International Tax Panorama

On Tuesday, France’s competition imposed a 500-million-euro ($593-million) fine on Google, for failing to negotiate “in good faith” with media companies over the use of their content under EU copyright rules.

The Competition Authority also ordered Google to present media publishers with “an offer of renumeration for the current use of their copyrighted content”, or risk paying additional damages of up to 900,000 euros a day.

Why the fine was imposed?

In 2019 when complaints were lodged in France, by groupings representing newspapers and magazines as well as Agence France-Presse against Google. The premise of the complaint was that Google has been showing articles, videos and images produced by publishers when displaying search results without adequate compensation, despite the seismic shift of advertising revenue online.

But in September 2020 , news publishers including Agence France-Presse (AFP) again filed a complaint with regulators, alleging that Google was refusing to move forward on paying to display content in web searches.

By not paying adequately Google was violating the “neighbouring right” under EU copyright law. 

The “neighbouring rights” aim to ensure that news publishers are compensated when their work is shown on search engines, social media platforms and websites.

In April 2020, the French competition authority ordered Google to negotiate “in good faith” with media groups after it refused to comply with a the EU copyright law.

Here Google ignored the the authroity’s decision to negotiate in good faith with media companies about neighbouring rights while negotiating over the launch of its Google Showcase news service, which launched late last year. Thus the fine was imposed by the Competition Authority.

Is the problem limited only to France?

The problems of inadequate advertising revenue compensation by Google, is not limited to only France. The company is facing a global backlash as regulators across the world sharpen scrutiny of the world’s largest tech firms, looking at its advertising business, apps and search.

Media houses struggling with print subscriptions are affected heavily from inadequate ad revenue from ads displayed alongside news search results.

Australia earlier this year required digital giants like Facebook and Google to pay local publishers for news. Google has been increasingly paying publishers but on its own terms, with a $1 billion Google News Showcase to point readers to news content.

What will be the impact of the fine?

Tuesday’s fine is the latest show of strength by the French regulator as it vies with its EU and German counterparts to be the region’s toughest watchdog of U.S. tech firms. The fine is being touted as the second-biggest antitrust penalty in France for a single company.

Google may risk a further attack in the news case as French regulators are expected to issue a decision on the substance of the case, which may also include fines, at the end of the year.

However, the real impact will only be felt if the publishers get an adequate compensation from the advertising revenue made by the Google.