Google May Rethink Global News Licensing Deals After EU Ad Revenue Experiment

Google May Rethink Global News Licensing Deals After EU Ad Revenue Experiment

  • 25.03.2025 13:04
  • medianama.com
  • Keywords: No Impact

Google tested removing news content from its EU services and found no significant impact on ad revenue, suggesting news reliance is low. This could influence Google's licensing deals with publishers in regions like India and Canada, potentially reducing payments to news organizations.

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Context

Analysis: Google May Rethink Global News Deals After EU Ads Experiment

Key Findings from Google's EU Experiment:

  • Experiment Duration: 2.5 months
  • Regions Tested: Eight EU regions (including Netherlands, Belgium, Spain)
  • Users Affected: 1% of users had news content removed from Google Search, Discover, and News
  • Daily Active Users Decline: 0.8%
  • Revenue Impact:
    • Search Advertising Revenue: No significant change in revenue
    • Discover Ads Contribution: Minimal impact on overall ad revenue
    • Overall Ad Revenue Impact: "Not statistically distinguishable from zero"

Market Implications:

  • Global Strategy Adjustment: Google may reduce reliance on licensing deals for news content, particularly in regions with similar regulatory frameworks (e.g., Canada, India)
  • Potential Revenue Shifts:
    • Google: Could focus more on non-news ad revenue streams
    • News Publishers: Risk reduced payments from tech platforms if experiments confirm minimal value of news content

Competitive Dynamics:

  • Regulatory Influence: EUCD (European Union Copyright Directive) has already influenced Google's approach to news licensing in the EU
  • Global Impact: Similar regulatory pressures in other regions could prompt broader changes in platform-publisher relationships
  • India Context:
    • News publishers are seeking revenue-sharing agreements with tech giants
    • Google’s experiment results may influence negotiations and licensing decisions

Financial Insights:

  • Google Q4FY24 Revenue Breakdown:
    • Total Revenue: $96,469 million
    • Advertising Revenue: $72,461 million (75% of total revenue)
      • Google Search: $54,034 million
      • "Other" (including Discover): $7,954 million
  • Ad Revenue Sources:
    • Dominant source from search advertising
    • Discover ads contribute minimally to overall ad revenue

Strategic Considerations:

  • Experiment Outcomes: Google’s findings suggest news content may not be critical for ad revenue generation
  • Long-Term Effects:
    • Potential reduction in licensing agreements with news publishers globally
    • Impact on local news ecosystems, particularly in regions where platforms are required to compensate publishers

Conclusion:

Google's EU experiment highlights the potential long-term implications of regulatory changes on platform-publisher relationships. If similar experiments in other regions yield comparable results, tech companies may reevaluate their approach to news content licensing, potentially disrupting revenue streams for news publishers worldwide.