As the media industry girds for war with Silicon Valley’s powerful tech companies, its executives are coming to a painful realization: Rupert Murdoch saw it coming.
The octogenarian Aussie is seen in his industry as a rogue, a villain, and a bit of a Luddite, crouching behind his paywalls as the future arrives. His empire’s most daring technical innovation might have been phone hacking.
But in recent months, the 86-year-old billionaire has emerged to his industry as something else: a hero.
Murdoch and his chief newspaper lieutenant, News Corp CEO Robert Thomson, have taken a central role in the news industry’s corporate war against Facebook and Google, technology leviathans that have eaten journalism’s business model and forever changed how readers consume information.
That dynamic has until recently been the stuff of insider-y media trade stories and navel-gazing panel discussions, but the 2016 election changed everything. Stories in recent months highlighting Facebook and Google’s fraught role in the election — from the spread of “fake news” to 10 million people viewing Russian-bought ads — have thrust skepticism about the power held by social giants into mainstream public view like never before.
Now media executives are sensing blood in the water — hoping that Facebook and Google’s legitimate public relations nightmare might give news outlets more leverage in business negotiations, and that Washington lawmakers and the public at large will come to see tech giants as public utilities that require regulation.
As the most well-connected media mogul in Washington, the news industry might need Murdoch now more than ever.
His bare-knuckle tactics are familiar to both UK election campaigns — “It’s The Sun Wot Won It” — and brutal regulatory battles in the US. In a legendary late 1980s cross-ownership feud in Boston, Murdoch’s Herald newspaper launched a vicious campaign against Senator Ted Kennedy, who had blocked the mogul’s exemption from owning a newspaper and television station in the same market. (Read one anti-Kennedy lead from a Boston Herald columnist: “Was it something I said, Fat Boy?”)
As the most well-connected media mogul in Washington, the news industry might need Murdoch now more than ever.
Google and Facebook might do well to study the Kennedy incident. The Times of London, a Murdoch-owned British daily newspaper, has engaged in a months-long campaign this year exposing various problems with tech platforms, particularly issues that have concerned advertisers. The series began on Feb. 9 when a jarring image was splashed across the front page: an advertisement for resort chain Sandals next to a jihadi YouTube video. “BIG BRANDS FUND TERROR,” read the headline.
Since then, the paper has published 18 front pages taking on Facebook and Google, YouTube’s owner, with headlines like “GOOGLE: WE WON’T REMOVE VIDEO THAT ATTACKS JEWS” and “FACEBOOK PUBLISHING CHILD PORN.”
The Times series and subsequent reporting from other outlets this spring (like Murdoch’s Wall Street Journal) sparked an advertiser exodus from YouTube by brands like Sainsbury’s, McDonald’s, and L’Oreal. Thomson even railed against social media companies on an investor call on the same day of the Times’ initial story, adding that, conveniently, News Corp was testing its own digital-advertising network.
The YouTube advertiser revolt didn’t harm Google’s staggeringly strong bottom line, but the Times series rattled the company enough to lead to a face-to-face meeting between Murdoch, Thomson, and Google chief executive Sundar Pichai, according to sources.
“[Google and Facebook] would prefer we didn't draw so much attention to the problematic content on their platforms. Understand firstly that we're not going to stop. Secondly, this content is a huge issue,” said a senior executive at Murdoch’s UK newspapers.
To be sure, journalists across the board have been homing in on Facebook and Google because it has been a captivating story.
For media executives, the tides of public opinion turning against Facebook and Google couldn’t have come any sooner.
Lawmakers and regulators from Washington to London to Brussels have begun scrutinizing tech giants once lauded as corporate darlings. Facebook, Google, and Twitter are being dragged to Capitol Hill to answer questions about Russian attempts to use social media to influence the 2016 presidential election. Mark Zuckerberg has spent months walking back Facebook’s PR line that the company’s influence in the election was a “pretty crazy idea.” Google was slapped with a monster antitrust fine after a seven-year EU investigation.
For media executives, the tides of public opinion turning against Facebook and Google couldn’t have come any sooner, and they are happy to keep up the pressure. News Corp sources describe its battle against the platforms as a business, not moral imperative.
That’s because the so-called duopoly of Facebook and Google, by some estimates, accounted for nearly 100% of the growth in US digital ad revenue last year. Nearly all mainstream media outlets derive a mammoth portion of their audience from the very platforms that are swallowing them whole. Some digital upstarts have built entire businesses on the backs of the social platforms, and are therefore routinely beholden to the whims of their tech overlords (case in point: the “pivot to video”). For years, that reality has been enough to keep media executives up at night — but also hushed in their criticism.
Not Murdoch or Thomson. In some regard, News Corp was always well-positioned to become a loud voice railing against big tech. From early on — after Murdoch’s 2007 acquisition of the Wall Street Journal — the company made the decision to focus on paying subscribers instead of chasing a huge audience, which necessitates playing ball with Google and Facebook.
“The fact that the WSJ never gave its journalism away, that ethos helped reinforce their thinking,” said Raju Narisetti, a former News Corp executive and now CEO of Univision’s Gizmodo Media Group.
The reality of the news business means that working with Facebook and Google is a fact of life, though News Corp has always been notably fiery on the subject. In 2009, for instance, when Google’s search engine was fast changing the media landscape, Murdoch threatened to yank News Corp articles from Google search results in favor of Microsoft’s Bing, because Google “[steals] our stories.”
Murdoch had also singled out former Google CEO Eric Schmidt personally before in public statements. In recent years, one person familiar with the matter said, Google executives have sought to steadily thaw the two companies’ relationship.
Many media executives express fears about Facebook and Google publicly, and are gleeful in their criticism whenever the platforms mess up (like when Facebook had to admit a series of video metric miscalculations). But in the past, many have only done so privately among colleagues or on background with media reporters.
There are, of course, exceptions. Andrew Morse, general manager of CNN’s digital business, told Bloomberg this summer that “Facebook is about Facebook” and that “for the media companies looking to partner with significant commitments, it gets to be a bit of whiplash.”
Since the election, with Facebook and Google scrambling to defend their roles in the public discourse, news executives have ramped up criticisms. Facebook and Google are now a major political story.
NBC’s ad sales chief, for instance, said that if her company delivered as much nonhuman traffic as Facebook, “We would be testifying in Washington” — a not-so-subtle jab at Facebook, which has had to testify in Washington. (NBCUniversal is an investor in BuzzFeed.)
Executives haven’t always been so blunt.
“It was seen as unfashionable to highlight the risks. There was an element of fear that you might suffer the consequences,” said one executive at News Corp’s Dow Jones unit, which owns the Wall Street Journal. Thomson, for his part, has become well-known for his flamboyant anti-tech rhetoric, like how many websites act as “tech tapeworms in the intestines of the internet” or how some “net Neanderthals [think] everything should be free all the time.”
“For the last several years we've been working closely with major publishers around the world, including News Corp and hundreds more," Richard Gingras, vice president of news at Google, said in a statement. "We responded to their concerns about slow loading mobile pages with the open source AMP project and to their interest in video distribution with the YouTube Player for Publishers. The current big ask from publishers is around growing the market for premium content and subscription models. We are all in on helping with that!”
The Murdochs have a reason to play up any negative news about Facebook or Google.
“Our goal is to support quality journalism on Facebook. We've met directly with partners across the news landscape so we can best understand their ambitions for online subscriptions, and their collaboration is baked directly into the product we plan to test," Campbell Brown, Facebook's global head of news partnerships, said in a statement. "We want to improve news publishers’ outcomes on Facebook full-stop.”
Now that anti–Facebook and Google talk is in vogue, News Corp is happy to take a victory lap.
“The digital duopoly clearly benefited from commodifying content and rewarding sites, fake or flawed, that gamed search engines and peddled witless clickbait at the expense of provenance and professional journalism,” Thomson told BuzzFeed News in a statement. “That commercial and social damage has been a serious concern for many, many years, and yet other publishers have been supine in the face of this assault on principle and profit.”
Sources close to Thomson, long a loyal Murdoch ally in both London and New York, say the battle against Google is ultimately his baby, more so than Murdoch, who since the Roger Ailes scandal has taken on the top role at Fox News. But it’s a narrative happily championed by the close-knit circle of executives at News Corp and 21st Century Fox, sister companies that split in 2013. James Murdoch, Rupert’s son and chief executive of 21st Century Fox, recently lambasted Facebook for its problem with the “damn Russians.” “You’ve got to be kidding me,” he said in an interview with The Information.
The Murdochs have a reason to play up any negative news about Facebook or Google. News Corp, like all media companies, is engaged in a losing fight with the “duopoly” for a finite amount of digital advertising money. News Corp also collides with Google through its investment in AppNexus, a rival to Google’s DoubleClick. And then there’s News Corp’s planned digital ad network, announced the day of the first Times story and still in development.
“If you think the timing of the Times investigation and the launch of News Corp’s new digital ad strategy was purely a coincidence, well, I’ve got a bridge to sell you,” said one senior advertising executive.
The tough talk and tough reporting seems to have gotten News Corp somewhere in its negotiations with Google and Facebook. News Corp had long opposed Google’s “first click free” policy, which pushed news outlets to offer free access to articles in search results. Earlier this year, the Journal yanked free stories from search, which reduced its Google search traffic by 38% and its Google News traffic by 89%. Google announced the end of the policy this week.
“Felicitously, the tide has clearly turned over the past year and we genuinely welcome Google's recent initiatives, though we will need to check against delivery,” Thomson told BuzzFeed News.
Facebook is also adding subscriptions to its Instant Articles program, a policy News Corp pushed for. Traffic wise, some News Corp properties have suffered for their devotion to subscriptions. The Journal has lagged seriously in monthly traffic to its newspaper competitors like the Washington Post and New York Times, which have opted for softer paywalls and more expansive relationships with the platforms (and have broken seemingly endless news about the Trump White House).
Now, one open question is whether Murdoch, who is said to speak with President Donald Trump regularly, will use his deep ties in Washington to apply more pressure on the platforms as they face heat on Capitol Hill. Some sources close to Murdoch note that, from a personal perspective, he tends to want government to keep its hands off business. But he’s also self-interested, and News Corp was among a handful of companies and industry groups that signed a letter in support of the EU’s fine on Google.
News Corp is also among a group of newspaper companies seeking an antitrust exemption from Congress in order to win the right negotiate collectively with the tech platforms. The lobbying effort, led by trade group News Media Alliance, is something of a long shot — but News Corp has said it wants to “focus the public and Congress on the anticompetitive behavior of the digital duopoly, especially as it adversely affects the news and information businesses.”
“I do think News Corp was ahead of the curve in terms of seeing the difficulty of engaging with the Google and Facebook model,” said David Chavern, the chief executive of the News Media Alliance. “You had business anxiety before the election. Then you had the election that really brought it home to the public and to politicians that this news thing is not on a good path right now and that’s dangerous.”
“You’re seeing a growing voice of concern that this is a matter of both economical power and control that Google and Facebook have over the news industry and the societal consequences,” said Jason Kint, CEO of publisher trade group Digital Content Next.
Indeed, in recent months, some news executives have sought to leverage the rising public awareness, like when UK parliament launched an inquiry to look at the spread of “fake news” earlier this year.
“We had a fake news roundtable and it very quickly became a row between old media who were there and the social media companies who were also there and it wasn't anything to do with fake news,” according to a senior government source who attended the initial discussion. “It was all to do with, 'You're stealing our business model and you take our content and you distribute it in a way that we have no control over.’”
“Over months, maybe even years, that little seed grows and attitudes can start changing.”
Sources close to Murdoch and Thomson characterize their position fairly simply: They want large tech platforms to pay them for their content, and they aren’t afraid to use their own media properties as weapons. Which isn’t to say that reporters are directly told to go after Facebook or Google, but that those stories are prioritized, given heavier promotion and placement, and then championed by the executive structure.
“The power of the campaigning British newspaper is planting a seed in the head of the audience — many who aren’t spending hours and hours on the internet. They’re saying, ‘You probably wouldn’t know the evil that your Google or your Facebook are hosting. Here it is and here’s why you should care,’” said a former senior editor at a UK Murdoch paper. “Over months, maybe even years, that little seed grows and attitudes can start changing.”
But a senior correspondent at The Sun, Murdoch’s tabloid, said the paper was genuinely concerned with big tech — and that the coverage was more than just a self-interested business battle.
“Most of the coverage of the tech giants is linked to the terror stuff because that’s what our audience cares about,” this person said. “The editor genuinely believes the internet is the Wild West and tech companies, some which are bigger than governments, should be doing more to make it safer.”
Ultimately, sources close to Murdoch say that he hopes to push public opinion into viewing tech platforms more like Wall Street banks. And after years of bitter criticism, a softer refrain is echoing among Murdoch’s media contemporaries: Say what you want about Rupert, but he does love the news business. ●
Robert Thomson's name was misspelled in an earlier version of this story.