Google at odds with French government over proposed new tax
Google, Inc. is an American multinational corporation which provides Internet-related products and services, including internet search, cloud computing, software and advertising technologies. Advertising revenues from its AdWords feature generates almost all of the company’s profits.
The company was founded by Larry Page and Sergey Brin while both attended Stanford University. Together, Brin and Page own about 16 percent of the company’s stake. Google was first incorporated as a privately held company on September 4, 1998, and its initial public offering followed on August 19, 2004. The company’s mission statement from the outset was “to organize the world’s information and make it universally accessible and useful.”
Recently, Google has been in a war of words with the French government. In early September, French publishers asked the French government to pass a bill obliging search engines to pay the publishers for each link redirecting readers to their news site via search engines. The publishers viewed the tax as an extension of their authority under their publications copyright. While the tax will apply to all search engines, realistically, Google is the main target. While the French media pushes this agenda, some observers argue that this measure could be a double-edged sword, which could instead harm them.
Internet giant Google has made the French government aware it is unhappy with the new tax proposed by the Hollande Socialist government. The issue at hand is whether or not search engines like Google should have to pay publishers like newspapers for linking to their content. The new French government says yes. Google insists that it cannot afford to pay such fees, and it’s prepared to drop all French publications from its search engine.
In France, Google alone generates 40 percent of media website views, half of which come from Google news. It also redirects four 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.
Google executives met with French government officials last week to discuss the company’s threat to drop French media sites from its search results if France goes through with the threatened tax. Google says that such a law would “threaten its very existence,” according to a letter it sent to several French officials.
Google argues against the tax by pointing out that it is not earning revenue from media content. It’s only providing links to the content and then the media outlets are earning advertising revenue as well from the traffic they get from Google. According to Google, the whole issue is who is providing the service. Google is not providing a service at the expense of the media; rather, they are providing a service to the media. Google argues that they are sending them web traffic that they would otherwise not have.
The French publishers, through the French government, argue that despite four billion redirected clicks per month, the media sites have had difficulty benefiting from the Google traffic, as online readers. The proposed tax isn’t limited to France. Other countries in Europe are also considering the prospect of a tax in support of their own publications. Understandably, Google sees this trend as a threat to its business model.
Forum Question of the Week:
Should Google be required to pay a tax to the French government for each redirected click to a French publication?
Is it a Great W(h)ine, or a Bordeaux?
By Ben Tomkins
I’ve actually been wondering when something like this would happen.
France and several other countries are challenging Google’s right to link domestic media content through their Internet searches without compensating the media sources that created the content in the first place. In an immediate and dramatic response, Google threatened to cease linking French media content, effectively cutting off French citizens, and indeed the entire world, from using Google as a tool for accessing and referencing the French media.
The conflict between France and Google over media content is by no means coming out of the blue. This is only the most recent round of trouble between Europe and Google. The two clashed over the EU’s privacy laws when Google’s new, vague privacy statement stated Google’s intention to combine personal information from all of its subsidiaries to create a meta-profile of its users in order to tailor advertising and content results.
And thereby make way, way, way…
At the outset, there is a very American part of me that sort of knee-jerks at the whole “France and Europe want to charge Google for using their nations’ content” thing. It happens a lot in this country, because Americans aren’t particularly at home to European nationalistic ideals trumping the right of people to make a giant pile of cash in a free market. We poke fun at it, because in America, we all know that nationalistic fervor should only be used to trump the belief that people should have reasonable access to health care, but that’s not really the point.
Although the French legislative action has the flavor of CanCon in Canada (the fundamentally absurd belief that a country investing in its artistic citizens is the same as arbitrarily declaring that the content they produce is intrinsically superior because it was produced by Canadians), this is not merely some power play to forward French nationalism on the back of animosity generated by a previous legal dispute. It is a head-on collision between those who believe the value of the search engine is in the content it finds, and those who believe the value of content is materialized by the search engine.
The dynamics of the business of referencing information on the Internet are as fascinating as they are mind-blowing. In this day and age, it is almost more important that your content have high-profile access than it is for your content to have, well, content. Ostensibly, one can create the greatest art or literature in the history of mankind, but if your stuff doesn’t pop up in the first three hits on a Google search, you’re pretty much getting blown off by the lazy, opportunistic and thoroughly underdeveloped superior colliculus region of the brains of your fellow man-chimps.
As an example, my wife teaches private violin lessons here in Denver. She’s excellent. She has a website. She pays a little extra cash to get her stuff to pop up higher in search results from companies like Google. She has the most successful teaching website in Denver. Why?
If you Google “violin lessons Denver,” she comes up first.
Now my wife is a fabulous teacher, but her reputation only goes so far. People who don’t know the difference call her because she’s number one on the Google search. This has been a wonderful economic boon for us, and it’s worth the extra cash because we have no shortage of satisfied students as a result.
Now if one translates this example to the French media, one could make the argument – as Google does – that they (Google) are doing the content providers (the French media) a tremendous service as they are facilitating site traffic, allowing them to expand their readership, and thereby increase revenues by attracting advertisements. Everybody wins, though Google wins much more as they are the puppet masters of the whole affair.
But consider the following: what if my wife sucked at teaching as badly as she sucks at, say, sports involving bats? I’ll tell you exactly what happens. There would be a bunch of pissed off moms who would be using their friends as search engines rather than Google.
Basically, Google derives as much if not more value from the quality of its search results than content providers derive from the extra hits, because that’s the only standard by which we measure a search engine.
So now we’re back to it. Should France force Google to pay content providers for the business Google derives from the quality of their content? Honestly, I can’t really say. All I can offer is the above explanation of the situation, and point out that one of the great challenges of the information age is the determination of where one’s reputation ends and ease of access to one’s content begins.
The only thing I can say for sure though, is that Google’s claim that it will destroy their company and ruin the Internet is absurd. If France chooses to pursue this, then yes, Google may just leave France. That’s France’s prerogative. But that will open the door for a new company, with new ideas, new innovations and, yes, perhaps even composed of French citizens, to step in and reap the economic benefits of the vacuum. Giants may crumble and new heroes may arise, but things will go on whether Google controls the Internet or not.
Benjamin Tomkins is a violinist, teacher, journalist, and critically acclaimed composer currently living in Denver, Colo. He hates stupidity, and generally believes that the volume of one’s voice is inversely proportional to one’s knowledge of the issue. Reach Ben Tomkins at BenTomkins@DaytonCityPaper.com.
Antique media commit murder-suicide by government
By Mark Luedtke
The antique media business changed little between the days of Benjamin Franklin and the advent of radio. Competing fiercely for readers, hearts and minds, antique media outlets were in bed with different politicians and different political factions, and they nakedly advocated on behalf of those factions. But when FDR illegally seized control of the radio spectrum and created the unconstitutional FCC, he cartelized radio and subsequently TV so only progressives who promoted the pretense of objectivity could obtain licenses. By controlling access, government did the same to antique media. The only voices that made it to major media outlets were progressive, whether it be right-leaning progressive or left-leaning progressive. Along with government schools, this created the bizarre situation in which so-called conservatives became defenders of the progressive status quo – the income tax, the Federal Reserve, entitlements, aggressive foreign policy, war, etc. – while the progressives in charge of both parties continued to advance the progressive agenda.
Then Al Gore invented the Internet, and media changed forever.
A lot has been made about how the Internet structurally changed the way consumers consume media. Instead of waiting for a newspaper or a news report on the radio or TV, consumers can log onto the Internet at their convenience and access thousands of news stories on any topic they choose. Clearly this is a superior mechanism for obtaining news than being at the mercy of news outlets, and this has led to a decline in business for antique media.
But a bigger issue is rarely mentioned. The Internet exposed the terrible quality of product produced by the cartelized media. When a consumer reads one paper and watches one TV news broadcast, he can’t judge the quality of the news. But when he can examine dozens of articles and video reports to study a subject in depth, it’s easy to see how bad the product is.
Thanks to the Internet, people once again enjoy robust, unregulated competition for news. The cartelization of media by the government led to a dramatic lowering of the quality of news, and the Internet exposed it. Ironically, if not for the Internet, Al Gore would probably have gotten away with his lie about inventing it.
Antique media managers have responded to robust competition like wounded animals instead of rational human beings. In general, their product has become worse, not better. For example, I read an Associated Press story today that already blames President Obama’s election loss on race, based on a bogus poll AP conducted, not on the consequences of his policies.
I have a couple more obvious examples. For eight years, the antique press attacked President Bush pretty much daily for illegal wars even though Bush got congressional authorization to fight al Qaeda in Afghanistan and to invade Iraq. Since Obama has been in office, he’s attacked Libya, Yemen and Nigeria – that we know of – without congressional authorization, but the antique media never mentions those wars are illegal.
Also, the U.S. government knew that al Qaeda was a strong faction among the Libyan rebels, and Obama helped put al Qaeda in power in Libya. Obama is doing the same thing in Syria, funding and arming al Qaeda terrorists to overthrow the Syrian government. Al Qaeda then turns around and uses those weapons against Americans.
All of this information is readily available on the Internet from multiple, reputable sources, but the cartelized U.S. media covers it up. The same happens in every country. This kind of hypocrisy and dishonesty is rewarded in the political sector, but punished by the private sector – the New York Times lost another $88 million in the second quarter – but instead of improving their products, antique media is choosing the tried and true method of scoundrels: paying French and German politicians to plunder Google to protect them. This would be like horse and buggy industry paying politicians to plunder car companies a century ago.
Google recognizes this as an existential threat. If Google allowed one government to do this, all would do it, and they would destroy Google in a feeding frenzy of plunder. Google defended itself the only rational way it could, by promising to remove the media outlets of those countries from its search results. In typical brigand fashion, the French Culture Minister turned Google’s response upside-down and accused Google of threatening the government, as if Google were the aggressor.
But governments hate free speech, and unlike the horse and buggy industry, antique media is the propaganda arm of government. While plundering Google would be chilling for free speech, it would be great for governments. Public resistance has, so far, limited governments’ attempts to regulate the Internet, but this conflict provides an excuse to cripple it with taxes. Google delivers 4 billion clicks per month to French media outlets, so it’s not Google’s fault those outlets don’t offer a product that can make money off those clicks, but this isn’t really about Google. It’s about shutting down the free flow of information on the Internet so governments can once again control information through their cartelized propaganda outlets and therefore control the people.
But it won’t work. Competition on the Internet is already reducing Google’s relevance. That’s why the Brazilian antique media opted out of the Google aggregator without resorting to government coercion.
Mark Luedtke is an electrical engineer with a degree from the University of Cincinnati and currently works for a Dayton attorney. He can be reached at MarkLuedtke@DaytonCityPaper.com.