Trying to Tax the Internet.
By Don Quijones, Spain & Mexico, editor at WOLF STREET.
The European Commission seems determined to make itself even more unpopular among Europe’s disaffected public. This is just about the only conclusion that can be drawn from its latest decision to steam ahead with plans to adopt a controversial ancillary copyright law — A.K.A. snippet tax — that would open the way for Big Media in Europe to charge news aggregators and other websites a special fee for linking to their works.
The Commission has repeatedly denied that it has any intentions of introducing such a tax. Just two days ago Commissioner Ansip state unequivocally: “This Commission does not have any plans to tax hyperlinks.”
It was a hugely disingenuous claim, as was confirmed by the publication on Friday of a leaked draft of the Commission’s own impact assessment on the modernization of EU copyright rules.
Business As Usual
In the document, the Commission clearly states that it intends to introduce an ancillary copyright for press publishers, giving them the ability to levy a fee (or tax) on links with accompanying short snippets of text. It may not be obligatory but it will set a very clear precedent: once the law is passed newspaper publishers across all 27 EU Member States will have the right to extract fees from sites that link to their works.
Citing dwindling revenues at news organizations, the Commission claims that failure to push on with such a policy would be “prejudicial for… media pluralism.” In other words, it will do whatever it takes to protect Europe’s established media from the cruel vagaries of a new market reality in which by and large the biggest winners are large US tech companies.
The fact that the same policy was rejected — not once but twice — by European Parliamentarians in last year’s copyright report is, much like the European Parliament itself, of little relevance. The policy was also shunned by over 37,500 Internet users in a recent public consultation.
But who cares?
Certainly not the Commission, which has shown once again that it has learnt absolutely nothing from the Brexit experience. It continues to legislate with no consideration for the public interest, serving the exclusive interests of the most powerful lobby groups in Brussels, while continuing to say one thing in public and doing the exact opposite in private. In other words, it’s business as usual in Brussels.
A History of Failure
The link tax is the brain child of EU Commissioner for Digital Economy and Society, Günther Oettinger, as we reported last year. Now his scheme could be on the verge of being unleashed across all 27 EU Member States, even though two of them — Germany and Spain — have already piloted almost identical schemes, with disastrous consequences.
The first country to introduce the link tax was Germany, in 2013. As the Electronic Frontier Foundation (EFF) notes, the law was a manifest failure since most publishers willingly forfeited their right to payment from Google as soon as they realized just how much traffic they would lose from not being indexed on news aggregators such as Google News. Now, three years on, not a single journalist or newspaper has received a single cent from the tax.
The Spanish government, under concerted pressure from Spain’s biggest media lobby, AEDE, went a step further, by installing a mandatory scheme instead of a voluntary one, with the result that even the news organization quoted is not permitted to waive it. In a perfect example of cartel economics at work, every link on a Spanish website was to be taxed every time it was used by a Spanish-based user, and the funds raised would go directly into the AEDE’s coffers, to be distributed as it — and its sponsors — saw fit.
The goal was clear: to insulate the traditional (and extremely loyal) gate-keepers of public information, the mainstream press, from the consequences of declining sales and shrinking relevance.
But then reality – in the form of a company called Google – got in the way. Refusing to be shaken down for providing a useful service to Spain’s newspaper publishers free of charge, the world’s most powerful tech firm suspended the Spanish edition of its news service. It also removed all links to Spanish newspapers from all its Google News sites around the world.
Big Media Changes Tune
It didn’t take long for the impact to be felt. In the last year and a half small publishers are estimated to have lost 14% of their Internet traffic as a result of the closure of sites like Google News and Planeta Ludico. Even some of the major media groups that initially lobbied for the measure to be passed are now begging for its repeal. They include Grupo PRISA, the owner of El País, Spain’s biggest selling newspaper, and the radio broadcaster Cadena SER, which announced that it won’t charge the fee, even though the law specifically states that it must. “Nobody likes the new law,” said PRISA’s CEO Juan Luis Cebrián.
For the moment Spain’s so-called Google Tax has raised no funds and nobody seems to have any idea how the fees will be collected or distributed. What is clear is that opposition to the law, even among those who initially lobbied for it, is intense and growing. Yet that hasn’t stopped the European Commission from trying to roll out a very similar scheme across the whole of Europe.
Clearly, forging ahead with the scheme will do little to improve the already rocky relations between Brussels and Silicon Valley, which, as the FT reports, are embroiled in fractious arguments over issues covering competition, tax, and privacy. But it’s the EU’s relations with the increasingly disaffected people of Europe that are most at risk. By showing, once again, utter contempt for their concerns, the Commission risks distancing itself even further from the people over whose lives it nonchalantly rules, just at a time that a rash of popular referendums and make-or-break national elections is about to be held in countries across the old continent. By Don Quijones, Raging Bull-Shit.
In the same vein, the ECB is expanding its Program of Financial Darwinism. Read… Revealed: ECB Secretly Hands Cash to Select Corporations