Can the EU really make Google and Facebook pay publishers and media?

According to a number of media outlets of the Old Continent, the closing weeks of this summer will try to bring a major reform in the European publishing industry. As revealed last week by the Guardian and the Financial Times, the European Commission is working on a plan to give news publishers the right to demand payment from services like Google and Facebook for using their content. Despite the fact that an actual proposal will only be unveiled by Brussels in September, the plan itself sounds already like a radical change for the news industry.

A bigger plan

The measures are currently under development and there’s still a lot to find out around them, but what is already certain is that the proposals are part of a wider plan by the European Commission to weaken the dominance of internet giants in Europe, whose market share has ultimately slashed the revenues of newspapers and other traditional publishers.

A recent report published by the Guardian showed that online platforms such as Facebook will suck £450 million out of the UK news industry over the next decade. The report by strategy consultants OC&C says that, based on the impact of platforms on other mature media markets such as music, about 30% of annual digital revenue could go to platforms. That would mean the likes of Facebook and Apple taking between £200m and £250m a year this year, rising to between £400m and £450m from 2026.

Increasing pressure from publishers

Such figures suggest that the Guardian is probably more than right in saying that the Commission must have come under increasing pressure from publishers to level the playing field, after years of losses. The Financial Times indeed reports that the Commission sees the “dwindling revenues” at traditional news organisations as the core of the issue. A failure to push on with such a policy, according to the Commission’s draft document, would be “prejudicial for […] media pluralism”.

In its draft proposals, the words that the Commission reportedly uses actually leave no space for misunderstandings. “The sustainability of publishing industries in the EU may be at stake, with the risk of further negative consequences on media pluralism, democratic debate and quality of information”, as quoted by the Guardian. Therefore, the Commission will rule to let news publishers receive “exclusive rights” to make their content available online to the public, in a move that would “force services such as Google News to agree terms with news organisations” for showing extracts of articles, as revealed by the Financial Times.

Video and music content under the lens

The working document by the European Commission has also space for platforms like YouTube, Vimeo and Dailymotion, as circulated on many newspapers recently. The music industry has long complained that services such as YouTube do not pay artists adequate amounts for their music and has openly asked regulators to close the gap. Now the Commission is looking at imposing an obligation on platforms hosting user-uploaded content to seek agreements with rights holders “reflecting the economic value of the use made of the protected content”, as described in the draft documents.

YouTube uses Content ID, which automatically identifies an artist’s content, to give rights holders the choice of whether to leave it as it is, block it or monetize it through a revenue-sharing deal, and Google says that the music industry chooses to monetize 95% of its Content ID claims, generating more than $ 2 billion for rights holders. But rights holders say they do not have enough contractual power and that there’s never a fair discussion with online platforms since they have obligation to negotiate with them.

A jeopardized approach

The non-compulsory nature of the resolution and many of the aspects that online platforms have claimed as a defense of their conduct may carry the risk of creating a lot of uncertainty when the plan will be unveiled, and there could be more to come. It is true that the draft proposal already shows that the plan has been designed to be quite protective for the so called “traditional” publishing industry, but on the other hand there would be also the risk of creating a more fragmented market rather than a unified one. As an example, it is important to keep in mind that there would be no obligation on publishers to make Google pay for using their content. Many indeed may also choose to continue making their journalism available at zero cost in the hope of attracting more readers and having a broader range.

EU-US clash

What sounds almost sure, despite the huge uncertainty, is that the move will represent a new challenge for the already strained relationship between Silicon Valley and Brussels, which has been through hard times lately over issues concerning free competition, tax and privacy. The EU-Google file is more-than-ever hot and there’s a recent case of the US Treasury department attacking the Commission’s moves to obtain billions of euros from Apple for an alleged tax evasion case in the Old Continent.

The Commission seems anyway more than convinced to present the plan despite the risk of opening a real quarrel with US firms, in the name of the creation of a digital single market that stretches its borders up to this matter too. The mission has the aim of reducing the differences between national copyright schemes and now the Commission must have realized that a jeopardized approach on this topic didn’t produce good effects in the past.

Prior efforts to force internet firms to pay up in European countries such as Germany and Spain, where Google reacted to a mandatory charge by shutting down Google News, indeed show how difficult the whole endeavour will eventually be. Hence, the Commission needs to be prepared now for a powerful reaction by the US Internet giants against its desperate plans to save the lives of media moguls of this continent.

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