Google power

Mathias Döpfner is Chief Executive of German publisher Axel Springer. The interview was conducted at DW's Global Media Forum.

DW: Your recent open letter to Google chairman Eric Schmidt in which you wrote that you are afraid of Google caused quite a stir internationally. So let's talk a bit about Google. Do you yourself use Google?

Mathias Döpfner: Of course I use Google every day, all the time. Day and night.

There are many alternatives to Google for example Startpage/Ixquick, DuckDuckGo or Blippex for search. Why don't you use those instead of Google?

Try to change the search engine on your iPhone. I think there are three options and none of the other alternatives is a true alternative in Europe. So Google is simply the best product and basically with regard to search the only one.

You are among the leading German publishers that have been going against what you call Google's abuse of its dominant position in the search ad market in courts in Europe and in Germany. Springer and other German publishers recently filed a civil joint suit via VG Media against Google demanding a share of Google's ad revenues for copy right infringement. Why should Google pay for publishing small excerpts and sending traffic to you?

Because the law says so. They will not be paying for sending us traffic. This is a bit polemic. They would pay for re-publishing our content on their sites. The law protects the right of the publishers as similar rights have protected the rights of the music and movie industry and of all creative industries. The law is crystal clear: search engines and aggregators drawing on publisher's content have to obtain a license. Google was offered a negotiation but has declined to talk. They have publicly stated on numerous occasions that they do not intend to pay. Under existing law a civil lawsuit is the statutory next step when a search engine or aggregators decline to obtain a license.

My letter to Eric Schmidt was on a totally unrelated matter. It was about antitrust, not copyright. Yes, I was the first to have the courage to express my fear. My goal was to stimulate a debate and we have seen a debate which I think is very fruitful. I am not against Google or have the intention of damaging Google. That's not what this was about. It is just that we need a debate about a healthy ecosystem in the digital world that enables competition, because competition in the end is in the interest of the consumer.

The fact is that a market dominating player who has a market share of 90 percent in Germany and in some Eastern European countries 99 percent - which makes it a de facto monopolist - needs to accept certain transparent and clear criteria that apply for all listings. At the moment Google downgrades certain products of competitors and upgrades their own products in the listing without disclosing it, so the costumer doesn't get the product with the highest traffic figures. Instead the costumer gets the product that is a Google product perhaps on the first rank of the listing. I think this is critical and needs to be clarified somehow and that was the main reason for the present debate.

From a business perspective Google is still pretty much a one-trick pony. While it is active in many different markets, more than 90 percent of its revenues still stem from ad search. Any company that is so heavily dependent on a single source of income is highly vulnerable. Is that the reason why you have recently invested in two German vertical search engines (Truffls and Jobspotting) and French search engine Quant to tap into that market?

I wouldn't call Google a one-trick pony. If you are the biggest search engine, if you are with Youtube the second biggest search engine and the biggest video platform, with Android the biggest mobile system, with Chrome the biggest browser, then you are market leading in so many fields that I think this is a pony that knows a lot of tricks.

That they are very exposed to advertising revenues is true. But also here they have a market share of 60 percent in Germany and I think that's a very solid position. But we shouldn't envy them. It's a tremendous entrepreneurial success and Google is probably one of the smartest companies in the world. That's why I am not against Google. We just need to have this debate that a monopolist with such a dominating position has to accept certain rules. Google is not just like any other average company.

Can you give an example why you think Google is not a normal company?

Here's a comparison: If you own 10 percent of the German highways no one would interfere when you make certain rules like whom you allow to use the highway and how much you charge. But if you own 100 percent of the roads in Germany then I think it is a political question for society that there needs to be fair and transparent criteria for the use of the roads. That's what this debate is all about.

Let's talk a bit about Axel Springer, the company you lead. Axel Springer has a very ambitious goal. You want to become the leading digital publisher. Who do you currently consider the leading digital publisher?

That is very interesting, because there actually is not really a leading digital publisher right now. There are some digital brands of course like the Huffington Post which is clearly a globally very important digital content brand. But the Huffington Post is not part of a publisher, it is part of AOL which is a different company with a different structure.

If you look at traditional media companies there are very few who really aggressively digitize. The New York Times and the Financial Times are ahead of most of their peers and the Economist is also a heavily digitized brand … but there is no real digital-only player, no real digital publisher. We really want to take advantage of the opportunities that the Internet and digitization provide for content business models. There are threats, and we have talked about some of them, and there are tremendous opportunities. We want to take advantage of them and in a couple of years we want to be leaders in the regional markets we are active in, Germany, Eastern Europe, France, England and also in the segments we are active in like subscription, advertising and classifieds.

It is a new definition because a lot of journalistic companies think that in the digital space they have to diversify and become a media company in the broader sense of the word. But we think you can still be a publisher in the modern world. You can be very modern and at the same time stick very much to your core competence which is great journalism.

Critics charge that with the divestment of large parts of your journalistic newspaper and magazine portfolio recently you are no longer a company with journalism at its core, but an Internet conglomerate with a few journalistic sideshows. What's your response?

In your question lies a theory I strongly disagree with. Already now Axel Springer is a lot more journalistic in its core than it used to be prior to the divestment of two regional newspapers and some of our magazines. We divested these assets because we didn’t have a chance to become a market leader in these segments. We are a market leader in the premium segment with Die Welt and we are a market leader with Bild in the mass segment and we are a market leader in some smaller segments like music, sports and computer electronics.

We now have cash available from selling these assets for 920 million euros that we can invest step by step into fast growing digital content businesses or content businesses that have a huge potential to be digitized. One example is N24. We bought the market leading news channel in Germany as a core for all our video content for our websites. That is an entirely journalistic asset. We invested in Ozy, a digital content business near San Francisco and we have invested in launching new products in existing segments where we are already strong or market leading like Bilanz.

So over the next few years you will see that this idea to become the leading publisher not only keeps, but even strengthens journalism in the core of the company and its structure. The fact that today 70 percent of our employees are not working as journalists, but are either working for advertising or classifieds is nothing new. When Axel Springer founded the company decades ago it was the same. In a publishing company always roughly 70 percent of the employees did not work for journalism.

The Wall Street Journal, the Huffington Post and now Buzzfeed have all launched or soon will launch German-language services. If Axel Springer really wants to become the leading digital publisher you will have to have a journalistic presence in English.

Yes.

Can you elaborate?

What you have said in your question is absolutely true. English is the lingua franca of the world. If we want to move as a digital publisher beyond the boundaries of local languages like German, Polish or French we need to take up the lingua franca which is English. We will do that either through an investment in the US, Australia or Canada or in any other country. I would not limit it too much to a particular region, but it will have to be in the English-speaking world.

Do you have concrete plans for that project?

We have hundreds of ideas, but no concrete project yet that is at a stage that we should speak about it.