Who wants to screw up a win-win-win arrangement?

Unsurprisingly, European regulators.

Imagine that one person provides the vast majority of your food for twenty years. For free.

And now imagine that this person profits from this act because her work with you and many others allow her to be recognized as the greatest food distributor. Sounds like a good deal for both, right?

If you are French, you might say, “I resent the fact that my food provider, despite giving me free food for decades, also benefits. How do I grab her benefits? I know, let’s charge her for the right to give me free food!”

Zut alors.

My parents would have called this “biting the hand that feeds you.”

I hope the feeder has enough sense to leave the problem children alone with no supper.

It is in this spirit that I write to you about the new European Union copyright law aimed directly at Google, the new French statute enabling it, and the French court decision limiting Google’s options.

Please note, out of fairness, that the Spanish already tried this move with predictable results. Spain passed a “snippet tax” similar to the new EU copyright provisions. The Spanish newspapers which, obvious to rest of us, benefited greatly from being easily searchable by Google, insisted Google pay for the privilege of listing articles from the periodicals and sending readers to them. Google closed Google News in Spain in response.

Google balked, the Spanish newspapers suffered. According to Neiman Lab, a study of the results of this fight by a trade association of Spanish publishers found:

In general, our main conclusions are:

  • There is no justification — neither theoretical nor empirical — for the existence of the fee since aggregators bring to online publishers a benefit rather than a harm…
  • As a result of the fee, online publishers, especially small ones, stop attracting significant advertising revenues (which can be estimated in the short term at around €9-18 million annually), in addition to the creation of barriers to entry and expansion, with the consequent negative impact on concentration and competition…
  • The fee also has a negative impact for consumers, due to the reduction in the consumption of news and the increase in search time…
  • Finally, it has a negative impact on innovation in all the sectors involved (news aggregation, online press, advertising, etc.).

And yet, European regulators, apparently loathing American tech giants and doing everything in their power to thwart them,[1] have taken another swing at the same tax on a freely available internet.

Don’t get me wrong. I am opposed to free riding on the efforts of hard working journalists and not providing a benefit in return. I am old enough to remember the “framing” cases of the late 1990s, especially Washington Post v. Total News, where sites like Total News framed Washington Post – and many other newspapers – stories with their own advertising. I agreed with the complaint by the Post and was glad to see the parasitic website closed down after the parties settled.

However, I am also old enough to remember how difficult it was to find anything on a much smaller internet without search functions. Try looking up new information on “list” sites like Yahoo! used to be, or be forced to remember (or find) the actual URLs of the sites you want to visit, and you will thank your lucky stars for Google, Bing, Duck Duck Go, and all of the others. Content providers making their money on eyeballs should feel exactly the same way. The internet consumers win, finding what they need fast. The content providers win – being found quickly by customers or the “herd” they are milking for advertising. And the search engines win by placing ads of their own.

Who would want to screw this up?

Not hard to guess.

First, the European Parliament passed a law aimed directly, in its own official words, at Google, Facebook and Apple, which makes internet platforms directly liable for content uploaded to their site and providing a legally enforced right to news publishers to negotiate deals for news stories used by news aggregators. Then, in July, France became the first country to ratify the new copyright act, thus solidifying it as national law.

The law says that internet search and news companies like Google must negotiate to pay for headlines and news that it links to and uses. So Google logically chose not to use the news that it would otherwise have needed to pay for. No problem, right? Google followed the law. If you link to the news you need to pay, therefore two options: 1) use the news and pay, or 2) don’t link to the news and don’t pay.

The president of a French newspaper said, "We are outraged, Nobody can flout the law, but that's what Google is doing. The future of the French and European press is at stake.” So the publishers sued Google, asking the French competition authority to force Google to BOTH include French articles AND pay the French press for doing so.

The French competition authority agreed, holding that Google was acting improperly. Even French President Macron is involved, claiming Google  “can not get away with it when it decides to operate in France.” Google wrote, "We don't accept payment from anyone to be included in search results. We sell ads, not search results, and every ad on Google is clearly marked. That's also why we don't pay publishers when people click on their links in a search result."

As astutely stated by Mike Masnick on the Techdirt blog, “How hard is this to understand? If you make something against the law (aggregating news and posting snippets without a license), don't be surprised if the companies who have been doing that stop doing that. You outlawed something, and so Google obeyed your new law and stopped doing it.” But, as clearly predictable as that outcome was, it also was not what the EU publishers and their legislative lackeys wanted from Google.  They want Google’s money.  They really didn’t want Google to simply follow the law, but to pay the publishers – essentially an offer Google can’t refuse.

Masnick laid out the “Eurocrats” initial miscalculation as a matter of incentives.

“The problem is that the Eurocrats made a bunch of really dumb miscalculations here: first, they assumed that including snippets was more valuable to Google than it is to the publishers. It is not. Their traffic will decline without snippets, meaning many will quickly rush to opt-in [specifically allowing free listings on Google] to add them back. Second, they assumed that putting a tax on something wouldn't change the incentives and that Google would just carry on offering the same snippets, but just paying for them.”

Assuming is one thing.  Forcing companies to comport with your desires for the law’s effects, even when those companies can clearly comply in other ways, is obnoxious, illegal and a ridiculous overreach. France’s Culture Minister said that the decision “is an important step toward the effective enforcement of the publishers’ neighboring right,” and that “Some people wanted this right to remain a dead letter. They made a mistake,” he added. Well, the mistake was the decision, and what is missing is common sense.

So the French competition board is changing the rules 1) in the middle of the game, and 2) in a manner unsupported by the law it is supposed to be upholding. Is this truly the way the Europeans intend to rig the game, or is Google just passing through on the way to justice? Either way, the EU has demonstrated by its wild-eyed mania for extracting money from big American tech companies that it is able to lose a win-win-win game.

[1] The EU’s highest ever anti-trust awards have been against Google/Alphabet, highest tax award against Apple, the spectacularly high privacy fine limits were specifically aimed at GAFA, these copyright laws are aimed specifically at the same companies.