‘Google Tax’ – An attack on diversity and consumer choice

The European Commission is still considering including an EU-wide ‘google tax’ in its upcoming copyright reform proposals, Commissioner Oettinger confirmed at a meeting with Conservative MEPs at the start of March. This is very bad news for publishers, particularly smaller publishers, even though many larger publishers are calling for a ‘google tax’ in the mistaken belief it will help them address falling revenues from eroding traditional print sales. It will also penalise consumers by reducing their choice and ease of access to digital news content, and runs directly contrary to the news consuming habits an entire generation have grown up with.

 

The idea behind the so-called ‘google tax’ stems from publishers demands that google pay them for the headlines and article snippets it includes in its google news search feed, arguing that google is benefitting from the content they have written. Google’s counter-argument is that there is no advertising on the google news feed so they do not profit from it directly, and that instead they deliver huge and valuable internet traffic to publishers websites.

 

The ‘google tax’ first came to public attention in 2013 when Germany passed an ancillary copyright law which forced google to pay publishers unless they explicitly opted-in to appear with no renumeration on google news, google removed all news sources which did not opt-in. Within months of the law coming into force a consortium of more than 200 companies had opted back in to google news, citing a disastrous collapse in traffic that risked forcing some of their members ‘to go bankrupt’. This example did not stop Spain’s even stricter copyright law coming into force on 1st January 2015 which made it impossible for individual publishers to waive their rights to renumeration. The result was that google shut down its news service in Spain and removed all Spanish publishers from its global news feeds, saying it could not afford the significant costs the law created for a news feed that generated no advertising revenue.

 

Oettinger himself has hinted at a preference for pan-European rules along the lines of the Spanish model, describing it as more developed than the thinking in his native Germany. This would be disastrous for European publishers, and especially smaller niche and local publishers who rely more heavily on google news to deliver their traffic. An official study by Spanish publishers released last summer showed that in the first six months the law had led to a 14% fall in traffic to small publishers, significantly higher than the headline rate drop of 6%. Another important point was that the law didn’t just effect google, it also hit smaller Spanish news aggregators such as Planeta Ludico and NiagaRank. The study slammed the law’s anti-innovation effect, making it harder for new players to enter the publishing market, and its diminishing effect on consumer choice.

 

Whether the largest Spanish publishers will decide it is worth taking the initial hit in revenue to squeeze out smaller competition from the market remains to be seen. But this study’s results undermine much of the anti-monopoly arguments publishers use against google. It is certainly true that google has a dominant position in the market, but the infrastructure it created is helping deliver a more diverse and innovative publishing market, boosting publications as print sales decline year after year. This hurts consumers most of all, reducing readers choices even as more of them than ever before are enjoying the freedom of getting their news from multiple sources and thereby delivering advertising revenue to many different publishers. That more open publishing market place is what established market players are seeking to undermine, squeezing out newer entrants and damaging the viability of smaller publishers, but such an anti-competitive move should be resisted.

 

Despite the evidence from Spain and Germany, the Commission still appears to be pressing ahead with proposals for ancillary copyright reform, based on a flawed initial consultation limited to rights holders and sidelining consumers voices, as my colleague Julia Reda has highlighted, though the Commission now says it will take their views onboard. Ultimately if individual countries wish to pass a ‘google tax’ they are free to do so, no matter how counterproductive and anti-consumer such a law is, but a pan-European assault on consumer choice and smaller publishers would be a disastrous and regressive move for the European economy.