Spain’s “Google Tax” Highlights Europe’s Protectionist Approach Toward Innovative Technologies

 

Google Spain

Last week, the Cortes Generales and President of Spain passed a law that would force search engines like Google to pay newpapers, magazines and other periodical sites in Spain’s newspaper association for linking directly to their content in search results.

The Canon AEDE law (Spanish) is a part of Spain’s copyright reform proposal supported by Spain’s newspaper lobby, the Asociation de Editors de Diarios Espanioles (“AEDE”). The law is effectively a Linking Tax that seeks to subsidize losses that newspapers have suffered from the rise of the Web. Canon AEDE “protects” the intellectual property of Spain’s periodicals in the form of a fee that periodicals  charge to Google and other content aggregators for listing their sites within their news search results.

To be clear: The law focuses on Google News and other aggregator results rather than general keyword searches. It could, however also have a significant effect on User-Generated-Content sites like Twitter and Facebook, which are also adept at both sharing and contextualizing news links.

With the New York Times reporting earlier today that despite gains in overall circulation, it’s profits have fallen by 21%, Spain’s new law presents a monetization scheme that content sites around the world would appreciate, but it may create more problems than it solves.

The first issue is that the mechanism of these payments is murky. The law calls for Google and other content aggregators to pay publications a fee to “periodically update their links,” (paraphrase) which, in many cases ignores the means by which links appear as the result of searches or content aggregator algorithms. More important, is the way that Canon AEDE, which derives its authority from copyright law, disregards the doctrine of Fair Use; a common system of rules which allows individuals and organizations to paraphrase and reference content for informational purposes.

In recent years, the people and government of Spain have been no stranger to legal controversies surrounding search engines using Google specifically as a target. Earlier this year the EU Commission ruled that, based on a Spanish complaint, Google and other search engines must allow for the “Right to be Forgotten,” which means providing users with a means to request the removal of any search result which involves their personal activities. There too, the Europeans failed to provide any specific instructions, leaving Google, Microsoft and other search engines to develop concrete solutions to abide by these laws.

Spain has also challenged smaller US tech firms whose innovations are focused on the disruptive sharing economy.At the behest of hotel lobbyists, the Spanish government is cracking down on Air BnB and Uber by fining them as much as $40,000 in some instances due to not reporting their activity to the Spanish Tourism board.

Indeed recently Google and other technology companies are seemingly under constant attack by Europe’s drive to curb the cultural influence of the Internet and draw revenue from disruptive American technology products and services.

In 2013 the French Superior Council of Audio Visual has also proposed that Facebook and Youtube should pay a tax based on the ad revenue gained from French traffic to finance French cultural products. In addition to the proposed content-based tax revenue, French authorities are exploring ways to to further cash in on the success of American technology giants by imposing an added tax on devices like smartphones and tablets running operating systems built by Apple and Google. These revenues, they propose, would also finance French cultural products.

Germany’s Bundesregierung  passed a law similar to Canon AEDE in late March of 2013. Google’s response was to remove the content provided by Germany’s periodicals from Google News. Google then allowed each affected website to re-enlist on Google News if and only if they waived their right to collect the very fees the German law said they were entitled to.

Julio Alonso reports that Canon AEDE attempts to block Google’s Germany strategy by stating that the fees are an “inalienable right,” which means that editors cannot opt-out or refuse to collect the fees. The law also proposes the creation of an industry organization whose sole responsibility is to collect these fees from Google and other aggregators.

The internal controversy surrounding Canon AEDE was considerable. Genbeta.com reports that opposition to the law within the Cortes Generales proposed as many as 169 partial amendments though it remains unclear as to which of these amendments were accepted before Canon AEDE was signed into law.

It’s easy to see the motivation behind Canon AEDE. From the perspective of AEDE, the trade group that is the law’s namesake, Google’s ability to generate advertising revenue from searches of their content is problematic. It’s also worthy to note that Spain, which is Europe’s 4th largest economy, is pulling itself out of a six year economic slump. With an unemployment rate at one quarter of the Spanish workforce, the Cortes Generales and the President hope that the estimated €1.13 billion in revenues from fees and fines associated with Canon AEDE could get more of Spain’s young people working while also coming across as a populist win.

The law is set to go into effect in late 2014.