'Abuse of market power': Inside German publishers' legal beef with Google

There’s a long history of legal battles between German publishers and Google, and on Feb. 19, the ruling in the latest skirmish came down in favor of the tech giant.

Axel Springer, along with 40 other publishers, had sued Google, claiming that the tech company was unfairly using its market dominance to punish publishers who were demanding payment from Google for displaying snippets of text, such as the 250 characters that you would see in Google Search.

Google refused to pay a fine to publishers and instead said it would stop showing the snippets. As Google has 90 percent share of the German search market — sources estimate its revenues for Germany lie between €3 and 4 billion ($3.3 – 4.4 billion) — Germany’s publishers were rankled. “We found this to be a cruel example of abuse of market power,” said Christoph Keese, executive vice president at Axel Springer, who told Digiday the ruling will be appealed. “In this environment, it’s unfair.”

Berlin’s ruling courts disagreed, declaring Google’s business model a win-win for all parties. But all of this is just the first of many more cases concerning Leistungsschutzrecht.

WTF is Leistungsschutzrecht?
Leistungsschutzrecht is the ancillary copyright law that was introduced into Germany’s copyright code in 2013, the details of which are still being thrashed out in court battles. In essence, German publishers want money from Google for displaying snippets of publishers’ text in products like Google Search, Google News, YouTube and so on.

“Historically in the U.K. and the U.S., the copyright code lies with the producer,” said Keese. “In Europe, it’s the opposite: The creator and publisher hold a stronger standing.”

As American aggregator companies, like Google, Facebook and Flipboard (popular in Germany), have expanded internationally, they have operated under their Stateside legal guidelines. Part of the U.S. copyright code states that 300 words can be copied online without the need of any compensation to the author or publisher. Aggregators can legally publish up to 300 word snippets of stories without paying out for the rights. Considering the average word count of a news story hovers around 400, this doesn’t give much incentive for a user to click through from the aggregator to the publisher’s page.

What power do the publishers have?
VG Media, a consortium of about 200 publishers, is a copyright collecting society speaking on behalf of the publishers in the legal battles.

In September 2015, the Copyright Arbitration Board and the German Patent and Trade Mark Office ruled largely in favor of Germany’s publishers, ruling that aggregators are allowed to publish seven words for free — any more than that, they must pay.

Exactly how much is still under discussion, but the court ruled aggregators must owe 6-11 percent of the sales they are making from the use of this material. If aggregators are not transparent with the amount they’ve made, then a collecting agency has grounds to sue.

And the aggregators who are forthcoming with how much they make?
Multiyear contracts are drawn up between the aggregator and collecting society. “Anyone telling you it’s a laborious process filled with red tape and bureaucracy, well that’s crap; they just don’t want to pay, which is a fair enough reason,” said Keese. VG Media already makes €43 million ($48 billion) in license payments each year from TV and radio broadcasting copyrights, according to Keese. He points out collecting societies are an important part of creators’ income and an important part of the digital economy.

What about the ancillary copyright law doubters?
Of those there are plenty, not least numerous media outlets dismissing ancillary as “insane” and “unworkable.” There are also those who believe publishers and lobbyists are deliberately misinterpreting copyright laws in order to save a broken business model. What is clear is that it’s a complex and sensitive issue.

Will this spill outside of Germany?
It’s not uncommon for legal battles of this nature to go on for up to 10 years. It’s likely that Google and VG Media will settle — weeks, days or even hours — before it gets escalated to the high court, which is what the Copyright Arbitration Board is advising.

Ancillary copyright law supporters are keen to take it to European Union level. But it’s unlikely, according to Ann Becker, senior adviser at the European Publishers Council. “We want publishers to be in a better position to be able to negotiate licenses for those wishing to use the content for commercial purposes.” As such, the European Commission this Monday has agreed to launch a consultation into publisher rights, to make them more in line with other content right-holders.