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European publishers could win the battle for a Google tax, but lose the war

A woman hovers a mouse over the Google and European Union logos in SarajevoA woman hovers a mouse over the Google and European Union logos in Sarajevo

Google is fighting a battle with European regulators on a number of fronts, one of which is a long-running case that alleges anti-competitive behavior in the company’s search results. But it is also fighting with European publishers, who allege the search giant is stealing revenue from them by posting excerpts of their content in its Google News results. According to a recent report in the New York Times, EU publishers are lobbying hard for copyright changes that would impose a “Google tax” on such behavior.

This no doubt seems like a great idea: Since Google (GOOG) has billions of dollars, most of which is made up of advertising revenue that no longer goes to newspapers, why not get it to pay for the privilege of linking to content from European publications? The only problem, however, is that this strategy could turn into a classic Pyrrhic victory, in which publishers win the battle but lose the war.

The Times reports that a number of trade associations, including the Federation of European Publishers, have been meeting with antitrust officials and other regulators to push for “stricter, Europe-wide limits on how Google and others may use publishers’ online content.” They are apparently hoping to make these new rules part of the upcoming overhaul of EU copyright laws, expected later this year. “If the rules are approved,” the paper says, “Google may eventually have to pay newspaper and magazine groups whenever links to their content are shown on Google’s European aggregation sites.”

What makes this latest effort so surprising is that publishers in a number of European countries have already seen what happens when they impose a “Google tax” on excerpts of their content. In Spain, for example, publishers lobbied for changes to their copyright laws that would require the company to pay for even short excerpts, and won—although “won” might be the wrong word to use in this case.

After the new laws came into place, Google announced that it was removing Spain from its news index completely, arguing that it effectively had no choice, since publishers were unable to opt out of the payment requirement. The result? Traffic to Spanish news sites, including large traditional publishers, dropped by more than 20% overnight. Some smaller news sites actually had to shut down, according to a study done of the impact of the law change. The study concluded:

“There is no theoretical or empirical justification for the introduction of a fee to be paid by news aggregators to publishers for linking their content as part of their aggregation services. Likewise, the arbitrary nature of the fee, which prevents publishers from opting out of receiving the payments, inflicts harm on a large number of outlets, particularly small publications.”

Spain’s law is only one of a number of attempts to get Google to pay for excerpts. Belgian publishers sued Google for “scraping” their content, but eventually settled with the company in 2013 in return for a commitment to help publishers figure out their digital businesses, in part because traffic to their sites dropped precipitously after Google removed their content. French publishers also wound up settling with Google as well, after the company agreed to set up a digital innovation fund for newspapers.

Among those lobbying for new EU copyright rules is German publisher Axel Springer, which has been a vocal critic of Google. And yet, it is also one of the companies that has felt the pain of a Google tax most directly: After German laws were changed to require payment for “snippets” of text, a number of publishers told Google to either pay the fee or remove their content, so the company removed them. After just two weeks, Springer relented, saying its traffic had plunged.

Undaunted by those experiences, it seems EU publishers are determined to try and bring Google to heel using the combined forces of the entire European Community. They may be hoping that the search giant won’t be willing to remove all of their content from its index, and so will be forced to pay. But unless the EU makes a payment mandatory, some publishers will likely opt to stick with Google and its traffic-generating search results—and those who push for payment will get the short end of the stick.

The publishers say their battle against Google isn’t about protecting their legacy businesses, but about creating a “level playing field” for the future. But by pushing for a Google tax, instead of figuring out how they can benefit from the billions of clicks and visits the search company sends their way, they could be mortgaging that future instead of helping to create it. And that attitude arguably applies to the European Union’s approach to digital in general, not just its attitude towards Google News.