Thursday, December 18, 2014

Europe Declares War on the Internet - Soeren Kern

by Soeren Kern

"Spanish newspapers formed suicide pact, invited Google to pull the trigger. Google did." — Twitter user.
Spain's ailing newspaper industry, which is utterly dependent upon Google News search engine to drive traffic and revenues, is now at risk.
The spirit of the new law "is not really about compensation, but about extorting money from Google... The final result of the Google Tax: no one gets paid, media lose traffic and Internet users lose an important service. Spanish newspaper publishers should be thankful that an external agent drives readers to their publications for free." — Alfredo Pasqual, technology commentator.
Europe's obsession with Google may be more about anti-Americanism than anything else.

The Internet giant Google has announced that it is shutting down its Google News service in Spain.

The move came in response to a new copyright law in Spain that would require Google and other news aggregators to pay Spanish publishers for linking to their content.

The Spanish law follows similar legislation in other parts of the European Union, where politicians are increasingly lashing out at Google over a host of complaints about antitrust, privacy and taxation issues.

Google has accommodated critics in some countries, but with Spain, the government appears to have completely overreached: Spain's ailing newspaper industry, which is utterly dependent upon Google News to drive traffic and revenues, is now at risk.

(Image source: Google)

Spain's new Intellectual Property Law (Ley de Propiedad Intelectual) was approved in February 2014 and enters into effect on January 1, 2015. Also known as the "Google Tax" (tasa Google), the purpose of the new law is to force predominately American internet content aggregators to pay for the rejuvenation of digital media in Spain.

The law was drafted by the Spanish Ministry of Education, Culture and Sports, with the help of the Association of Spanish Newspaper Editors [AEDE], a virulently anti-Google media guild that represents approximately 100 Spanish publications.

AEDE successfully lobbied the Spanish government to insert a controversial clause into the new law that requires content aggregators such as Google and Yahoo! to pay struggling Spanish publishers—ranging from generalized blogs to national newspapers—for any use of their content, including snippets and titles.

The Spanish law is modeled on similar initiatives in Belgium, France and Germany, but it goes much farther because it prohibits Spanish content providers from waiving such payments. The "one size fits all" law states that publishers not only have an "inalienable" right to levy such licensing fees, but that they may not refuse to do so. The law also allows AEDE to fine companies like Google up to €600,000 ($750,000) if they do not comply with the law.

At the same time, the law is vague about how the payments should be calculated. It states that if an agreement over payments cannot be reached, the Intellectual Property Commission should impose a tariff. Critics say that this ambiguity leaves the law vulnerable to subjectivity and to the arbitrariness of entities that are philosophically opposed to Google.

The head of Google News, Richard Gingras, said the new law makes no financial sense for Google, and therefore the company will close down its news service in Spain, effective December 16. In a statement, Gingras wrote:
"[S]adly, as a result of a new Spanish law, we'll shortly have to close Google News in Spain. Let me explain why. This new legislation requires every Spanish publication to charge services like Google News for showing even the smallest snippet from their publications, whether they want to or not. As Google News itself makes no money (we do not show any advertising on the site) this new approach is simply not sustainable. So it's with real sadness that on 16 December (before the new law comes into effect in January) we'll remove Spanish publishers from Google News, and close Google News in Spain.
"For centuries publishers were limited in how widely they could distribute the printed page. The Internet changed all that—creating tremendous opportunities but also real challenges for publishers as competition both for readers' attention and for advertising Euros increased. We're committed to helping the news industry meet that challenge and look forward to continuing to work with our thousands of partners globally, as well as in Spain, to help them increase their online readership and revenues."
Spain's Minister for Education, Culture and Sports, José Ignacio Wert, dismissed Google's move as a "business decision" that was not influenced by the new law. In a statement that suggests he may not fully understand how the internet actually works, Wert said:
"It is important to note that despite the suspension of Google News service, access to information on the internet continues to be guaranteed. You can access this information directly on the newspaper websites or as a result of indexing the news on search engines and other aggregators of news content."
Wert also asserted that Spain's new law is "a pioneering regulation at the European level," one that "marks a clear path" for the rest of Europe to follow.

In reality, Google's decision to terminate its news service in Spain spells potential disaster for the Spanish media sector.

One Twitter user summed it up this way: "Spanish newspapers formed suicide pact, invited Google to pull the trigger. Google did."

The online news service The Spain Report wrote:
"Google's decision to axe its Google News service in Spain—it could hardly agree to pay a tax on links, a fundamental building block of the Internet—will affect all Spanish newspapers, not just those belonging to the powerful publishers' association AEDE, which has pushed hard for the new law. Small bloggers and news sites will be affected and Spanish newspapers will now see a relatively large drop in traffic to their pages.
"Since the economic crisis began in 2008, Spanish media outlets have suffered the twin economic and technology crises as much or more as journalists in other countries. The latest data from the Spanish Federation of Journalists' Associations (FAPE) show 11,145 journalists have been sacked and 100 media outlets closed since 2008. Free papers, print editions and major news outlets such as state broadcaster TVE, El Mundo and El País have all been affected."
A Spanish technology commentator, Alfredo Pascual, noted that Spanish media executives are "not in a position" to make demands upon Google because its services are "indispensable for them to eat tomorrow, and not the other way around." He added that the spirit of the new law "is not really about compensation, but about extorting money from Google."

Pascual said it was time for Europeans to "stop comparing Google to the United Nations, a neutral international organization, and begin seeing it for what it is, namely a private multinational that can do what it wants and profit from its products and services."

According to Pascual:
"Like it or not, Google runs the show in Spain, and 98.9% of Spanish Internet users are fine with that fact. Spanish newspaper publishers should be thankful that an external agent drives readers to their publications for free. And those who do not like it should 'take their ball and go home.' Requiring Google to pay is recklessness promoted only by those who are deeply ignorant of the rules. The final result of the Google Tax: no one gets paid, media lose traffic and Internet users lose an important service."
This is not the first time that Google has faced trouble in Spain.

In December 2013, the Spanish government fined Google €900,000 ($1.1 million) for allegedly breaking Spanish data protection laws.

In May 2014, the European Court of Justice [ECJ] ruled that Google was required to remove historical information about European citizens so that they are not "being perpetually or periodically stigmatized as a consequence of a specific action performed in the past."

The case about the "right to be forgotten" was brought by a Spanish national, Mario Costeja González, who asked Google to remove a link to a digitized 1998 article in the Barcelona-based newspaper La Vanguardia about an auction for his foreclosed home.

Since the ECJ's ruling, Google has received about 185,000 requests from people in Europe to remove links to online material, according to the company's transparency report.

In November 2014, European Union regulators said that the "right to be forgotten" should apply not just to Google's local European sites, but to the "entire world."

Google is also facing problems in other parts of Europe, where its search engine controls approximately 90% of the market.

In Germany, where Google delivers more than half a billion clicks to German news sites each month, a new copyright law took effect in August 2013 that requires Google and other internet aggregators to pay for the use of content produced by German media firms.

Unlike the law in Spain, however, German publishers are allowed to waive their right to demand payments, so as not to lose the traffic that Google sends their way. As a result, Google only displays material from publishers who agree not to charge to have their content appear on Google News. Publishers who refuse to agree to these conditions are excluded from the news aggregation service.

The new law was the product of an intense lobbying campaign initiated by major German publishers, including Axel Springer SE, which did not give Google permission to link to its news sites.

In an open letter to Google's chairman, Eric Schmidt, the chief executive of Axel Springer SE, Mathias Döpfner, wrote:
"We are afraid of Google. I must state this very clearly and frankly, because few of my colleagues dare do so publicly."
In November 2014, however, Axel Springer backpedalled after traffic to its sites plunged. The company said that traffic flowing from clicks on Google search results had fallen by 40% and that traffic delivered by Google News had plummeted by 80%.

In an interview with Reuters, Döpfner said that his company would have "shot ourselves out of the market" if it had continued with its demands for Google to pay licensing fees.

In France, Google reached an agreement in February 2013 to pay €60 million ($75 million) into a fund to help French publishers develop their presence on the Internet. Nevertheless, in January 2014, France's data protection watchdog CNIL fined Google €150,000 ($185,000) after Google ignored a three-month ultimatum to bring its practices into conformity with local privacy protection laws.

In Belgium, Google agreed in December 2012 to pay "around 5 million euros" ($6.2 million) to "compensate" local newspapers and journalists.

In the Netherlands, Dutch regulators issued an ultimatum in December 2014, threatening Google with a fine of up to €15 million ($18.7 million) if it fails to meet a February 2015 deadline to improve its privacy policy.

In Brussels, the European Parliament in November 2014 passed a non-binding vote that Google should be "broken up."

Europe's obsession with Google may be more about anti-Americanism than anything else. According an analysis published by the New York Times, "Google, fairly or not, has become a glaring proxy for criticism of an intrusive American government and concern over America's unmatched technology dominance."

Back in Spain, AEDE, which apparently never contemplated the possibility that Google might close down its Spanish news site, is now demanding that the Spanish government and the European Union intervene to prohibit Google from shutting down the service.

In a statement, AEDE noted that in Spain "Google controls nearly all of the searches in the market and serves as an authentic gateway to the internet." It added that the closure of Google News would "beyond any doubt have a negative impact on Spanish citizens and businesses, given Google's dominant position in the Spanish market."

Spanish commentators are predicting that AEDE, which was banking on windfall profits from obligatory payments forced upon Google, may now need to ask the government to repeal the law.

A Spanish technology commentator, Aurelio Jiménez, wrote:
"Let's get real: AEDE was salivating about the money that they would make with this law and the totally legitimate decision by Google to close down Google News has taken them by surprise. In addition to consumers, the big losers will be the new media themselves, which, by disappearing from the news search engine, will lose traffic (and thus income).
"Neither with you nor without you. AEDE wants Google News to remain open, but it also wants it to pay them a fee. I wonder what they expected: that Google would pass through the hoops and pay handsomely for a service that benefits AEDE? It did not take even one day for AEDE to realize its error. Our country is a banana republic."

Soeren Kern is a Senior Fellow at the New York-based Gatestone Institute. He is also Senior Fellow for European Politics at the Madrid-based Grupo de Estudios Estratégicos / Strategic Studies Group. Follow him on Facebook and on Twitter.


Copyright - Original materials copyright (c) by the authors.

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