News Corp recently filed a complaint with the European Commission against Google over “improper scraping of content for use in search results.”  News Corp alleges that Google takes News Corp content and makes it available in Google’s search results.  According to News Corp, displaying their content on Google’s sites bypasses News Corp’s sites (and therefore ads) and deprives News Corp of revenue.  Google will take the content down if News Corp asks.  But if News Corp does so, Google will not display any News Corp content, including the links to stories that would otherwise come up.  News Corp believes failing to display these links is an abuse of dominance.

It is not an abuse of dominance.

Taking News Corp content and displaying it in search results is a form of free riding. Google didn’t create the content; News Corp did.  News Corp’s content enhances the value of Google’s search engine and may in fact drive ad click-through revenues for Google.  But News Corp benefits too.  In exchange for being able to display the content, Google promotes News Corp’s websites to readers interested in that topic.  That promotion drives readers to News Corp’s website where they generate revenue for News Corp.

In this sense, the Google-News Corp relationship is a form of symmetrical reciprocal free riding. Rather than attempt to quantify and clear between them complex and perhaps indeterminable costs, both parties agree to free-ride off each other in roughly equal portions.  If symmetrical, their cross-externalizations create an efficient outcome.  In other words, both companies profit from using each other’s materials—Google improves the desirability of its search engine; News Corp gets more readers, higher click-throughs and revenues.

In addition, the content Google takes is a snippet of the article, not the whole article. Absent Google, News Corp would not have nearly the same traffic.  I suspect that the number of people who read only the first few sentences of a news story on Google is not large.  If those people are so disinterested in the story that the first few lines is satisfying, it would also seem that they would not be likely to spend a lot of time perusing advertisements, which are presumably related to the article, on a news site.  The losses News Corp is complaining about—consumers of light news-summaries in lieu of actual articles who otherwise buy a lot of related products through ads on News Corp’s sites—must be at the margins.

What News Corp is really complaining about is that it can’t free ride off Google’s search engine. It wants all the value from placement without paying any price.  And placement has value.  The ads at the top of the page are paid ads.

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