Adding to its recent troubles in the stock market, due to poor earnings results released prematurely by mistake causing a drop of its share price, French media have forced Google to engage in a battle against the government over a bill to tax search engines. While media push this agenda, this measure could be a double-edged sword, which could instead harm them.
It all started early in September, when French publishers asked the government to pass a bill obliging search engines to pay them for each link redirecting readers to their news site via search engines. The tax will came as a sort of copyright extension. Although it is supposed to apply to all search engines, Google is main target. The search engine giant did not fail to express its displeasure about it. In a letter addressed to the French government last week, Google has threatened to no longer reference the French media if it is forced into the tax
Google is by far the most used search engine in France and also a very important source of traffic for the French media. Ninety percent of internet users use the search engine, unlike in the United States where other search sites like Yahoo and Bing compete against Google. In France, Google alone generates 40% of media website views, half of which come from Google news. It also redirects 4 billion clicks per month to French publishers’ web pages. And although there are other sources, such as links in Facebook, newsletters or direct clicks, French news sites see significant traffic from Google.
Thus, most media outlets can hardly do without Google, many of which base their ranking strategy almost entirely on the Google algorithm.
The other major glitch lies in the fact that most news website business models are based on advertising. The more viewers to a website, the more they can make advertisers pay more for using their services. Consequently they have every interest to be better referenced. If Google put its threat into execution, it would deprive them of a large audience share and advertising revenues at the same time.
The French government, favorable to the measure, was left surprised and unimpressed by Google’s attitude. The Culture minister, Aurélie Filippetti, warned that it was not with threats that Google was going to treat “a democratically elected government." As for now, all parties are still standing their ground.
Europe is becoming a real headache for Google. Already in summer 2011, Google decided not to reference Belgian newspapers anymore because of similar tax policies. In fact, back in 2006, some Belgian newspapers, represented by the management company Copiepresse, filed a complaint against Google "news" service for linking their articles without permission or compensation in return. And after several years of lawsuit, Google was dismissed by the Court of Appeal of Brussels, deciding not to link Belgian media involved in its search engine. The matter was settled three days later but harm had already been done in the meantime as the news website audience considerably dropped.
The French bill gets its inspiration from a similar recent bill in Germany named "lex Google," which also plans to make hyperlinks taxable. Few German officials considered it unacceptable for for-profit organizations to use free content derived from journalists and newspaper investment, available on the internet, for commercial purposes. Indeed, in France this issue has lifted the veil on the ambiguous relationship between news sites and search engines. On one hand they need them because they bring viewers, but on the other hand since search engines also earn revenues with those which it links to, wouldn’t it make sense to pay something in return to the copyright owners?