Why Spain's Google Tax Is Doomed
Perhaps the most intriguing question about the "Google tax" introduced in Spain is whether there is a workable way to limit or tax the spread of information on the Internet. I suspect there isn't, and Spaniards are about to find that out the hard way, as some Germans and Belgians did before them.
According to Spain's new copyright law, services that post links to news articles or excerpts from them will have to pay a fee to the Association of Editors of Spanish Dailies, a group that represents the country's news industry, or face a 600,000-euro ($751,000) fine. Previous experience shows the law will probably be short-lived because the newspapers demanding the change will hate it when Google applies it.
That's what happened in Belgium, where the newspaper trade association Copiepresse tried to force Google to pay for linking to its members' content on its Google News service. It won in the courts but capitulated after Google pulled all the links in 2011 -- both from Google News and from its search index. The newspaper publishers realized they were losing traffic and getting nothing back.
That's what happened in Germany last month. Germany last year passed a measure in favor of news organizations similar to the Spanish one. Quaintly, it only concerned text snippets on Google News, requiring no payment for headlines. When Google failed to pay up, an industry group called VG Media sued it. Again, Google defeated it by pulling all the links to VG Media member sites, and the group hastily laid its claims to rest, complaining loudly of "blackmail."
There's a lot to argue about in these cases. Does Google have the right to set up its own news aggregation service without paying the organizations that do actual reporting? Does Google profit more from using the snippets and headlines, or do the publishers make more money from advertisers off of the additional traffic that Google drives to their sites? Can Google a sites from its search index if it has been ordered by a court to remove links to it from Google News, or is Google thereby abusing its monopoly position?
Arguing out all these questions, however, amounts to nothing but hairsplitting. From a common-sense point of view, Google doesn't have to index the entirety of the Internet, nor does it attempt to do that. It doesn't even know what percentage of the Web is covered by its database of more than 100 million gigabytes. So if 100 sites disappear from the index, nobody is going to miss them.
The national news industries' attempts to wring money from Google will always clash with the willingness of more opportunistic publishers to receive traffic from Google on its terms, and with the general public's unfortunate indifference to news quality. It's not as though the public would switch to another search engine that agreed to pay the newspapers and was legally allowed to display links. The most loyal readers would simply go directly to their favorite sites, and the rest would shrug and keep Googling.
Another part of the Spanish copyright law orders websites to remove links to pirated content without a court order, simply at the copyright holder's request, and imposes the same 600,000-euro fine for failure to do that. It's even less reasonable than the news royalty: If Google removes all the offending links, it will be harder for copyright holders to find pirate sites. Information about them will spread on social networks and by word of mouth.
The Internet is much bigger than Google, which is why all the attempts to control it through the leading search engine -- including the infamous "right to be forgotten," which people now attempt to use to remove bad reviews of their work -- are doomed. Even Google itself is hard to squeeze, but if someday the pressure becomes unbearable for it, hundreds of alternative content distribution systems will spring up, as they did in the pre-Google era.
Perhaps the only way to help content producers cope with the Internet's intrinsic leakiness would be to charge an Internet access tax like the one Hungary attempted to introduce last month but scrapped in the face of mass protests. If a way could be found to channel such a fee equitably to content creators, it might turn out to be a more popular levy than the one Hungarian Prime Minister Viktor Orban wanted to use to cut budget deficits.
Such a tax, however, would give rise to more tricky issues, such as state support for the media and the fact that many people would effectively be forced to pay twice for some content, first as taxpayers and then as subscribers or buyers. It might be a better idea simply to accept reality, leave Google alone, and work on refining the business models of content creators -- many of which are, after all, still profitable.
This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.
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