The Google and Facebook Advertising "Snippet Tax", What's It Really About?
Australia and the EU are not happy with US technology companies in general, but in particular Alphabet (GOOG), Facebook (FB), Microsoft (MSFT), and Apple (AAPL).
This discussion regards advertising giants Alphabet and Facebook.
Australia and the EU believe the advertising giants are stealing money from other publishers, especially news print, and/or are unfairly driving such companies out of business.
Crackdown in Spain
In 2015, Spain decided to tax Google simply for linking to other content.
Google responded appropriately. It told Spain to go to hell and pulled the plug entirely. Rather than pay companies to promote their content, Google pulled out of Spain, and has been out of that market ever since.
TechDirt has an interesting discussion regarding a Study of Spain's 'Google Tax' on News and how much damage the tax did.
Governments across Europe, generally at the behest of traditional newspaper publishers, have been pushing for what they call an "ancillary copyright," but which is much better referred to as a "snippet tax" or a "link tax." Belgium was the first country to try it, and Google responded by removing complaining publications from Google News.
When it came time for Spain to try to appease its misguided and angry publishers, the government sought to avoid the tactics that Google had done in the past and thus made it mandatory to pay, saying that sites themselves couldn't even opt-out of getting payments, even if they didn't want them. In response to this, Google broke out the somewhat surprising "nuclear option" and shut down Google News in Spain entirely.
After the law went into effect, the Spanish Association of Publishers of Periodical Publications (AEEPP) commissioned an economic study about the impact of the new Spanish ancillary copyright law -- and found (not surprisingly) that the legal change (and the shuttering of Google News and other aggregators) was absolutely harmful to the Spanish news media and innovation in general.
Google Threatens to kill Google News in Europe
Undaunted by the dismal results in Spain, the EU nannycrats still want to crack down on Google and Facebook.
In 2019, NiemanLab reported Google Threatens to kill Google News in Europe Over "Snippet Tax".
The European Union is considering a set of changes to digital copyright that are, well, quite controversial. One of those would require Google and other platforms to pay publishers for the right to display anything more than the tiniest snippet of a story in its search results or elsewhere.
It’s true that — despite a decade’s haranguing from publishers that might lead you to think otherwise — Google doesn’t make much of its money from news-related content in search. It makes money when you search “dry cleaner in Boston” or “what’s a good toaster oven,” not "events in Syria."
In 2014, Spain passed a “snippet tax” not unlike the one being considered by the EU. A 2017 study into what happened as a result found "the shutdown of Google News reduces overall news consumption by about 20% for treatment users, and it reduces page views on publishers other than Google News by 10%."
If anything, the study results suggest Google ought to demand a price to link to stories not pay for the privilege of promoting other content.
It's a bit more complicated because everyone benefits from the links including Google.
So let's call it a wash, with everyone benefitting, including consumers. If everyone wins, what's the beef?
With that, let's flash forward to 2021.
Alphabet in Talks with Spanish Publishers to Bring Google News Back
On February 22, 2021, Reuters reported Alphabet in Talks with Spanish Publishers to Bring Google News Back.
Alphabet’s Google is negotiating individual licensing deals with a divided Spanish news industry that could allow the U.S. tech giant’s news service to resume in the country, three sources close to the matter told Reuters.
Google News, which links to third party content, closed in Spain in late 2014 in response to legislation which meant it had to pay a mandatory collective licensing fee to re-publish headlines or snippets of news.
Now the thorny issue is back on the table as Spain prepares to implement the 2019 European Union copyright directive by June. While that requires Google, Facebook and others to share revenue with publishers, the government could allow the companies to negotiate individual deals with content providers.
A spokeswoman for Google Spain said publishers should be free to choose their own business model. “The copyright law should not make it mandatory to put a paid license in place,” she said.
The EU rules, do not force online platforms to pay for links posted to their news site by publishers, the main grievance for Facebook in Australia, so their implementation could pave the way for a series of deals.
Publishers Free to Choose Their Own Business Model
That is exactly the way it should be and exactly as I proposed in my previous article, and I had not seen Google's response to Spain when I wrote it.
Facebook vs Australia, Who Wins the Debate?
Let's recap Australia with a look at my previous post Facebook vs Australia, Who Wins the Debate?
Australia passed a law that would force advertising giants such as Facebook and Google to pay media companies for monetizing their news content when it’s posted to their social media platforms. Facebook responded with an Overly Broad Content Block [Just as Google did in Spain].
In the wake of Facebook’s unilateral censorship of all sorts of Facebook pages, parliamentarians in the country accused the tech giant of “an assault on a sovereign nation”.
The discussion was entirely one-sided on Twitter. No one defended either Facebook or Google until I chimed in.
What Copyright Issue?
If a company does not want links to its articles on FB or Google all they have to do is say STOP. Right?
That led to this silly idea from a "Crazy Realist"
The media companies don't want Google and Facebook to "stop" but they do unfairly demand a "Snippet Tax".
In response, Google pulled the plug in Spain and Facebook did in Australia.
In Praise of Google's and Facebook's Responses
I cheer the responses of Google and Facebook although the latter was more than a bit sloppy.
Hilarious Video on Australia's Law
My lead image is from that video. Please play it. It's a hilarious and accurate take.
What's It Really About?
The above video hits the nail squarely. I found the video today via TechDirt.
As I've discussed previously, there's nothing to bargain over when you should never have to pay for links. The links are free. There's no bargaining imbalance, because there's nothing to bargain over. And, it's clearly a tax if the only end result is that Google and Facebook have to fork over money because the government tells them to. That's... a tax.
Anyway, that's why I'm happy to see The Juice Media, an Australian outfit that is famous for making hilarious "Honest Government Ads", usually for the Australian government (but sometimes for elsewhere) has put out a new "ad" about the link tax in which they explain how it was a fight to take money from one set of giant rich companies, and give it to another set of giant rich companies, and not to do anything useful in between.
Fight to Save the Little Guy?
Contrary to the widespread myth the EU and Australia are in a fight to save small publishers, this battle is anything but, as Spain proved.
A Word About EU and Australian Nannycrats
Companies like Microsoft, Apple, Google, and Facebook could never come to be in the EU or Australia.
The nannycrats in those countries would destroy them in the name of competition.
Technology companies exist in the US for a reason: The US has open free markets, freedom of speech, and better tax codes, at least on a relative basis.
Consumers use Google, Microsoft, and Facebook because they like the products.
Google spawned amazing self-driving technology, Google Earth, and countless other ideas that never would have or could have happened in the EU because the EU would have broken them up in a futile effort to save the local bookstore.
The local bookstore is doomed, no matter what the EU and Australia do. So are malls and so is newsprint.
The irony is the snippet tax as designed by Australia and Spain would speed up, not halt, the end of printed media.