Sep 16, 2020
Google exec on hot seat in Congress over advertising power
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WASHINGTON – A Senate panel put a top Google executive on the defensive Tuesday over the company’s powerful position in online advertising as some lawmakers look hopefully toward an expected antitrust case against the tech giant by the Trump administration.
Donald Harrison, Google’s president for global partnerships and corporate development, insisted at a hearing by the Senate Judiciary antitrust subcommittee that Google’s ad business faces ample competition, has benefited consumers, and has kept prices low for advertisers and publishers such as local newspapers.
The Justice Department has pursued a sweeping antitrust investigation of big tech companies, looking at whether the online platforms of Google, Facebook, Amazon and Apple have hurt competition, stifled innovation or otherwise harmed consumers. The department is reportedly readying a major case accusing Google of abusing its dominance in online search and advertising to stifle competition and boost its profits.
That expected action “could be the beginning of a reckoning for our antitrust laws,” said Sen. Amy Klobuchar of Minnesota, the panel’s senior Democrat. She said she hoped “there’s a start” at the Justice Department and that also “things are going on” at the Federal Trade Commission, which has carried on a separate antitrust investigation of the Big Tech companies.
The administration has long had Google in its sights. A top economic adviser to President Donald Trump said two years ago that the White House was considering whether Google searches should be subject to government regulation. Trump himself has often criticized Google, recycling unfounded claims by conservatives that the search giant is biased against conservatives and suppresses their viewpoints, interferes with U.S. elections and prefers working with the Chinese military over the Pentagon.
Google has denied the claims and insisted that it never ranks search results to manipulate political views.
The company has acknowledged that it’s been in discussions with the Justice Department as well as state attorneys general, without elaborating on the nature of the talks. A bipartisan coalition of 50 U.S. states and territories, led by Texas Attorney General Ken Paxton, announced a year ago that they were investigating Google’s business practices, citing “potential monopolistic behavior.”
The issue of perceived bias by Google against conservatives also arose at Tuesday’s hearing. Subcommittee chairman Sen. Mike Lee, R-Utah, and other Republicans raised an instance in which Google warned the Federalist Society, a conservative legal organization, that its news website could be banned from making money from Google’s ad platform because of remarks in the site’s comment section that Google considered racist.
Lee told Harrison that Google was applying a double standard in its treatment of the Federalist web site, by invoking free-speech legal protections that shield it from liability for users’ offensive comments. “This is how a company acts when it senses, perhaps correctly, that it doesn’t have competition,” Lee said.
But mostly the senators homed in on Google’s position in advertising as they questioned Harrison. In the “ad tech” marketplace bringing together Google and a huge universe of advertisers and publishers, the company controls access to the advertisers that put ads on its dominant search platform. Google also runs the auction process for advertisers to get ads onto a publisher’s site. In addition, Google owns Android, which is the world’s largest mobile operating system, email systems, video service YouTube and mapping services, which provide it with users’ data that it can deploy in the advertising process.
“This looks like monopoly upon monopoly,” said Sen. Josh Hawley, a Missouri Republican who is a leading critic of Big Tech.
Klobuchar cited research showing that Google may be taking between 30% and 70% of every ad dollar spent by advertisers using its services — money that critics say should go to publishers that produce content and run the ads, such as newspapers.
Google, whose parent is Alphabet Inc., controls about 90% of web searches. Google has long argued that although its businesses are large, they are useful and beneficial to consumers.
Harrison said that Google shares the majority of its “ad tech” revenue with publishers.
He rejected even the lawmakers’ assertion that Google is dominant, saying that market dominance suggests abuse, which is foreign to the company. He reeled off names of competitors in “ad tech” business: Adobe, Amazon, AT&T, Comcast, Facebook, News Corp., Oracle and Verizon.
“We know that we’re popular,” Harrison said. “But we don’t agree that we’re dominant.” Consumers have “tons of choices,” he said.
Harrison noted that online advertising prices in the U.S. have fallen more than 40% since 2010, according to Federal Reserve data. Last year, Google’s search and advertising tools generated $385 billion in economic activity for U.S. businesses, he said.
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Cloud gaming battle heats up as Amazon enters the ring to take on Microsoft and Google
As Microsoft battles it out with Sony in this year's edition of the console wars, it's now got another rival to worry about.
Amazon announced Thursday that it would launch its own cloud gaming service, a kind of "Netflix for games" that forgoes the need for consoles or dedicated hardware to play video games. Called Luna, the platform comes with a library of 100 titles and users can play with a special Luna controller.
The entry of Amazon into the raft of companies developing such game-streaming services has long been rumored. The company's announcement now marks an official challenge to the likes of Microsoft and Google, which have both recently launched their own respective cloud gaming products.
But Amazon is taking a slightly different approach to those companies. Instead of going for an all-access subscription — like Microsoft is with Xbox Game Pass — Amazon is launching so-called "channels" for a range of publishers, for which users have to pay a monthly fee. Only Ubisoft and Amazon itself have been confirmed as companies included in that offering so far.
And though Luna is similar to Google's Stadia platform in that users can play games from the cloud across PC and mobile devices, it diverges from the company's business model as players won't have to pay extra for individual games.
Amazon also said Luna will be available Apple devices, but only as a web app. This is a step up from Microsoft and Google, which have been unable to add cloud gaming functionality on iPhones due to restrictions within Apple's App Store that require pre-approval for each game. Apple recently loosened its stance slightly, allowing game streaming services that link to games via separate apps. Apple has a competing game subscription service called Apple Arcade+.Can Luna succeed?
Amazon poses a significant threat to Microsoft and Google given its prowess in cloud computing. The firm's Amazon Web Services, or AWS, division is the biggest player in the space, with Microsoft's Azure trailing closely behind. Amazon also has a successful gaming brand in Twitch, the live streaming platform it bought for $970 million in 2014. The decision to integrate Luna with Twitch could drive growth for the cloud gaming offering.
But does that mean it will be successful? Not necessarily. There are numerous hurdles for Amazon to overcome, not least the issue of finding enough content to make its service worth paying for. Google Stadia notably struggled on this front, launching with just 22 titles at launch, but has since gathered momentum as more games have been added.
"Unlike Microsoft and Sony, Amazon lacks the core games business — something that has been a huge hurdle to overcome for Google Stadia," George Jijiashvili, senior games analyst at market research firm Omdia, told CNBC.VIDEO1:4401:44Amazon unveils new products, including a home security droneNews Videos
"Amazon has a wealth of experience in cloud infrastructure, but this does not guarantee success. Whilst AWS is clearly a huge advantage, this is only one dimension of the final offering, and the emerging features, content, Twitch integration, and monetisation models will determine the uptake of the service."
While Twitch has been a boon to Amazon — especially in the midst of a viral pandemic that has seen viewership spike — the company has had less success in the development of its own games. Amazon pulled Crucible, its first big-budget game since the creation of Amazon Game Studios in 2012, from public release just a month after it launched. Another title, New World, has been delayed until early next year.
Cloud gaming will no doubt be a key battleground for gaming companies in the coming years. According to Omdia, such streaming services are expected to generate $4 billion in revenues next year and a massive $12 billion by 2025. That's no insignificant chunk of an industry estimated to be worth more than $150 billion.Related Tags
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