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Why Europe Hates US Internet Giants In Six Charts

mn - 1

by Frederic Filloux

Here in Europe, America’s domination of the digital world is met with unabated detestation. Today’s first of two articles looks at the facts.  

This summer, as I prepared lectures for my foreign students at the Sciences-Po School of Journalism, I wanted to explain who “owns” internet traffic and audiences in Europe.
The figures are irrefutable: Most of what we watch is controlled by a handful of US-based internet giants. Thanks to rigorous processes and quasi-religious conviction, Google, Facebook, Microsoft and a group of their partners or competitors have succeeded in creating, consolidating and exporting their power. They broke things on the way to their dominant position and, as a result, built a wide front of malcontents: large corporations (e.g. in Germany) who see their local dominion threatened by “those barbarians”; frustrated entrepreneurs unable to fuel the growth of their businesses; national politicians eager to find traction in the public opinion; public officials who manage to aggrandize business issues, transmuting them into great “causes”. Of course, American companies carry their share of responsibility in this process as their muscular confidence too often veered into arrogance. But it is nonetheless fascinating to watch how the narrative drifted away from facts and into fantasy.

First, the audience question. Here is the internet audience in raw, non-unduplicated millions “uniques” (visitors) per month for the French market:

audience mUV

When you look at such a picture, a sense of frustration is understandable. Almost everyone in France’s 50M internet population (and that’s likely to be similar in other European countries) deals with a Microsoft or a Google digital property. And half of that population visits Facebook — almost as much as all French news sites combined. When it comes to legacy flagship players such as Le Monde or Le Figaro (both see their desktop traffic going away), their audience share is 5x less…

A look through other metrics such as the time spent isn’t enthralling either:

time spent

In short, French internet users spend roughly as much time on Facebook as on the ten largest local media sites combined.

Despite good mobile penetration, excellent infrastructure and reasonable rates, France didn’t manage to catch up on mobile applications:

Capture d’écran 2015-08-24 à 10.06.38

In an ecosystem in which the winner (read: icons on the first screen) takes all, US companies have been able to capture an even greater audience share on mobile than on the web. In this, there is no reason other than product features and quality.

Take the weather forecast apps in the above ranking. In theory, Météo-France, with its near-monopoly on weather data, should have been able to grab the N°1 slot for mobile apps on French smartphones. It turns out AccuWeather did just that. With less than half Météo-France’s staff — but most likely a business culture built upon 180,000 customers across the world — the Pennsylvania company enjoys almost twice the mobile viewership of the French state-owned weather forecasting bureaucracy.

The same goes for the classifieds business captured by LeBonCoin – owned by Norway’s Schibsted and implementing an inherited Swedish concept. While French newspapers were ranting about their evaporating classifieds revenue, the Norwegian group quietly built an amazing click-machine that even managed to outpace eBay.

In both cases, no predatory practices, no abuse of dominant position, nothing to chew on for EU commissaires. We simply have two corporations, deeply imbued with customer-centric cultures, that took advantage of weak incumbents in markets that were up for grabs.

Those who stigmatize the dominance of internet giants forget to mention two key success factors badly lacking in France.

The first is the access to capital. The comparison between Europe and the United States is eye-opening:

vc size

As Venture Beat noted in its yearly account of VC activity in Europe:

That big year in venture funding was somewhat muted because, after two big quarters, venture financing dropped 24 percent in Q4 compared to Q3.
And more bad news: The number of VC fund closings in 2014 fell 4 percent from 2013 to 76. The total amount raised dropped 18 percent in 2014 to €3.4 billion ($3.8 billion). The drop was especially steep in Q4, when the number of funds that had closings plummeted 51 percent from the same period a year ago.

Such performances bodes ill for Europe’s ability to fund a vibrant innovation ecosystem. (As explained in a previous Monday Note, French VC are doing even worse: With a GDP 6x smaller than the US, its VC pipe is 50x smaller, and the gap is worsening.)

The second success factor found wantings in Europe is higher education.  Again, an appalling picture emerges:

edu expenditure

Whatever the metric (secondary education, tertiary, with or without R&D programs), the United States educational system far outspends Europe. (French elite Ecole Polytechnique engineering school has only 7 computer science professors vs hundreds for Ivy League and Ivy League+ universities.)

America’s dominance of the European internet is indisputable, but it can’t be explained away with accusations of bullying and exclusionary practices. Agreed, US companies don’t pay enough taxes, but they often do so by taking advantage of tax arrangements concocted by European officials, including the former European commission president Jean-Claude Juncker himself when he was Prime minister of Luxembourg. And it should be noted that all European multinationals avail themselves of similar “tax optimization” practices. As a high ranking Google official once told me: “Our shareholders, the financial markets would crucify us for not taking advantage of the European tax system…”

Europe can be proud of many extraordinary industrial achievements: Airbus, Arianespace, the European network of high-speed trains, the French nuclear energy program that is second to none, Germany features a world-beating auto industry and is China’s lead supplier of complex industrial machinery. But when it comes to the digital revolution, European structures, mentality and inward-looking conservatism played against the innovation thrust.

Next week, we’ll look at the ideology built upon European technological frustrations. It even comes with its own grammar.


Why Nikkei Paid Top Money For The FT


by Frederic Filloux

The Financial Times is a rare media property: a global, long-established brand combined with a successful — although unfinished — digital transformation. Such uniqueness explains why Nikkei paid £844m ($1.3bn, €1.18m) for it.  


20 Home Pages, 500 Trackers Loaded: 
Media Succumbs to Monitoring Frenzy


by Frederic Filloux 

News sites use trackers more indiscriminately than ever. A random sample of twenty digital properties yields stunning results. Last week, we looked at how long web sites take to load, today, we see how messy their user data collection is. 


News Sites Are Fatter and Slower Than Ever


by Frédéric Filloux

An analysis of download times highlights how poorly designed news sites are. That’s more evidence of poor implementation of ads… and a strong case for ad blockers. More

The New Age of Visual Storytelling

by Frederic Filloux

A new generation of photographers reinvents the way stories are told. For their images, the weapons of choice are social networks and applications, video and mobile phones.   More

The Journalist and The Expert: Rapprochement Required


by Frederic Filloux

At a time when the information world becomes increasingly shallow, journalists ought to join forces with experts. The alliance would bring deeper knowledge to journos and sharper story-telling to eggheads. More

The redistribution game for news

by Frédéric Filloux
Forget the 70-30 split for subscription between publishers and distributors. Today, for publishers, the new norm is a 100%-70% split of ad revenues, depending on who sells the ad. For news distribution, re-intermediation will be intensely competitive.

The chart above illustrates the upcoming shift in news distribution. No doubt: We’re heading towards a new phase of massive re-intermediation, of reshuffling the layers between the news producers (traditional media houses or pure players) and readers. This raises important questions: What will publishers gain or lose in the process? Will they end up handcuffed to a cluster of gatekeepers or will they reap decisive gains for their business model.

Who becomes the dominant player in this new structure? More

More facts on mobile 


by Frederic Filloux

New mobile internet trends have caught my attention this week. Today, we look at their impact on the news business. (1)

In developing countries, mobile growth keeps accelerating.

  • In Nigeria (pop: 173 million, median age: 18), based on page views count, 76% of internet traffic now comes from mobile.
  • In India (pop: 1.25 billion), the rate is 65%. As a comparison, the proportion is 23% in the UK, 22% in the United States and 14% in France.

At least, four elements drive mobile growth in emerging countries: More

New generation CMS can help monetizing quality journalism

by Frederic Filloux

Monetizing digital journalism requires one key ingredient: Causing quality contents to emerge from the internet’s background noise. New kinds of Content Management Systems and appropriate syntax can help in a decisive way. 

Until now, mining good journalism from the web’s depths has been done from the top. Over the last 13 years, looking for “signals” that flag quality content has been at the core of Google News: With a search engine scanning and ranking 50,000 sources in 30 languages and 72 editions, its inventor, the famous computer Scientist Krishna Bharat, has taken his extraordinary breakthrough to an immense scale. More

Ad Blocks’ Doomsday Scenarios


by Frederic Filloux

On the ad blocking front, the situation keeps getting worse. Until now, the media industry pretended to ignore the problem, perhaps waiting for a miracle cure. This might turn into a long lull.  

In coming weeks, a large analytic firm will release disturbing figures on the state of the ad blocking scene. According to someone who has advanced knowledge of the data, on desktop computers and on critical segments of the digital audience, the use of ad blocking keeps rising exponentially. More