumers around reduced choice could manifest in poorer customer service, which is an area vertical players tend to focus on — whereas Google, as a platform funnel, does not.

Another German travel startup — Munich-based FlixBus — was also willing to go on the record with concerns about the impact of Google’s market power on the sector, despite not being in the same position as its business is not an aggregator.

Nonetheless, FlixBus Jochen Engert, founder and CEO, called on regional lawmakers to act against what he described as Google’s “systematic abuses” of market dominance.

“We call on the politicians in Germany and the EU to now work for fair competition on the Internet. It must be forbidden that monopolistic companies like Google abuse their market power, especially in times of crisis, and prevent competition for the benefit of the customer due to their dominance,” he told us. “Google systematically abuses its dominant market position to seal off access to customers from competitors and gets away with it time and again. It is only a matter of time before other industries and business models, in addition to travel, hotel and flight bookings, are permanently threatened.

“For FlixMobility [FlixBus’ parent company] as an internationally positioned market leader with its own platform, technology and our unique content, the situation is more relaxed than for smaller start-ups or those which also aggregate content such as Google. Nevertheless, in our opinion Google should be obliged to list and market its own products in search results on an equal footing with comparable offers. Here regulation must not stand by and watch for too long, but must react before Google irretrievably controls customer access and excludes competition.”

GetYourGuide’s Reck expressed hope that German lawmakers might be able to offer more expeditious relief to the sector than the European Commission — whose competition investigations typically grind through the details for years.

“The German government is actually very alert at this point in time,” he said. “They’re currently working on a new competition legislation that they will put in place probably within the next six months. It’s already in the making — and that will also be addressed to exactly that type of behavior of global, quasi-monopolistic platforms crossing the demarcation line, moving into other fields and trying to leverage their monopoly in order to create synergies in adjacent fields and crowd out competition.”

Asked what kind of intervention he would like to see regulators make against Google, Reck suggests its business should be regulated akin to a utility — advocating for controls on data, including around the openness of data, to level the playing field.

Though he also told us he would be supportive of more radical measures, such as breaking Google up. (But, again, he says speed of intervention is of the essence.)

“If you look at all of the data that Google collects, whether that’s consumer reviews, availability from its partners, all of the content from its partners, all of the information that they have through Android, whether that’s geo-specific data, whether that is interests, whether that is contextual information, Google is training their algorithms day and night on this data, no one else can. But we all have to provide data to Google,” he said.

“That’s not a level playing field. We need to think about how we can have a more open data architecture, that obviously is compliant with our data privacy laws but where developers from anywhere can build products based on the Google platform… As a developer in travel it’s currently very hard for me to access any data from Google so I can build better products for consumers. And I think that really needs to change — Google needs to open us for us to create a more vibrant and competitive ecosystem.”

“At a national or EU level we need to have an updated legal code that allows for quick interventions,” Reck added, saying competition enforcement simply can’t carry on at the same pace as for the markets of the past. “Things are moving way too quickly for that. You need to take a completely new approach.

“As Google correctly pointed out consumer prices have fallen but falling consumer prices is the weapon in tech; offering products for free allows you to gain marketshare in order to crowd out competition, which again leaves less choice for the customer so I think we need to think about how we think about tech and platforms in new ways.”

The Commission is currently consulting on whether competition regulators need a new tool to be able to intervene more quickly in digital markets. But there’s more than a trace of irony that its adherence to process means further delay as regulators question whether they need more power to intervene in digital markets to prevent tipping, instead of acting on long-standing complaints of market abuse attached to the 800lb gorilla of Internet search — with its “special responsibility” not to trample on other markets.

Reached for comment on the travel startups’ complaints, a Google spokeswoman sent us this statement:

There are now more ways than ever to find information online, and for travel searches, people can easily choose from an array of specialized sites, like TripAdvisor, Kayak, Expedia and many more. With Google Search, we aim to provide the most helpful and relevant results possible to create the best experience for users around the world and deliver valuable traffic to travel companies.

During the pandemic, we’ve been working hard with our partners in the travel industry to help them protect their businesses and look toward recovery. We launched new tools for airlines so they can better predict consumer demand and plan their routes. For hotels, we expanded our ‘pay per stay’ program globally to shift the risk of cancellation from our partners to us. And we’ve updated our search products so consumers can make informed decisions when planning future travel, further reducing the risk of cancellation.

The company did not respond to our request for a response to claims we heard that it seeks to secure rights to partners’ content and data via contracts and service agreements.

No relief

In another sign of the growing rift between Google and its travel partners in Europe, German startups in the sector banded together to press it for better terms during the coronavirus crisis earlier this year — accusing the tech giant of being inflexible over payments for ads they’d runs before the crisis hit. This meant they were left with a huge hole in their balance sheets after making mass refunds for travellers who could no longer take their planned trip. But the gorilla wasn’t sympathetic, demanding full payment immediately.

Asked what happened after TechCrunch reported on their concerns at the end of April, Reck said Google went silent for a few weeks. But as soon as the travel market started picking up in Germany — and GetYourGuide decided it needed to start advertising on Google again — it reissued the demand for full payment.

GetYourGuide says it was left with no choice but pay, given it needed to be able to run Google ads.

Reck describes the recovery package Google offered after it made the payment as “a Google recovery package” — as it was tied to GetYourGuide spending a large amount on YouTube ads in order to get a small discount.

The offer would recoup only “fraction” of GetYourGuide’s original losses on Google ads during the peak of the COVID-19 crisis, per Reck. “YouTube obviously is not where we lost the money. We lost the money in search where we had high intent customers, Google customers that wanted to come and shop. So that to us was [another] slap in the face,” he added.

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Six Toronto VCs discuss COVID-19 and the post-pandemic era

As North America’s fourth-largest city, Toronto is one of the world’s top startup ecosystems.

After spawning companies like Eventbrite and Crowdmark, Ontario’s capital has attracted international talent that complements its homegrown population of entrepreneurs and technical talent.

Six investors we surveyed who work and live in the area said they believe Toronto will continue to thrive after the COVID-19 storm passes. Some of them focus exclusively on the region, while others invest elsewhere as well. As they explained, the city has a lot going for it: It’s diverse, has access to locally trained engineering and business workers, and the area has already fostered many companies that are doing very well.

Investors expect Toronto to remain a fintech hub

Fintech is one of the city’s top industries, and the investors in this survey expect this to continue. Stephanie Choo, head of investments at Portag3 Ventures, said “fintech continues to see massive tailwinds from the fallout from COVID-19 as incumbents struggle to fully digitize their offerings.”

Ameet Shah of Golden Ventures listed fintech as one of Toronto’s key industries. Eva Lau of Two Small Fish Ventures agreed, adding that “blockchain has also been doing well because many blockchain-related technologies or companies were started in Toronto.”

Other investors point to fintech business leaders in Toronto like CEOs Mike Katchen of Wealthsimple, Daniel Eberhard of Koho, Andrew D’Souza and Michele Romanow of Clearbanc and Kirk Simpson of Wave Financial.

Diversity is one of Toronto’s strengths

Nearly all of the surveyed investors cited diversity as a key reason to live and work in Toronto. Probal Lala, chairman of Maple Leaf Angels, says, “Beyond having a vibrant technology ecosystem, Toronto has one of the most diverse communities in North America and is not only a great place to find the intellectual horsepower and funding to build a great global startup, but also the mosaic of social communities that makes it a great place to live and raise a family.”

Choo said the United States’ current battles over immigration could benefit Canada. “Small, nimble teams that need to move fast may still choose to co-locate in person — and many will still want access to amenities that only a large, vibrant and diverse city like Toronto can offer.”

She also pointed to Toronto’s claim of being one of the most diverse cities in the world. “[This] not only makes the city interesting but also very welcoming for those who relocate from elsewhere; a strong startup and tech scene, and, lastly, a vibrant cultural and food scene, especially through the lens of cost-of-living compared to comparable major cities.”

Shopify’s executives are key players in Toronto’s ecosystem

Several VCs listed Shopify executives as local leaders, while others acknowledged the growing unicorn’s impact. Ameet Shah of Golden Ventures says, “Toronto has traditionally been strong in fintech, B2B SaaS, crypto and AI. The explosion of Shopify should also benefit companies focused on e-commerce and supply chain solutions.”

Adam McNamara and Ameet Shah, when asked about local business leaders, both listed Satish Kanwar. Kanwar is GM and VP of Product at Shopify after the company purchased Jet Cooper, a startup co-founded by Kanwar. McNamara also points to Farhan Thawar, Shopify’s VP of Engineering, as a local leader.

Who we spoke to:

  • Probal Lala, chairman, Maple Leaf Angels Capital Corporation
  • Stephanie Choo, head of investments, Portag3 Ventures
  • Adam McNamara, founding partner, Ramen VC
  • Ameet Shah, partner, Golden Ventures
  • Matt Golden, founder and managing partner, mGolden Ventures
  • Eva Lau, founding partner, Two Small Fish Ventures

Probal Lala, Maple Leaf Angels Capital Corporation

How much is local investing even a focus for you now? If you are investing remotely in general now, are you filtering for local founders?

Prior to COVID-19 hitting, a requirement for the majority of my investments was a face-to-face visit with the founding team. For the most part, this meant founders spending time in Toronto. As we primarily invest in seed and pre-seed, this usually meant local founders.

When the pandemic hit, we shifted our process to primarily Zoom meetings (including due diligence) and as a result the mix of founding teams has expanded beyond our typical catchment area (two-hour drive from the city) to a broader base. Investment cycles appear to have slowed a bit due to the remote approach but our reach to founding teams has expanded to a broader base of geographically distributed founding teams (Mostly Canadian although we have recently seen a number of international opportunities).

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Australia now has a template for forcing Facebook and Google to pay for news

Australia is closing in on a legally binding framework to force adtech giants Facebook and Google pay media companies for monetizing their news content when it’s posted to their social media platforms or otherwise aggregated and monetized.

Back in April the country’s government announced it would adopt a mandatory code requiring the tech giants to share ad revenue with media business after an attempt to negotiate a voluntary arrangement with the companies failed to make progress.

Today Australia’s Competition and Consumer Commission (ACCC) has published details of a first pass at that mandatory code — which it says is intended to address “acute bargaining power imbalances” between local news businesses vs the adtech duopoly, Google and Facebook.

The draft follows a consultation process before and after the release of a concepts paper in May, in which the ACCC sought feedback on a range of options. More than 40 submissions were received, it said.

Under the proposed code the ACCC is suggesting a binding “final offer” arbitration process as a way to avoid platforms seeking to drag payment negotiations. Under the proposal they’d get three months’ “negotiation and mediation”, after which an independent arbitrator would choose which of the two parties’ final offer is “the most reasonable”, doing so within 45 business days.

“This would ensure disagreements about payment for content are resolved quickly. Deals on payment could be reached within six months of the code coming into effect if arbitration is required,” the ACCC writes.

The code also aims to enable groups of media businesses (such as local and regional publications) to collectively negotiate to get a better deal out of platforms use of their content.

On the enforcement front, the draft proposes that non-compliance — such as not bargaining in good faith or breaching minimum commitments — can lead to infringement penalties, with the maximum set at $10M or 3x the benefit obtained or 10% of a platform’s turnover in the market in the last 12 months (whichever is greater). So Facebook and Google could potentially be on the hook for fines running to many millions of dollars if they are found to have breached such a code.

The scope of the code’s application looks broadly enough drawn that it seems intended to try to prevent platforms from dodging payment by simply switching off a single news-focused products (such as Google News). Google did just that in Spain instead of paying for reuse of news snippets there (and it remains switched off in the market). But the ACCC’s proposal also applies to Google search and Discover so Google would have to forgo showing any Australian news content to avoid the revenue share — which is a far bigger switch to flip.

Another interesting aspect of the proposal would require the platforms to give news media businesses around a month (28 days’) notice of algorithm changes that are “likely to materially affect” referral traffic to news and/or the ranking of news behind paywalls; and also for “substantial” changes to the display and presentation of news, and advertising directly associated with news.

Another notable requirement is for platforms to give news media businesses “clear information” about the data they collect via users’ interactions with news content on their platforms — such as how long people spend on an article; how many articles they consume in a certain time period; and other data about user engagement with news across platform services.

This aspect of the proposal looks intended to tackle the problem of dominant platforms using their market power to maintain their grip on the attention economy by being able to monopolize access to data by blocking content producers from being able to access information about how Internet users are engaging with their work.

Platforms like Facebook have sought to centralize others’ content to their advantage — applying market power to encourage content to be posted in a place where only they have full access to interaction data. This breaks the link between news producers and their own audience, making it harder for them to perform analytics around articles or respond to changes and trends in consumption behavior.

Being cut off from so much user data also makes it harder for media outlets to cultivate closer relations with consumers of their product — something that looks increasingly vital for developing successful additional revenue streams, such as subscription offers, for example.

“There is a fundamental bargaining power imbalance between news media businesses and the major digital platforms, partly because news businesses have no option but to deal with the platforms, and have had little ability to negotiate over payment for their content or other issues,” said ACCC chair, Rod Sims, commenting on the proposal in a statement.

“In developing our draft code, we observed and learned from the approaches of regulators and policymakers internationally that have sought to secure payment for news. We wanted a model that would address this bargaining power imbalance and result in fair payment for content, which avoided unproductive and drawn-out negotiations, and wouldn’t reduce the availability of Australian news on Google and Facebook.”

“We believe our proposed draft code achieves these purposes,” he added.

The proposal contains more suggestions aimed at breaking down the power imbalance between the two adtech giants and news producers. One element would require them to publish proposals for recognizing original news content on their services — which sounds like an ‘exclusive’ label (to go alongside ‘fact-checked’ labels platforms can sometimes choose to apply).

The pair would also need to provide news media businesses with what the ACCC dubs “flexible user comment moderation tools” — such as the ability to turn off comments on individual stories posted to a platform.

The theme here is increased agency for news businesses vs Facebook and Google so they have a better chance to shape public debate happening around their own content — platforms having also gobbled up the sorts of conversations which used to happen via a newspaper’s letters’ page.

In terms of eligibility, the ACCC says media businesses would be eligible for payment for platforms’ content reuse if the online news content they produce “investigates and explains issues of public significance for Australians” or “issues that engage Australians in public debate and inform democratic decision-making; or issues relating to community and local events”.

Other criteria include adhering to minimum levels of professional editorial standards; maintaining a “suitable degree” of editorial independence; operating in Australia for the main purpose of serving Australian audiences; and generating revenue of more than $150,000 per year.

The code, which would initially only apply to Facebook and Google (though the ACCC notes that other platforms could be added if they gain similar market power), is not intended to capture any non-news content producers, such as drama, entertainment or sports broadcasting.

In a statement responding to the proposal Google expressed deep disappointment. Mel Silva, MD of Google Australia, said:

Our hope was that the Code would be forward thinking and the process would create incentives for both publishers and digital platforms to negotiate and innovate for a better future – so we are deeply disappointed and concerned the draft Code does not achieve this. Instead, the government’s heavy handed intervention threatens to impede Australia’s digital economy and impacts the services we can deliver to Australians.

The Code discounts the already significant value Google provides to news publishers across the board – including sending billions of clicks to Australian news publishers for free every year worth $218 million. It sends a concerning message to businesses and investors that the Australian Government will intervene instead of letting the market work, and undermines Australia’s ambition to become a leading digital economy by 2030. It sets up a perverse disincentive to innovate in the media sector and does nothing to solve the fundamental challenges of creating a business model fit for the digital age.

We urge policymakers to ensure that the final Code is grounded in commercial reality so that it operates in the interests of Australian consumers, preserves the shared benefits created by the web, and does not favour the interests of large publishers at the expense of small publishers.

Facebook had far less to say — sending a line attributed to William Easton, its MD for Australia & New Zealand — which says it’s reviewing the proposal “to understand the impact it will have on the industry, our services and our investment in the news ecosystem in Australia”.

In terms of Australia’s next steps, further consultation will take place on the draft mandatory code during August, with the ACCC saying it will be finalised “shortly after”.

More details about the draft code can be found here.

While regulation being applied to big tech now looks like a given in multiple jurisdictions around the world — with US lawmakers alive to the damage flowing from a handful of hyper-powerful homegrown tech giants— the question of how fair and effective it will be is very much up in the air.

One potentially problematic element of Australia’s approach with this news ad revenue share is that it does not appear to tackle Facebook’s and Google’s abusive model of surveillance capitalism — which remains under regulatory scrutiny in Europe — but seems set to further embed the media with data-mining business models that work by stripping consumers of their privacy to target them with behavioral ads.

Critics contend that a myriad of harms flow from behavioral advertising — from time-wasting clickbait at the low end to democracy-denting disinformation and hate speech at the other. Meanwhile other less intrusive types of ad-targeting are available.

A section of the proposed code that touches on “the privacy of platform users” notes only that: “The draft code’s minimum standards require digital platforms to provide clear information about the data they currently collect through news content. However, the code does not include any requirements for digital platforms to increase sharing of user data with news media businesses. Accordingly, the code does not have an impact on the privacy protections currently applicable to digital platform users.”

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After ad revenue drop, Twitter tells investors it’s eyeing subscription options

After reporting Q2 earnings that showed a marked dip in ad revenue, Twitter has said its exploring alternatives — dangling the possibility of a subscription option.

Earlier today the social media giant reported ad revenues of $562M, down almost a quarter (23%) on a year ago — saying that the pandemic and “civil unrest” leading many advertisers to pause campaigns had both contributed to the decline. While the US, its biggest market, saw a drop of 25% in ad spend.

Twitter CEO Jack Dorsey told investors it’ll likely run subscription “tests” this year (via CNN), though he also said the bar for charging users for aspects of the service would be set “really high”.

So presumably it’s not considering a ‘your first ten tweets are free’ style pay-to-tweet model.

“We want to make sure any new line of revenue is complementary to our advertising business,” CNN reports Dorsey remarking during the investor call. “We do think there is a world where subscription is complementary, where commerce is complementary, where helping people manage paywalls… we think is complementary.”

The prospect of a paid version of Twitter — free from trackers, annoying ads and irritating algorithms which meddle with the clean chronology of the timeline — has been a holy grail for certain Twitter addicts since (basically) forever. So plenty of its most fervent users will be watching keenly to see exactly what Dorsey cooks up.

We’re spitballing here — but perhaps Twitter could charge, er, certain high profile, high risk users billions of dollars per month for the privilege of tweet-threatening the rest of humanity… Just a thought.

Twitter casting around for ad revenue diversification looks interesting in light of broader digital privacy trends that have put the ad tracking industry under increasing (and increasingly awkward) scrutiny.

Certain adtech players and mechanisms are facing challenges under European data protection rules, for instance, while there are also moves afoot in California to further tighten the consumer protections introduced this year, under the Consumer Privacy Act, which could see more US users blocking the tracking industry’s access to their data.

Last week’s massive Twitter security breach also hardly throws a positive light on the company from a privacy perspective. Dorsey addressed the breach in remarks on today’s call, with CNN reporting he apologized to investors — admitting the company “fell behind” on its security obligations.

“We feel terrible about the security incident,” he said. “Security doesn’t have an end point. It’s a constant iteration… We will continue to go above and beyond here as we continue to secure our systems and as we continue to work with external firms and law enforcement.”

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Google brings free product listings to its main Google Search results

Earlier this year, Google made a significant change to its Shopping search tab in the U.S. to allow the service to primarily feature free product listings selected by Google’s algorithms, instead of paid ads. Building on that change, Google is today introducing a shift to free product listings in the main Google Search results page in the U.S. Before, it would only showcase sponsored links in its “product knowledge panel.”

This panel appears when a Google user searches for a product that has matching listings on e-commerce website. But until now, those links were paid ads. Google says, starting this summer, these panels will instead feature free listings.

This change will roll out first in the U.S. on mobile, followed later by the desktop.

Shopping ads aren’t going away, however. These ads will appear separately at the top of the page, where they’re marked like Google’s other ad units.

Since its shift to free listings in April of this year, Google says it’s seen an average 70% increase in clicks and 130% increase in impressions across both the free listings and ads on the Shopping tab in the U.S. These metrics were based on an experiment looking at the clicks and impressions after the free listings were introduced, compared with a control group. The control group was a certain percentage of Google traffic that had not been moved to the new, free experience.

Image Credits: Google

Google has positioned its shift to free listings as a way to aid businesses struggling to connect with shoppers due to the impacts of the coronavirus pandemic. But the reality is that this change would have had to arrive at some point — pandemic or not — because of Amazon’s threat to Google’s business.

Amazon over the years has been steadily eating away at Google’s key business: search ad revenue. In a report published last fall, before the pandemic hit, analyst firm eMarketer said Google’s share of search ad market revenue would slip from 73% in 2019 to 71% by 2021, as more internet users started their searches for products directly on Amazon.

Now the coronavirus is pushing more consumers to shop online in even greater numbers, much to Amazon’s advantage. The online retailer reported the pandemic helped drive a 26% increase in its first-quarter 2020 revenue, for example. Meanwhile, a new eMarketer forecast estimates that Google ad revenues will drop for the first time this year, falling 5.3% to $39.58 billion due to pandemic impacts on ad spend — particularly the pullback in travel advertiser spending.

Google needed to change its Search service to return more than just paid listings to better compete. Paid listings alone wouldn’t always feature the best match for the user’s search query nor would they show as complete a selection — a problem Amazon’s vast online superstore doesn’t have. But Google’s shift to free listings also incentivizes advertisers to pay for increased visibility. Now, advertisers will need a way to stand out against a larger and more diverse selection of products.

“For many merchants, connecting with customers in a digital environment is still relatively new territory or a smaller part of their business,” notes Google’s, Bill Ready, President of Commerce. “However, consumer preference for online shopping has increased dramatically, and it’s crucial that we help people find all the best options available and help merchants more easily connect with consumers online.”

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Apple’s first virtual WWDC keynote set a new standard for remote presentations

In a preshow post, I compared the upcoming virtual WWDC to late-season “M*A*S*H.” If you watched the show during its original run or have since binged it on Netflix or Hulu, you’re likely aware of the producers’ uncomfortable transition away from using a laugh track. It was an ultimately beneficial choice in a show about a mobile military hospital during the Korean War, but shifting viewer expectations wasn’t easy, so it was done gradually, over time.

After so many years of priming audiences for a large online spectacle, event teams haven’t had the same luxury. Some shifted online last minute and others simply canceled the shows altogether. Even though COVID-19 was looming for months, there was really no simple decision here, and as such many of these first-time virtual-only events have been uncomfortably awkward and primarily defined by what they’re not.

Microsoft made a valiant attempt to embrace the temporarily new normal with its recent Build conference. The result was, at best, a mixed bag, relying on cringe-inducing banter by two employees to anchor several days of developer events. Where the presentation most shined, however, was when it was at its most simplistic: Satya Nadella stood in front of a bookshelf to address the weirdness of the situation and moved on with the day’s news. It was one of those moments where you found yourself grateful that the CEO is the emotional opposite of his screaming predecessor.

One could simply ignore the strangeness of it all — the absence of a live audience packed with a cheering section full of developers and employees. But to do so would be doing it a disservice.

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Facebook adds option for US users to turn off political ads, launches voting info hub

Beginning today, Facebook users in the U.S. will have the option to “turn off” all political advertising on the platform. The company made the controversial decision not to fact-check or otherwise moderate political ads last year, but the new feature will give users more control over what they see—at least for users who decide to flip the new setting to “off.”

Facebook made the announcement Tuesday in a blog post and an op-ed from Mark Zuckerberg. The post noted that the company originally announced the new option in January but would now add it to the platform as it prepares for the 2020 U.S. presidential election. The option will appear immediately for some U.S. users, rolling out more broadly in the next few weeks. The option to disable political ads will apply to political, electoral, and social issue ads from candidates, Super PACs and other groups. The option will pop up for users directly on any political ad across Facebook and Instagram or through either platform’s ad settings.

“By giving people a voice, registering and turning out voters, and preventing interference, I believe Facebook is supporting and strengthening our democracy in 2020 and beyond,” Zuckerberg wrote in USA Today. “And for those of you who’ve already made up your minds and just want the election to be over, we hear you — so we’re also introducing the ability to turn off seeing political ads. We’ll still remind you to vote.”

Facebook may have previously announced its intention to allow users to see fewer political ads, but the language in its blog post from the beginning of this year said only that it would add a setting to let people see “fewer” political ads—not turn them off altogether as the company is announcing now. The January post also defended the company’s decision not to fact-check political ads or limit its extensive ad targeting tools.

In the instructional video the company provided, the setting offers to show users “fewer ads about this topic” rather than disable them entirely. We’ve asked Facebook to explain the discrepancy.

Last week, presumptive presidential nominee Joe Biden called on the company to fact-check its political advertising in the two weeks running up to the U.S. election. While Facebook’s added option is a small change, it’s still a rare concession for critics of its stubbornly laissez-faire view of political ads on its platform.

Facebook plans to make the new setting available beyond the U.S. “in countries where we have enforcement on ads about social issues, elections and politics” starting in the fall. The company is also implementing two ad transparency changes, making sure “Paid for by” disclaimers on political ads follow them after they’ve been shared and allowing anyone who uses the company’s Ad Library to track ad spending for Congressional races. Previously this was only available for U.S. presidential campaigns.

Along with the changes to how it handles political ads, Facebook also announced a Voting Information Center, a central hub that will provide information to U.S. voters on how to register to vote, request a mail-in or absentee ballot, any voting ID requirements and when and where to vote. The info center will also collect local alerts from election officials that might note adjustments to voting methods in light of COVID-19. The new voting info hub will be modeled after the coronavirus information center that Facebook launched in March.

According to the blog post, the information collected in the new U.S. voting hub will evolve as voters “move into different phases of the election,” like registration cutoffs, vote-by-mail ballot request deadlines, early voting periods and election day itself.

Facebook calls the effort “another line of defense” against election interference, clearly looking to avoid a repeat of its role in amplifying disinformation during the 2016 presidential election—a deeply consequential failure the company continues to grapple with a full four years later.

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YouTube’s FameBit rebrands as YouTube BrandConnect, shuts down its self-service program

FameBit, YouTube’s influencer marketing platform acquired by Google in 2016, is today undergoing a rebranding. The new platform will now be called YouTube BrandConnect, and will remain open to eligible creators in the U.S. with over 25,000 subscribers. The update follows FameBit’s recent announcement regarding the closure of its self-service website which allowed creators to independently find brands to work with, submit deal proposals, and complete campaigns.

Now, YouTube BrandConnect will only focus on the full-service side of its offering, where a team of experts proactively matches creators with brands and provides end-to-end campaign management and delivery. The company said creators to earn 30 times more from full-service deals compared with self-service deals, and self-service only represented 4% of total FameBit payouts to creators.

The self-service website and all accounts will be closed on July 31, 2020.

From this point forward, creators eligible for the full-service program will be able to sign up for YouTube BrandConnect through YouTube Studio. The company says it will add more campaign management features to the YouTube Studio platform in the months ahead.

For participating brands, the goal of the revamped program is to provide measurable campaigns related to their branded content deals with top YouTube creators.

On this front, YouTube has added new measurement tools designed for greater accountability —  like Brand Interest Lift, Influencer Lift, and organic view-through conversations. Brand Interest Lift measures consumer search behavior resulting from the creator’s video. Influencer Lift measures consumer sentiment on Purchase Intent, Brand Recall, and other factors. Brands can also use Google Insights and other tools to measure the impact and the ROI of influencer marketing for the first time on YouTube, the company notes.

YouTube says it will also soon expand its ad technology offerings to include an updated “shopping shelf” that appears below a YouTube video. Soon, it will roll out the option for a “media shelf” which will allow viewers to rent or buy movies a video recommends, instead of only featuring merchandise for sale or apps for download, as the shelf can do now.

On the creator side, YouTube claims its insights-based matchmaking tools allow for access to more branded content deals. Over the past two years, the average deal size resulting from these matches across the full-service platform grew more than 260%, the company says.

Meanwhile, the influencer marketing industry as a whole is projected to reach $15 billion by 2022, YouTube says, citing Business Insider Intelligence data from December 2019. This forecast, due to its timing, does not take into account the impact the COVID-19 pandemic is having on influencer marketing, of course. The fallout from the spread of the coronavirus — including things like travel restrictions, business closures, and event cancellations — led to a related reduction in influencer brand deals, eMarketer reported in April. More than 1 in 4 U.S. influencers said in March they were receiving fewer collaboration offers from brands as a result.

The longer-term impacts from these changes mean brands working with influencers will want more reliable, measurable data, about their campaign’s success. In addition, a more robust platform for brand deals and measurement will also give YouTube a competitive advantage over TikTok, which has seen usage increasing during the pandemic, particularly with a younger user base.

“We’ll continue investing in our technology and expanding internationally to bring new experiences to creators, brands, and their fans globally,” said YouTube, in an announcement about the rebranding and update. “This is just the beginning for YouTube BrandConnect, and we’re excited to bring even more value to creators, brands, and viewers through branded content campaigns in the months ahead.”

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Facebook and Instagram roll out Shops, turning business profiles into storefronts

Starting today, you’ll be able to browse and buy products directly from a business’ Facebook Page or Instagram profile.

Both Facebook and Instagram already supported a degree of ecommerce — for example, Facebook has its Marketplace and will likely make a bigger push through its Libra cryptocurrency initiative, while Instagram allows users to buy products featured in posts and ads. But the company’s new tools go further, enabling businesses to create a full-fledged Facebook Shop.

After all, the pandemic has probably made consumers even more likely to treat Facebook and Instagram profiles as the go-to source of information on local restaurants and stores — if your favorite store has changed their hours, or switched to online delivery/curbside pickup, they’ve almost certainly posted about it on Facebook or Instagram. So why not allow visitors to make purchases without having to leave the Facebook and Instagram apps?

It’s also worth remembering that the pandemic’s economic fallout is already hurting and killing off many small businesses — businesses that post and advertise on Facebook. So the company has a stake in helping those businesses survive in any way it can.

In a Facebook Live session today, CEO Mark Zuckerberg described this as a way to help businesses suffering in the wake of COVID-19, though he acknowledged it will not “undo all the economic damage.”

He also suggested that this will remain useful after the pandemic: “I do think we’re going to continue living more of our lives online and doing more business online.”

Image Credits: Facebook

Meanwhile, Instagram’s vice president of product Vishal Shah told me this as a big, global test of the feature, with nearly 1 million businesses already signed up.

Those businesses will be able to create a Facebook Store for free — they just upload their catalogue, choose the products they want to feature, then customize it with cover image and accent colors. Visitors can then browse, save and order products.

Facebook’s vice president of ads Dan Levy said that while the company will charge “small fees” on each purchase, the real monetization will come from driving more advertising.

Levy described this as a “build and render anywhere” solution, with Shah adding that “the shop itself will be very consistent, whether it’s on Facebook or Instagram.” What will differ is how consumers discover the shops, whether it’s via the Facebook Marketplace or a product tagged in a photo on Instagram.

The company also plans to launch another experience called Instagram Shop this summer, allowing users to browse products directly from Instagram Explore and eventually to jump into a shopping experience from the app’s main navigation tab. There will also be ways for merchants to feature and link products from their Facebook Stores in their live videos, and for consumers to connect loyalty programs to their Facebook accounts.

As part of this announcement, Facebook said it’s partnering with Shopify, BigCommerce, Woo, Channel Advisor, CedCommerce, Cafe24, Tienda Nube and Feedonomics.

Merchants will be able to use these third-party platforms to manage their Facebook Shops, as well as the ads tied to those Shops. For example Shopify said, “Facebook Shops allows Shopify merchants to get control over customization and merchandising for their storefronts inside Facebook and Instagram, while managing their products, inventory, orders, and fulfilment directly from within Shopify.”

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