Google Italy Investigated for Depressing Publisher Ad Revenues

Google is under investigation by Italian competition authorities over allegations it is abusing its dominant position through its news aggregation product — and strangling publishers’ ad revenue as a result. The investigation was prompted by a complaint from the Italian Federation of Newspaper Publishers, suggesting the search giant was not transparent enough in how it indexes and prioritizes newspapers’ online content.

Speaking with the New York Times, Carlo Malinconico, president of the publishers’ group, said a lack of disclosure from the search firm regarding its Google News algorithm made it impossible for publishers to tweak their content to maximize their traffic and, as a result, their advertising revenues.

“The Competition Authority has notified us of a claim against Google Italy. We’re finding out more details today, although we do know that it’s in relation to Google News which drives significant traffic and new readers to newspaper Web sites,” a Google spokesperson said. According to some reports, Italian authorities searched Google premises in Milan yesterday, but the spokesperson was unable to confirm this.

Responding on Google’s European Public Policy Blog, Josh Cohen, senior business product manager for Google News, said the firm was “reviewing the claim,” but took the opportunity to remind publishers that they were free to opt out of having their sites indexed by the product at any time, without penalty from Google’s main index.

According to the New York Times report, Italian publishers are accusing Google of penalizing publishers that opt out of the news product by hindering their appearance in traditional search results also. Google maintains that the two products remain separate, and publishers are able remove their content from Google News alone.

Google has had an uneasy relationship with publishers, particularly surrounding its Google News service. On the one hand, content indexed through the service may help drive traffic to publisher sites, but on the other, publishers are wary of Google generating revenue from their content without reimbursement, and often argue that few readers click-through after reading story summaries on the Google site.

“We don’t display the news stories in their entirety. Rather, our approach is akin to that of web search: we simply show the headlines, a line or two of text and a link to the site — just enough information to make the user want to read the full story,” Cohen wrote in his blog post. “Once a user clicks through to the article, it’s up to the news publisher to decide how to profit from this free traffic. They can choose to charge people to read the story in addition to placing advertisements on their site.”