In American sports vernacular, it was an un-deux punch: In actions brought first by news publishers (SEPM; APIG, which represents most major French print news publishers; and Agence France-Presse, the news agency with whom Google is completing a global licensing deal), French authorities fined Google €500 million for, among other things, failure to negotiate in good faith with news publishers in July.
In the event of non-compliance, Google may be fined an additional €300,000 per day per complainant, up to €900,000 per day of delay.
The significance of the fine
As a friend said, “That’s not enough to fill Google’s coffee cup.” However, Isabelle de Silva said, the French Competition Agency (FCA), or Autorité de la concurrence, of which she is president, has fined Apple €1.2 billion and Google around €1 billion since December 2019, according to Wired.com.uk.
According to The New York Times: “The case has been closely watched because it is one of the first attempts to apply a new copyright directive adopted by the European Union intended to force Internet platforms like Google and Facebook to compensate news organisations for their content.” The Times noted that, “As policymakers crack down, Google has been trying to strike deals with individual publishers,” saying it would spend more than US$1 billion to license content from international news organisations, in addition to the three-year deal with News Corp.”
INMA spoke with Frederic Filloux, founder and editor of The Monday Note, about the situation earlier this week. His opinion of the arrangement is different from that of many observers.
Filloux argues that tech platforms should pay something for their depletion of the digital ad market, but he views neighbouring rights as a “weird mental construct” that goes against the spirit of the Internet and has its origins in the tradition of French government subsidies to the press that are shrinking each year. In short, not a sound way to do business. And he believes Google is more open to working with the press than other platforms, perhaps even to achieve a settlement with a longer life than the short-term arrangements it offers publishers now. But, he acknowledges, Google may have been guilty of some foot-dragging during the negotiation period.
The July fine followed another in June of €220 million for using its dominant advertising technology to further strengthen its position and outbid rivals, reported Wired.com.UK. As that publication put it, the June ruling of the FCA on Google’s ad tech was “headline-grabbing” because:
- “Google didn’t fight it” (unlike three European Commission competition investigations, which fined the company more than €8.2 billion).
- Google agreed with all the facts.
- Google agreed to make “significant changes to how it operates.”
It was headline-grabbing because “these changes won’t just happen in France, but across the world.”
Google and France: infractions and injunctions
No doubt, news media publishers around the world are hoping the same will happen following the even larger July fine, although Google is considering a challenge, according to Wired.com.uk.
The scope of the FCA’s decision is multi-faceted, and the failure to negotiate in good faith was only one of the infractions of “injunctions issued in the context of [the FCA’s] interim measures’ decision of April 2020, which was confirmed by the Paris Court of Appeal in October 2020,” according to an explanatory FCA brief.
The brief (paraphrased below) discussed these, illuminating the logic behind each as well as the manner in which Google failed to meet its obligations as enumerated by the regulator in April 2020.
Injunctions No. 1 and No. 4 established the obligation to negotiate in good faith under established conditions and according to transparent and non-discriminatory criteria over a three-month period.
The regulator ruled that Google failed to meet this obligation by:
- Moving the negotiation towards the new Showcase service. Publishers/complainants have “consistently requested that the negotiations related in a specific and transparent manner to the remuneration due for the current use of content protected by related [or neighbouring] rights,” while Google has “systematically imposed a global discussion focusing on the subscription of publishers and news agencies to a new global partnership, called Publisher Curated News, or PCN, which focused in particular, on a new service called Showcase.”
- Refusing to negotiate with press editors who do not have a Political and General Information (IPG) certification, particularly egregious because Google’s own assessment showed that “the direct revenue derived from ‘non-IPG’ publishers is greater than those it derives from ‘IPG’ content.”
- Refusing to negotiate remuneration for related rights with press agencies. The legislation “clearly expressed its intention to grant the producer of journalistic content a property right,” and “to include in this mechanism the press agencies.”
Injunction No. 2 established the obligation to communicate to press publishers and agencies the information necessary “for a transparent evaluation of the remuneration due.”
In other words, the platforms were required to “provide press publishers and agencies with all the information relating to the uses of press publications by their users as well as all the information necessary for a transparent assessment of the remuneration [due for neighbouring rights] and its allocation.”
The evidence the FCA collected indicated that this communication was:
- Partial (limited to direct advertising revenue generated by the Google Search service, excluding all revenue, in particular indirect, related to the use of this content).
- Late (coming so late in the original three-month negotiation period that publishers were given only a few days before the end of the deadline set by the injunction).
- Insufficient (making it difficult for entry-level companies to make the link between Google’s use of protected content, the income it derives from it, and its overall financial proposals.
Injunction No. 5 concerned the obligation of “neutrality on the terms of indexation, classification, and presentation of protected content from publishers and press agencies on Google services during negotiations relation to related rights.”
This is to prevent publishers from suffering unfavourable consequences on the usual conditions of display, indexing, and ranking of their content on Google, because of or related to ongoing negotiations.
According to the brief: “Google violated the obligation of negotiation neutrality … by linking the negotiation on remuneration for the current use of content protected by related rights to the conclusion of other partnerships that may have an impact on the display and indexing of content from press publishers and agencies.”
Injunction No. 6 established the “neutrality obligation of negotiations relating to related rights with regard to any other economic relationship that Google makes with press publishers and agencies.”
This is to prevent Google from “voiding negotiations on related rights by offsetting the remuneration paid to publishers for related rights on other activities. It is also to prevent Google from using its dominant position in the market for general search services to force, during negotiations with press publishers and agencies, the use of some of its services.”
Nonetheless, the FCA found that “for most of the negotiation period, Google linked discussions about possible compensation for current use of copyrighted content to discussions about the new Showcase programme … .” Further, “Google was also able to link participation to the Showcase programme to the Subscribe with Google (SwG) service’s subscription.” By linking the negotiation of related rights and the subscription of new services, both of which benefit Google and provide it with new advantages or services, “the SwG service results, in particular, in a levy on a percentage of all financial flows received by publishers for subscriptions taken out.”
Non-compliance: “an exceptionally serious practice”
In short, the FCA brief calls Google’s non-compliance with an injunction “in itself an exceptionally serious practice,” noting:
“Google’s behaviour is the result of deliberate, elaborate, and systematic strategy of non-compliance with Injunction No. 1 and appears as the continuation of the opposition strategy of Google, put in place for several years, to oppose the very principle of related rights during the discussion of the directive on related rights, then to minimise its concrete scope as much as possible. It thus appears that:
- The negotiation strategy implemented by Google with regard to the negotiations conducted within the framework of the Decision was part of a more global strategy implemented at a more global level, and aimed at avoiding or limiting as much as possible payment of remuneration to publishers.
- To use the Showcase service to resolve the basic debate on the allocation of specific rights to publishers and agencies for the reproduction of press content.
- To use negotiations on related rights to obtain the production of new content by press publishers, via Showcase, and subscription by the latter to the SwG service, which allows Google to collect additional income from subscriptions to press titles.”
In addition to the fines, according to the FCA brief, Google has been ordered over the next two months to:
- Propose a remuneration offer meeting the requirements of the law for the current use of protected content on its services to the entering parties.
- Supplement this offer with the information provided for in the French Intellectual Property Code, including an estimate of the total revenues it generates in France by the display of protected content on its services, indicating the share of revenues generated by the press publisher or the agency at the origin of the requested offer of remuneration.
In a statement, Google responded that, “Our objective remains the same: We want to turn the page with a definitive agreement. We will take the FCA’s feedback into consideration and adapt our offers.”
Images from Tada Images (stock.adobe.com).