Google chief legal officer David Drummond was on the receiving end of an unexpected mugging yesterday, as the CEO of Burda Media - one of Germany's largest and most successful publishing companies - tore into the Jolly G Giant, accusing it of controlling the market, lack of transparency and, effectively, running off with the bulk of the money.
Exquisitely, Burda is the sponsor of the show Drummond was speaking at, DLD. Prior to Paul-Bernhard Kallen's assault, Burda Media chairman Hubert Burda had also noted that the main problem with the online advertising industry is that "the advertising has gone to Google."
The words of the two executives carry considerable weight, because Burda Media is by no means a maimed old media company. It runs a profitable magazine business, which it insists isn't going to die any time soon, and under Hubert Burda it has invested heavily in online properties, having about a €600 million stake in a range of companies with turnover in the region of €1 billion.
It is also - perhaps ominously for Google - a signatory to the Hamburg Declaration, the copyright manifesto issued last year by a group of publishing companies. Kallen succeeded Hubert Burda as CEO this year, and so far does not look like a man who minces his words.
"The issue is not Google and traditional media," Kallen said in response to a piece of Google boilerplate from Drummond ("the way through is partnership with folks like us, to send them them lots of leads and help them monetise with ads... we're a good distribution channel...")
"Google is so tremendously successful that they sort of control the market," Kallen continued. They're an infrastructure company, he said, and they should therefore be open with information (i.e. algorithms). At the moment, Google could change its algorithm overnight and a company could lose 90 per cent of its traffic. "It can't be that you're living in hope like that," he said.
Drummond patted transparency on the head ("transparency, more transparency is always good...") then did the trade-off boilerplate about bad people gaming Google if its algorithms were published. Kallen was unimpressed.
"In Germany something like 65 per cent of leads go through Google. That is market dominance."
"I would challenge that," responded a rattled-sounding Drummond. "Bing is one click away."
Kallen: "You own the highway."
Drummond: "You can go and buy another car."
As far as we know, those last two aren't in the standard Google boilerplate, and possibly not in the Chocolate Factory guide to constructive engagement with valued media partners, either.
Kallen then fleshed out his objections to Google, calling first for transparency, second for a "fair share" of revenues, and third - possibly the most ominous for Google - clear rules defining what kinds of businesses you're allowed to be in if you're an infrastructure company. He then rammed it home by reading out - in German - the relevant sections of Google's AdSense Ts & Cs: the ones that say Google gets to decide how much or how little you get, and that it's not going to tell you what percentage of the total take that it gets (more or less).
"I still sense there's a lot of hostility here," commented Jeff Jarvis, journalism prof and fan of both Google and Burda, in an apparent early bid for quote of the year. But it's all sweetness and light really. "We are looking for more amicable solutions," a smiling Kallen concluded. "Don't worry, don't worry." ®
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