A recent research paper suggests that under the proposed Journalism and Competition Preservation Act (JCPA), Google (Nasdaq: GOOGL) and Meta (Nasdaq: META) could owe US news publishers between $11.9 billion and $13.9 billion annually. The study, conducted by academics from The Brattle Group, the University of Houston, and Columbia University, utilized a “conservative” estimate to calculate potential payments.
The research argues that current and past deals between publishers and tech giants, such as Google News Showcase and Facebook News (which is currently being wound down), undervalue the true worth of news content on these platforms. Google strongly disputes these findings, accusing the researchers of relying on flawed data and reaching a “biased” conclusion.
Under the JCPA, news providers can collectively negotiate fair payment from major tech companies profiting from their content. Meta, which owns Facebook, has been reducing its payments to publishers and recently removed all news content from Facebook and Instagram in Canada following the country’s Online News Act.
Sponsored · Altamira Gold Corp.
Related: Google Readies To Block Canadian News Content Under Bill C-18
According to the research, Google could owe US news publishers between $10 billion and $12 billion annually, while Meta may owe $1.9 billion.
A Google spokesperson countered these claims, saying “This white paper is based on inaccurate assumptions, debunked data, and basic errors, in support of a biased conclusion. In reality, less than 2% of all searches are news-related and we don’t run ads or make money on the vast majority of them.”
“What the white paper fails to recognize is that we do however drive tremendous value to news publishers by sending more than 24 billion visits each month to their sites — at no cost to them — which they can monetize.”
The UK’s News Media Association has accused Google of overstating the revenue news publishers currently generate through the platform. Despite the potential for billions in compensation, the research underscores that platform remuneration alone will not “save journalism.”
The legislation is currently awaiting further debate in the US Senate. Similar legislation is being considered in the UK, with the Digital Markets, Competition, and Consumers Bill progressing through the House of Commons.
The research methodology involved estimating the platforms’ revenue from user impressions on news content, projecting the share of searches for news content, and applying insights from the economics of bargaining.
The paper argues that a 50/50 revenue split is a reasonable starting point, estimating that Meta generates $3.8 billion in advertising revenue from news content, potentially owing publishers between $1.2 billion and $1.9 billion. For Google, the paper suggests revenue of $21 billion, resulting in potential payments ranging from $6 billion to $12 billion based on different revenue splits.
Information for this story was found via Press Gazette, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
