The Spanish War Against Google

At least in Europe, the newspaper wars are not quite over.

Five years ago this month, Eric Schmidt, the chairman and then-CEO of Google, published a column in the Wall Street Journal about the crisis in print. Newspapers are 'struggling to adapt to a new, disruptive world,' he said. 'The Internet has broken down the entire news package.' Schmidt, Mr. Forward-thinking, cast his eye to 2015: 'The compact device in my hand delivers me the world, one news story at a time. I flip through my favorite papers and magazines, the images as crisp as in print, without a maddening wait for each page to load.' Google News is what he had in mind, a website that compiles headlines and short summaries of news stories from many sources in clean, searchable form. Newspaper executives were frustrated and angry at Google, but he contended that Google would help news organizations rather than harm them. 'We want to work with publishers to help them build bigger audiences, better engage readers, and make more money.'

Google News has coasted to success in the United States, where fair use doctrine gives it wide latitude to aggregate content. But in Europe, in a climate where antitrust suits against Silicon Valley firms like Google have been heating up, the company is facing opposition. Earlier this year, Spain passed a law that would require content aggregators like Google to pay publishers for use of its story links or 'snippets,' the one or two sentences from the article that are displayed beside the source link. In response, Google on Thursday announced its decision to shutter Google News in Spain. For a giant like Google, the Spanish newspaper market is small fry, a novice matador up against a killer Miura bull. But it's at least possible that Spain's decision could be a turning point, showing publishers throughout Europe that it's possible to demand that Google pay for content.

'Whereas given their status of de facto gateway to the Internet, they hold all the keys, and offer only a take-it-or-leave-it choice of whether you come in and play their game or not.'

Angela Mills-Wade, Executive Director of the European Publishers Council

In the past, Google has avoided such litigation by setting up funds to support newspapers. In France, for instance, in February, 2013, Eric Schmidt traveled to the Élysée to personally cut a deal with President François Hollande. Under the terms agreed, Google set up a fund of €60 million (almost $75m) to finance innovation in digital publishing. In exchange, French publishers would not make Google pay to use 'snippets' of content on Google News. The following month, Germany passed a law known as the 'Google Tax' law, which gave publishers the exclusive right to profit from their content for one year. It made it illegal for sites like Google News to post ' non-insignificant' article excerpts without paying a fee. The law that went into effect allowed news publishers to explicitly opt in to Google's index, and prevent Google from paying fees.

But the new law in Spain says that the right to be paid cannot be waived-it is, in the Spanish, irrenunciable. Even if a publisher wants to license its content for free, it can't. The Spanish statute does not say exactly how much news aggregators would have to pay to aggregate an article, but, according to the New York Times, noncompliance could carry a one-time fine of $750,000.

In the background of Spain's law-for Google, lurking meanly-is a remark recently made by the new European Commissioner for Digital Economy and Society, Günther Oettinger. Oettinger took office last month and quickly announced his intent to reform copyright laws along the lines of the Google tax in Germany, his home country. According to Euractiv.com, Oettinger told the newspaper Handelsblatt, 'If Google takes intellectual property from the EU and makes use of it, the EU can protect this property and demand that Google pay for it.' So although Spain isn't such a big deal, the stakes may be Europe-wide.

When Richard Gingras, the head of Google News, made the announcement to close Google News in Spain, he included a surprising claim:

As Google News itself makes no money (we do not show any advertising on the site) this new approach is simply not sustainable. So it's with real sadness that on 16 December (before the new law comes into effect in January) we'll remove Spanish publishers from Google News, and close Google News in Spain.

On Friday afternoon, I spoke to Angela Mills-Wade, the Executive Director of the European Publishers Council, about Google News's announcement. She called Gingras's assertion that Google News makes no money on the service 'astonishing,' pointing to a speech that Marissa Mayer, then vice president at Google, gave in 2008, at the Fortune Brainstorm Tech conference, where Mayer said, according to Fortune's write-up, that Google News was worth about $100 million to the company. And that was 6 years ago. Mills-Wade told me that Google News should have been a partner to the news industry, considering the position they've established in the market. 'But,' she said, 'partnerships are built on trust by two willing parties with some common understanding and a balance of bargaining power based on mutual interest. Whereas given their status of de facto gateway to the Internet, they hold all the keys, and offer only a take-it-or-leave-it choice of whether you come in and play their game or not. If you do so, it is on their terms. So there is no trust and no hope of true partnerships or fair and open competition.'

When I reached Google for comment, a press officer sent a link to Gingras's announcement, along with a statement saying that, although they were 'incredibly sad' to be removing Spanish publishers from the site, they will 'continue to work with Spanish publishers to help them increase their readership and revenues online.'

Spain has pushed back against Google; its lawmakers must hope to set a precedent on compensation for publishers. Countries like China and Russia, which attempt strict control over their citizens' Internet activity, are pinching Google, too. The Financial Times reported Friday morning that Google is closing its engineering office in Russia, in response to a crackdown on Internet activity.

Unfortunately, whatever happens, none of this will change the troubled lot of newspapers.