Keith Draws

Google's AI Overviews = theft ⚖️ And Google just got smacked with ANOTHER publisher antitrust lawsuit -- by Penske, the owners of Rolling Stone & Variety It's similar to Chegg's suit, but with a key twist for publishers ... This suit *also* accuses Google of becoming an illegal "monopsonist" in the new AI content licensing marketplace Here's what you need to know👇 1) The complaint is very similar to the one filed by Chegg back in February -- but it's EVEN BETTER and covers more ground 2) Like Chegg, Penske is represented by Susman Godfrey, one of the most respected (and feared) litigation boutiques in the USA. This means Penske came to play. 3) A good chunk of the text is word-for-word identical to Chegg's complaint. See my thread summarizing that one for the full rundown of allegations I won't repeat here: xitter.gq/natejhake/status/18944… Here are some differences/additions from the first Chegg complaint that stood out to me: 4) Penske's compliant talks specifically about the loss of advertising & affiliate revenue due to AI Overviews. Paragraph 198 says Penske's affiliate rev has declined by "a third." 📉 5) "Google is threatening this business model by directly providing users with PMC content, or a close facsimile of it, on a GAI-powered search results page or from some other GAI tool. The resulting decrease in user visits to PMC sites diminishes PMC’s revenue, which in turn threatens PMC’s ability to continue investing in and producing high-quality content." (paragraph 63) 6) I am very happy to see this compliant also talks about Google's "monopsony power" in addition to it's monopoly power. I think Google's role as a monopsonist in the AI content licensing marketplace has been underdiscussed! 👏 7) Paragraph 86 explains the idea: "A monopsonist is a buyer with sufficient market power to control prices in an input market. Put simply, Google’s search monopoly gives it control over online distribution in search results for online publishers. Google uses that buying power to force online publishers to give up access to their content without monetary compensation. Google then itself acts as a publisher, either by republishing portions of other online publishers’ content or by using GAI to summarize the content. The end result is that users increasingly consume other web publishers’ content on Google’s SERP, either in abridged or derivative form, which starves those publishers of traffic and revenue." 8) Paragraph 124 makes me SO happy because it talks about a pet issue of mine -- Google's 2023 blog post promising publishers a "public discussion" about a new form of publisher control to replace robots.txt. 😏 The complaint correctly points out that post "tacitly recognized that the 'fundamental fair exchange' that had previously sustained the web would require a rethink for the AI era." 9) Pages 38-40 directly address Judge Mehta's opinion in the DOJ's search case regarding publisher opt-outs as a remedy. As a reminder, the takeaway there was that the court was sympathetic to publishers, but just felt there wasn't enough evidence to justify it. I said when the decision was published a couple weeks that some big publisher should sue to *create* the evidence: xitter.gq/natejhake/status/19629… VERY glad to see Penske doing that here 👏 10) Penske also alleges that there is a growing market for AI content licensing deals, pointing out the many deals done with publishers by OpenAI, Perplexity, as well as Bloomberg's reporting that even Google is discussing licensing fees with 20 large publishers. 11) Pages 55-60 include examples of how AI Overviews "directly compete" with the plaintiff publishers. For example, there is a screenshot of a query about Rolling Stone's 2025 gaming awards -- that shows the AI Overview competing for the user's attention above the Rolling Stone's website. 12) Similar examples "[l]ike AI Overviews, Google’s AI Mode uses publishers’ own content to compete against them." (para 171) 13) Pages 62-63 include additional data about the C4 data sets used in Gemini pretraining 14) Paragraph 194 cites Raptive's March McCollum as saying Google's AI moves "could put the future of the open Internet in danger." 15) Pages 70-73 have additional data about the increase of "zero click" searches, including citing studies from Pew & Ahrefs showing AI Overviews reduce clicks to publihsers. 16) "Google’s response to the widespread consensus that AI Overviews and AI Mode send less traffic to publishers than the previous search engine results page has been to assert that this consensus is based on 'inaccurate' reporting. But Google has offered no credible competing information regarding search referral traffic." (para 200) 17) Penske calls out Google's recent admission in the EDVA adtech case that "today, the open web is already in rapid decline." (para 205) 18) If Google keeps up its actions with AI, "the economic incentives necessary for the creation and publication of high-quality original content will evaporate. If unchecked, these anticompetitive practices will destroy the business model that supports independent journalism." (paragraph 206) 19) "Google’s unlawful conduct has thus put reputable publishers like PMC in a catch22 ... [because] with every article it publishes on its websites, PMC is forced to provide Google with more training and grounding material for its GAI systems to generate AI Overviews or refine its models, adding fuel to a fire that threatens PMC’s entire publishing business, the viability of many other online publishers, and the public’s access to high-quality content across the Internet. Google’s unlawful conduct cannot be permitted to continue." (paragraph 208) 20) "analysts have estimated that the value of the overarching AI content market could grow close to $30 billion by 2034" (para 217) 21) "Available information shows that participants in the AI content market recognize that republishing, training, and retrieval-augmented generation are separate use cases with independent value." (para 218) 22) Cites Perplexity's publisher fund (para 219) 23) Talks about RSL (really simple licensing) & pay-per-crawl (para 220) 24) "Google exercises its coercion through its web crawler and its search index. ... there is no way for publishers to tell Google, 'You may buy my content to generate search results, but you do not have my permission to use my content for other purposes.'" (para 226) 25) "Even if Google offered digital publishers the ability to opt-out ... the coercion would persist so long as Google preferences AI Overviews and Featured Snippets on its SERP—or, when it comes to AI Mode, so long as Google republishes content from online publishers like PMC without offering a SERP at all." (para 227) 26) "The presence of these links and the fact that Google automatically places the elements that feature them at or near the top of the SERP create an impossible dilemma for online publishers. Even if they could opt out of Google republishing their content, doing so would mean demotion on the SERP and thus less Search Referral Traffic, or becoming entirely invisible to users that search using AI Mode. So long as other online publishers know that they can artificially elevate their own search results by permitting Google to use their content for Republishing, GAI Training, and RAG, there will be a race to the bottom whereby virtually all publishers opt in, even though the only beneficiary in the end is Google." (para 228) 27) "In short, while Google’s reciprocal dealing increases its share of the online publishing market, it does so at the expense of reducing the output of original content across the entire market." (para 229) 28) Because Google has a search monopoly, it is able to act as a monopsonist in the market for buying content for AI Overviews/Mode (the "Input Market") 29) Google's conduct also harms consumers by degrading the web (para 236) 30) Google is suppressing the AI content licensing marketplace by abusing its search monopoly power. Points out how other AI companies without a search monopoly have done more licensing deals than Google (para 237) 31) Additionally, this all further expands Google's search monopoly by making users more reliant on Google (para 238) 32) Google also benefits in other ways, including that it basically can sell publishers' content via Vertex AI to enterprise clients (para 241) Personally, I'm very happy to *finally* see someone call out the shady stuff Google is doing with Vertex! 33) Finally, paragraph 285 sums it up saying: "Google’s conduct gives it a dangerous probability of acquiring monopoly power in the online publishing market by restricting output and reducing quality of content supplied in that market." *** My analysis: Overall, it's another fantastic complaint from Susman Godfrey, with even more beef to its allegations. One key difference from the Chegg suit is that these plaintiffs are more traditional content publishers (who rely on display ads & affiliates). Honestly, just about any online publisher could be easily added a plaintiff to this complaint with very little changes needed. 🤔 Another key difference is the focus on Google's growing monopsony power in the AI content licensing marketplace. I think this is a super important development, as hopefully this suit can help pressure Google to give publishers more choice & compensation over how AI uses our content. All around, good news for web publishers! Here's hoping more publishers sue!