Google and a French press have been negotiating for roughly 3 months now. If there is no agreement within 10 days, a supervision is dynamic to meddle and pass a law instead. This would means critical repairs to both parties.
Since final November, about twice a week and for several hours, member from Google and a French press have been assembly behind sealed doors. To palliate tensions, an gifted go-between has been allocated by a government. But distrust and incomprehension still disease a discussions, and a time is ticking.
In a now stalled process, a whole traffic revolves around income changing hands. Early on, member of media companies were seeking Google to compensate €70m ($93m) per year for 5 years. This would be “compensation” for “abusively” indexing and joining their contents and for collecting 20 word snippets. For perspective, this €70m is roughly a homogeneous to a 2012 digital income of newspapers and news magazines that make adult a IPG organisation (General and Political Information).
When a contention came to structuring and labelling such income transfer, IPG member dismissively left a doubt to Google: “Dress it up!”, they said. Unsurprisingly, Google wasn’t overjoyed with this rather blunt approach. Still, a hunt engine feels this competence be a right time to produce a understanding with a press, instead of perpetuating a implicit feeling that could subsequently raze and cost many more. At least, this is how Google’s European group seems to feel. (In a hyper-centralised energy structure, supervision in Mountain View seems delayed to comfortable to a idea.)
In Europe, bashing Google is some-more renouned than ever
– not to discuss all a other US-based internet giants, widely indicted of murdering aged businesses (such as Virgin Megastore – a sell sequence that also done any probable mistake). But a core emanate is tax avoidance. Most of these companies hired a best taxation lawyers income could buy and devised formidable schemes to equivocate profitable corporate taxes in EU countries, generally UK, Germany, France, Spain, Italy …
The French Digital Advisory Board — set adult by Nicolas Sarkozy and generally business-friendly — estimated final year that Google, Amazon, Apple’s iTunes and Facebook had a total income of €2.5bn -€3bn yet any paid usually €4m on normal in corporate taxes instead of €500m (a severe 20% to 25% taxation rate estimate). At a time of mercantile austerity, many governments see this (entirely legal) taxation deterrence as politically unacceptable. In this context, Google is a series one target. In a UK for instance, Google done £2.5bn (€3bn or $4bn) in 2011, yet paid usually £6m (€7.1m or $9.5m) in corporate taxes. To supplement insult to injury, in an interview with The Independent, Google’s authority Eric Schmidt shielded his company’s taxation plan in a misfortune probable manner: “I am really unapproachable of a structure that we set up. We did it formed on a incentives that a governments offering us to operate. It’s called capitalism. We are proudly capitalistic. I’m not confused about this.”
Ok. Got it. Very helpful.
Coming behind to a stream traffic about a value of a click, a doubt was fast handed over to Google’s spreadsheet jockeys who came adult with a compulsory “dressing up”. If a media supposed a use of a full operation of Google products, additional value would be combined for a company. Then, a certain volume could be subsequent from pronounced value.
That’s a basement for a understanding reached final year with a Belgium press (though a agreement is hidden in a formidable confidentiality clause).
Unfortunately, a French press began to discharge many of a eggs in a basket, one after a other, withdrawal roughly zero to “vectorise” a send of cash. Almost 3 months into a discussion, we are stranded with repugnant positions. The IPG member are fundamentally saying: we don’t wish to subordinate ourselves serve to Google by adopting ambiguous collection that we can find elsewhere. Google retorts: we don’t wish to be deliberate as another deep-pocketed “fund” that a French press will daub into perpetually though any lapse for a businesses; plus, we strongly brawl any idea of “damages” to be paid for joining to media sites. Hence a opening between a volume of income asked by one side and what is (reluctantly) excusable on a other.
However, we consider both parties vastly blink what they’ll remove if they don’t settle quickly.
The supervision taxation howitzer is installed with dual shells. The initial is a check (drafted by nothing other than IPG’s counsel, (see PDF here), that introduces a treasonable idea of “ancillary copyright”. Applied to a snippets Google harvests by a thousands any day, it creates some kind of authorised belligerent to taxation it a tough way. This montage is blending from a song attention in that a subordinate copyright levy ranges from 4% to 7% of a income generated by a zone or a company. A rate of 7% for a income officially announced by Google in France (€138m) would interpret into reduction than €10m, that is slot change for a association that in fact generates about €1.5 billion from a French operations.
That’s where a second bombard could land. Last Friday, a Ministry of Finances expelled a news on a taxation process practical to a digital economy patrician “Mission d’expertise sur la fiscalité de l’économie numérique” (PDF here). It’s a 200 page opus, upheld by no reduction than 600 footnotes. Its authors, Pierre Collin and Nicolas Colin are members of a French open chosen (one from a top jurisdiction, le Conseil d’Etat, a other from a homogeneous of a General Accounting Office — Nicolas Colin also being a former tech businessman and a writer). The Collin Colin Report, as it’s now dubbed, is formed on a set of doctrines that also come to a aspect in a United States (as demonstrated by a mixed references in a report).
To sum up:
• The core of a digital economy is now a outrageous volume of information combined by users. The news categorises opposite forms of data: “collected data” is collected by cookies, either a user allows it or not. Such datasets embody consumer behaviours, affiliations, personal information, recommendations, hunt patterns, squeeze history, etc. “Submitted data” is entered intentionally around hunt boxes, forms, timelines or feeds in a box of Facebook or Twitter. And finally, “inferred data” is a byproduct of several processing, analytics, etc.
• These troves of monetised information are combined by a giveaway “work” of users.
• The plcae of such information collection is eccentric from a place where a underlying mechanism formula is executed: we emanate a discernible value for Amazon or Google with my clicks achieved in Paris, while a clicks are processed in a server plantation located in Netherlands or in a United Sates — and many of a increase land in a taxation shelter.
• The plcae of a value insofar combined by a “free work” of users is now dissociated from a plcae of a taxation collection. In fact, it escapes any taxation.
Again, I’m fast summing adult a extensive analysis, yet a end of a Collin and Colin news is obvious: earlier or later, a value combined and a several taxes compared with it will have to be reconciled. For Google, a consequences would be severe: instead of €138m of central income certified in France, a taxation bottom would grow to €1.5bn income and about €500m profit; that could interpret into €150m in corporate taxation alone instead of a tiny €5.5m now paid by Google. (And I’m not counting a 20% VAT that would also apply.)
Of course, this egghead construction will be intensely formidable to interpret into enforceable legislation. But a French authorities intend to convene other countries and furiously run a EU Commission to come around to their view. It competence takes years, yet it could dramatically impact Google’s economics in many countries.
More immediately, for Google, a parliamentary discuss over subordinate copyright will open a Pandora’s box. From a right to a left, speedy by François Hollande‘s administration, lawmakers will outbid any other in perplexing to trashing a hunt engine and over that, any other vast internet company.
As for members a press, “they will remove too”, a comparison central tells me. First, since of a complications in environment adult a machine a Ancillary Copyright Act would require, they will have to wait about dual years before removing any dividends. Two, a governments — a benefaction one as good as a past Sarkozy administration — have always been dissatisfied with what they see as a French press’s “addiction to subsidies”; they intend to drastically revoke a €1.5bn in open aid. If a press gets is approach by a law, according to several administration officials, a Ministry of Finances will feel relieved of a obligations towards media companies that don’t innovate many notwithstanding vast influxes of open money. Conversely, if a parties are means to strike a decent business understanding on their own, a French press will fast get some “compensation” from Google and competence still keep many of a taxpayer subsidies.
As for a hunt giant, it will have to continue a tiny gash but, for a while, will be spared a ongoing pain of a prolonged and dear legislative quarrel — and a contamination that goes with it: a French check would be dissected by beside governments that will be usually too blissful to adjust and urge it.
Next week: because European media companies should be discreet in their exchange with Google