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Europe takes on Google, looks to Brazil with hope

Thursday - 11/1/2012, 9:30pm  ET

FILE - In this Dec.6, 2011 file photo, the Google logo is seen on the carpet at Google France offices before its inauguration, in Paris. Publishers in France, Germany and Italy want their governments to impose a "news tax" on Google to save them from extinction, demanding a law that would charge the search engine small payments in exchange for links to stories. Google, in response, says it will cease to index the sites altogether, warning that the proposals do nothing to solve the industry's problems on the continent that invented the printing press. (AP Photo/Jacques Brinon, Pool, File)

LORI HINNANT
Associated Press

PARIS (AP) -- European news organizations bleeding money and readers are trying to avoid extinction by asking governments in France, Germany and Italy to step in and charge Google for using their content in its search results -- something the Web giant has always done for free.

Critics -- including, unsurprisingly, Google -- say the strategy is shortsighted and self-destructive, and the search engine warns it will stop indexing European news sites if forced to pay. But publishers advocating a "Google tax" aimed at benefiting their industry point to the example of Brazil, where their counterparts abandoned the search engine and say repercussions have been minimal.

The dispute underscores a fundamental question facing media agencies around the world: Who should benefit from links to online content that is costly to produce and yet generates a fraction of the ad revenue that once allowed newspapers to flourish?

Europe has tried to sidestep Google before. Six years ago, then-French President Jacques Chirac unveiled plans for Quaero (Latin for "I search") as the answer to U.S. dominance of the Internet. The multi-platform search and operating system was supposed to work with desktop computers, mobile devices and even televisions.

Despite millions spent to develop Quaero, it went nowhere.

This week, implicit threats hovered over a meeting between current French President Francois Hollande and Eric Schmidt, Google's executive chairman.

Hollande demanded Google reach a deal with publishers over the copyright dispute and also address the French taxes it escapes by basing its European headquarters in Ireland. Google essentially reiterated a point it made in a recent letter to French publishers: Paris' latest attempt to impose itself would force readers to "Anglo-Saxon" sites based in countries with more favorable copyright laws, such as Britain and Ireland.

Google's post-meeting statement said the discussions dealt with "the contributions of the Internet to job creation and the influence of French culture in the world."

Adding to the pressure on Google in France, a French newspaper reported Wednesday that French authorities are threatening Google with a 1 billion euro tax bill and investigating alleged financial wrongdoing.

Google France denied being notified of such a tax bill and said it will "continue to cooperate with the French authorities." Government spokeswoman Najat Vallaud-Belkacem wouldn't comment on the report in the weekly Canard Enchaine, except to say that if there were a tax probe, it would be covered by laws on fiscal secrecy.

French publishers, along with counterparts in Germany and Italy, are hoping Brazil will be the proof that there is a successful way to confront Google.

After failing to come to terms with Google in the past year, Brazil's biggest papers -- representing 90 percent of circulation -- decided to boycott Google News by essentially making their content unavailable to anyone using the search engine. The result? Negligible losses in Web traffic, the Brazilian papers say.

Brazilian newspapers haven't ruled out reopening talks with Google, if the company whose name is synonymous with "search" agrees to pay for their content. Unlike in Europe, the Brazilian publishers have not turned to their government to act as a mediator or impose a tax as part of their dealings with Google.

"Newspapers live off advertising revenues, like Google. They're our competition and they have billions and billions in revenues globally," said Ricardo Pedreira, executive director of Brazil's National Association of Newspapers.

Still, Pedreira is not convinced Brazil is a good model for European nations. "Every country has a specific reality, and I think there will probably evolve different models in each nation," he said.

Others in Brazil have warned about long-term consequences of the boycott.

Carlos Castilho, a media critic and TV journalist, writing on the press watchdog website Observatorio da Imprensa, argued that the boycott was a backward strategy, because "news is everywhere today and to surround it with walls of copyrights is like trying to dry ice."

The growth of search engines as a way to find information is affecting news organizations in different ways.

Print news was suffering in the United States and Europe long before financial crises took hold in recent years, its business model eroded by television and the Internet. As print advertising revenues have declined, more media organizations are trying to boost circulation and earn more through subscriptions, including charging for online content.

The New York Times is among the most prominent news organizations with a website paywall. The Associated Press and Google have a long-standing business agreement that includes Google licensing of AP content as well as joint efforts to improve news products and services.

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