News Publisher Sues Google, Facebook for Digital Advertising “Existential Threat”

On Friday, West Virginia newspaper publishing company HD Media Company filed a complaint in the Southern District of West Virginia against Google and Facebook for purported antitrust violations in the digital advertising market, such that “the existence of the newspaper industry is threatened.”

The plaintiff “owns and operates several newspapers in West Virginia,” including The Herald-Dispatch in Huntington and the Charleston Gazette-Mail; these newspapers “have roots dating back to the 1870s and serve as the primary source of news journalism throughout West Virginia.” However, this is allegedly threatened by the defendants’ conduct.

According to the complaint, HD Media Company and other newspapers “compete for revenue in the digital advertising market. However, Google purportedly “monopolizes the market to such extent that it threatens the extinction of local newspapers across the country” because “(t)here is no longer a competitive market in which newspapers can fairly compete for online advertising revenue.” The plaintiff averred that Google, through various mergers and acquisitions, has “vertically integrated itself” in the digital advertising market “to enable dominion over all sellers, buyers, and middlemen in the marketplace.” As a result, the plaintiff proffered that Google’s conduct threatens newspapers, like the plaintiff, of their main source of revenue. The plaintiff claimed that the “freedom of the press is not at stake; the press itself is at stake.”  

In particular, the plaintiff claimed that newspaper advertising revenue, “which is critical for funding high-quality journalism,” has fallen by more than 50% since 2006. The plaintiff also pointed to a significant decline in the number of newspaper jobs and that “20% of all newspapers have closed in the past 15 years.”

Additionally, the plaintiff contended that the defendants “conspired to further their worldwide dominance in the digital advertising market in a secret agreement codenamed ‘Jedi Blue’” in order “to manipulate online auctions which generate digital advertising revenue.” In particular, Google and Facebook purportedly “agreed to avoid competing with (one) another in September 2018. The quid-pro-quo was as follows – Facebook would largely forego its foray into header bidding and would instead bid through Google’s ad server. In exchange, Google agreed to give Facebook preferential treatment in its auctions.” As a result, this alleged agreement mitigated a growing threat to Google’s dominance and further entrenched its marketplace. However, the complaint does not give specifics of the plaintiff’s purported harm beyond the loss of revenue.

Furthermore, HD Media Company noted that the House Judiciary Committee’s report on its antitrust investigation concluded that the defendants’ “anticompetitive and monopolistic practices have had a profound effect upon our country’s free and diverse press, particularly the newspaper industry.” Google and Facebook have faced antitrust lawsuits by the Department of Justice and the Federal Trade Commission, respectively as well as states filing additional suits against these companies.

The plaintiff contended that Google and Facebook have “monopolized the digital advertising market thereby strangling a primary source of revenue for newspapers across the country.” The defendants are accused of violating Sections 1 and 2 of the Sherman Act and West Virginia law for this purported monopolization, contract, and conspiracy to restrain trade. Additionally, Google is accused of unjust enrichment.

The plaintiff has sought declaratory judgment in its favor; an award for damages, including treble damages; an order permanently enjoining the defendants from further violations; pre- and post-judgment interest; an award for costs and fees; and other relief.

HD Media Company is represented by Farrell & Fuller, LLC; Robbins Geller Rudman & Dowd LLP; Fitzsimmons Law Firm PLLC; and Herman Jones LLP.