Google deal with France could have wider implications

 

ANALYSIS:Google is to pay into a publishers’ fund but avoided a licensing fee, writes RUADHAN MAC CORMAIC

The meetings took place in discreet hotel bars, in Paris parks and over transatlantic video-conference calls that would run until 3am French time.

Just three people were involved at the latter stages: Google vice-president for Europe Carlo d’Asaro Biondo; Nathalie Collin, representing the French newspaper industry; and the government-appointed mediator tasked with cajoling the two sides into an unlikely embrace.

After two months of talks, the mediator, Marc Schwartz, finally got the call late last Thursday to confirm the internet giant’s executives had formally approved the deal. Just 24 hours later, Google chairman Eric Schmidt was at the Élysée Palace alongside French president François Hollande to sign what both men described as “an historic deal”.

Wider tensions

The agreement, which will involve Google paying €60 million into a special fund to help French media develop their presence on the internet, is an attempt to end a long stand-off that had drawn in the French government and come to symbolise wider tensions between traditional media firms and the major powers of the internet.

The French media had pushed for Google to pay them licensing fees for listing headlines and snippets of articles in its search engine results. What emerged was not a licensing fee but a compromise both sides are keen to portray as a joint victory. Google avoids having to pay rolling royalties to the media and instead has made only a three-year financial commitment. The industry will receive a significant share of the income it hoped a licensing fee would generate. The €60 million fund will be dispensed by an joint panel to selected new media projects. All national and regional media defined as covering politics and news will be eligible, as well as web-only publications such as Slate and Mediapart.

Partnerships

Vaguer but potentially of great significance is the second element of the deal, which commits Google to developing partnerships with French publishers “to help increase their online revenues using our advertising technology”(the terms of the partnerships remain confidential).

It could also have wider implications. Google settled a similar case with Belgian publishers in December by helping them boost online revenue, but it still faces a dispute with publishers in Germany.

Asked yesterday whether Google was open to negotiating similar deals in other countries, a spokeswoman said: “We have many initiatives and partnerships in place around the world, and we are keen to continue collaborating. In addition, while the fund is aimed at Francophone projects, this does not exclude innovators, publishers from other countries with an interest in the French market.”

The first test of any rapprochement will come soon, when the French tax authorities complete their long-running investigation into the relationship between Google’s European headquarters in Dublin and its French subsidiary. The French accuse Google of selling advertising through its Paris office but declaring the activity in Ireland to avoid French taxes. Google denies this, but, with an estimated French revenue of between €1.25 and €1.4 billion, it’s on this question that the stakes are highest.