Is Google Losing its Patience With Europe?

Google ups the ante in its battle with European authorities, shuttering Google News in Spain

MADRID – In its most radical reaction yet to attempts by European governments and the E.U. to curb or milk its market dominance, Google announced Thursday that it will close Google News in Spain on Dec. 16 and remove Spnaish publishers from Google News.

The move comes after a new Spanish Intellectual Property Law, set to come into effect in January, requires publishers to charge Google and other search engines for the publication of their content.
“In the absence of sustainable digital business models, publishers in Europe, are lobbying regulators heavily to come up with a protectionist approach to shore up their revenues, vis-a-vis a digital international competitor,” said Daniel Knapp, at research firm IHS Technology.

“This new legislation requires every Spanish publication to charge services like Google News for showing even the smallest snippet from their publications, whether they want to or not,” Richard Gingras, head of Google news, announced Thursday.

“As Google News itself makes no money (we do not show any advertising on the site) this new approach is simply not sustainable,” he added.

The Spanish law is just the latest manifestation of European technophobia, an analog solution to a digital problem,” said Knapp.

As Gingras pointed out, Google News drives people to publishers’ websites, which in turn helps generate advertising revenues.

That was demonstrated in Germany, when an Ancillary Copyright Law, introduced in July after lobbying by VG Media, backed by Axel Springer, obliged Google to pay publishers for news snippet texts on its search engine, After Google News removed the snippets from its search engine, traffic to publishers’ websites fell by 40% over two weeks. VG Media was forced to authorize the snippets. Demonstrating Google’s massive market power, Axel Springer CEO Mathias Dopfer dubbed its move to charge for snippets “the most successful failure in our history.”

In Europe, “there is still the widespread hope for a fix-all digital business model that publishers are chasing like a holy grail. As they start to realize that this search is futile, many become frustrated that their digital strategy is not paying off,” Knapp said.

He added: “But there has been too little innovation or investment in original digital business models from, especially, European legacy media brands. Companies are denying the digital reality they move in. They can’t live with it, but they can’t live without it.”

For Knapp, in Spain, Google News appears to have “slammed its fist on the table. It is clear to me that Google is fed up with the protectionist approach of European publishers. Taking Google News offline is a much more dramatic move than just removing snippets. This is irreversible. Google is stepping up its negotiating power, saying: ‘That’s it, you have to live with the consequences.’”

Google enjoys an 85%-plus market share in Spain. The main beneficiary of Google News’ exit could now be Facebook, which enjoys a growing traffic in referral news.

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