In EU copyright battle, Google challenges the will of regulators

Google has been lobbying hard to make sure the European Union doesn’t bring in changes to copyright laws that could lead the company to have to pay publishers and other rights holders for content that Google hosts on its platforms, like YouTube, or that Google services link to, like Google News. Google has repeated it opposes the changes on the basis that it could impede the free movement of information around the internet — and put a crimp on Google’s business model.

The tech giant’s stance is setting up as a major test for European regulators eager to rein in Google and Facebook, as Google tries to pressure the EU into making concessions by presenting doomsday scenarios for both consumers and small publishers, even going so far as threatening to pull Google News from the EU.

“There is certainly a lot at stake for both Google and publishers,” said Robert Guthrie, partner for international law firm Osborne Clarke. “If the final Directive is pro-rights holder, then this is going to give bigger publishers more ammunition to negotiate higher license fees from Google. The smaller publishers are worried that Google will simply stop linking to their content.”

Google is unlikely to have visibility over how changes would impact revenue. In the last month, the platform ran tests of what a very sparse Google News would look like should the reform go through, which was debunked as scaremongering from opposition lobbyists. The company said that these tests led to a 45 percent reduction in traffic to news publishers. Google’s suggestion to pull Google News out of Europe was seen as empty threats by some analysts. Google doesn’t make money from News, but the service keeps people coming back to the search engine, from which it can earn revenue on queries.

“In theory, any changes to the law should not shut down services as it should be in the interests of both Google and publishers to negotiate license arrangements,” added Guthrie. The trouble is, in practice these negotiations could be challenging, forcing Google to remove content in the short term.

“The consequences for small and medium publishers could be dire, their very existence may be at stake,” said Greg Witham, chief operating officer at aggregator and publisher NewsNow — which has been lobbying against the reform — as small publishers heavily rely on search engines and aggregators for their traffic and revenue.

Others share the view.

“I saw estimations from very large publishers indicating that through [Google News] removal, between 15 and 45 percent of the non-organic reach will be at risk,” said Oliver von Wersch, CEO and founder of Von Wersch Partners, digital strategy consultant for publishers. “In general, news media will suffer, special interest media will win.” Von Wersch also suggests that Google AMP, its faster-loading mobile pages product, will shutter to avoid licensing trouble.

François Godard, a European media analyst at Enders Analysis, points out media casualties are a symptom of lack of a diversified business model.

“Relying on Google and digital advertising is leading them up a blind alley; this is cause to wake up,” he said. “The digital advertising model doesn’t finance journalism. This is just an acceleration of the underlying existing trend.”

Larger publishing groups with healthy direct traffic and no small amount of ill-feeling toward the U.S. tech giant are staunch advocates of the reform.

“It’s being blindly supported by big publishers who think it will return them to the glory years of controlling information and subsequent profits,” said a publisher who asked not to be identified. “It could actually have the reverse effect and accelerate the decline as consumers find alternative and better ways to consume content. I’m not convinced that blocking Google News or Apple News means users flock back to the original source of a press news story or publisher apps.”

Instead, the publisher said this is an indication of Europe’s aggressive desire to break up the power of the platforms through regulation.

“I fear it’s an example of how too much regulation can stifle market growth,” this publisher added.

Fears of how slow-moving bureaucracy can harm rapidly innovating technology have some sway. The current version of the reform has come under fire from publishers and lobbyists for being poorly crafted and not informed about the technical routines of the open web, while not accounting for potential investments into the necessary infrastructure needed, like content matching technology.

Ultimately, larger publishers are unable to flex as much muscle as U.S. tech platforms, leading down the route to regulation. And Google, with thousands of engineers and deep pockets, will manage to find services that comply.

“U.S. tech platforms have had extravagant privileges that negate the principles that have been at the heart of copyright since the 19th century,” said Godard. “I’m pretty sure Google will adjust.”

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