France has hit Google with a fine of half a billion euros after finding major breaches in how it negotiated with publishers to remunerate them for reuse of their content -- as is required under a pan-EU reform of digital copyright law which extended neighbouring rights to news snippets.
The size of the fine is notable as it's over half of the entire $1BN news licensing pot that Google announced last October -- when it said it would be paying news publishers “to create and curate high-quality content” to appear on its platforms.
At the time, the move that looked intended to shrink Google's exposure to legal mandates to pay publishers for content reuse by pushing them to accept commercial terms which give it broad rights to 'showcase' their content.
France's watchdog has now called out -- and sanctioned -- the practice.
The half a billion euro penalty is also notable for being considerably more than Google had already agreed to pay French publishers, according to Reuters -- which reported, back in February, that the tech giant had inked a deal with a group of 121 publishers to pay them just $76M over three years.
France's competition authority said today that it's applying the sanction of €500 million ($592M) against the tech giant for failing to comply with a number of injunctions related to its earlier, April 2020 decision -- when the watchdog ordered Google to negotiate in good faith with publishers to remunerate them for displaying their protected content.
Initially, Google sought to evade the neighbouring news right by stopping displaying snippets of content alongside links it showed in Google News in France. But the watchdog found that was likely to be an abuse of its dominant position -- and ordered Google to stop circumventing the law and negotiate with publishers to pay for the reuse in good faith.
The Autorité de la Concurrence is not happy with how Google has gone about this, though.
A number of publishers complained to it that the negotiations were not carried out in good faith and that Google did not provide them with key information necessary to inform payments.
The Syndicate of magazine press publishers (SEPM), the Alliance de Presse d'Information Générale (APIG) and Agence France Presse (AFP) made complaints in August/September 2020 -- kicking off the investigation by the watchdog and today's announcement of a major penalty.
Further fines -- of up to €900,000 per day -- could be headed Google's way if it continues to breach the watchdog's injunctions and fails to supply publishers with all the required information within a new two-month deadline.
In a press release detailing its investigation, the Autorité said Google sought to unilaterally impose its global news licensing product, aka 'Showcase', under a partnership the tech giant calls Publisher Curated News -- in negotiations with publishers -- pushing for the legal neighbouring right to be incorporated as "an ancillary component with no separate financial valuation".
Publishers requests to break out copyright remuneration negotiations were denied, per the watchdog's investigation.
It also found Google "unjustifiably" reduced the scope of negotiations with regard to the scope of income derived from the display of protected news content -- with Google telling publishers that only advertising income from Google Search pages posting news content should be taken into account in determining the level of remuneration due.
The authority found this exclusion of income from other Google services and all indirect income related to this content to be in breach of the copyright law and its earlier compliance order.
Google also "deliberately circumscribed" the scope of the law on neighboring rights by excluding titles that do not have a Political and General Information certificate -- which the watchdog couched as a "bad faith" interpretation of the code on intellectual property.
It also found the tech giant sought to exclude press agencies from renumeration related to their content when used by third party publishers -- highlighting that as another breach of its April 2020 decision, by further noting: "The French legislator has been very explicit on the need to include press agencies."
In another finding, it said Google had only provided publishers with "partial" and "insufficient" information for a "transparency assessment of renumeration due"; and further accused the tech giant of delaying until just a few days before the injunction deadline to provide it -- so of being "late" too.
The authority's investigation highlights compliance problems with another injunction -- related to an obligation of neutrality in how protected content is presented on Google's platforms -- with the watchdog writing on that: "The strategy put in place by Google has thus strongly encouraged publishers to accept the contractual conditions of the Showcase service and to renounce negotiations relating specifically to the current uses of protected content, which was the subject of the Injunctions, under penalty of seeing their exposure and their remuneration degraded compared to their competitors who would have accepted the proposed terms. Google cannot therefore claim to have taken the necessary measures to prevent its negotiations from affecting the presentation of protected content in its services."
Another injunction sought to prevent Google from seeking to leverage its dominance by offsetting remunerations paid to publishers for the neighbouring rights.
On this the watchdog also took issue with its approach -- noting that its Showcase product requires publishers to make not just snippets of their content available for display on Google's platforms but "large extracts" and even whole articles.
It also found that Google linked participation in the Showcase program to subscription to another service called Subscribe with Google (SwG) -- enabling it to link negotiation on neighboring rights with the subscription of new services that could financially benefit its business.
Under a subhead which denounces what it found as "extremely serious practices", the authority goes on to accuse Google of "a deliberate, elaborate and systematic strategy of non-compliance" -- and of continuing an already years-long "opposition strategy" to the principle of neighbouring rights; and then, after they'd been baked into EU and French law, seeking to "minimize the concrete scope of those rights as much as possible".
Google has, the authority asserts, sought to use a global strategy to close down publishers' ability to negotiate for remuneration for their content reuse at a national level -- using its Showcase product as a cloak for "avoiding or limiting as much as possible" payments to publishers; and, simultaneously, seeking to use negotiations on neighboring rights as an opportunity to obtain access to new content by press publishers that could allow it to collect additional income, such as from subscriptions to press titles.
"The sanction of 500 million euros takes into account the exceptional seriousness of the breaches observed and that the behavior of Google has further delayed the proper application of the law on neighboring rights, which aimed to better take into account the value of content from publishers and news agencies included on the platforms. The Authority will be extremely vigilant about the correct application of its decision, as non-execution can now lead to periodic penalty payments," added the watchdog's president, Isabelle de Silva, in a statement (which we've translated from French).
The half a billion euro fine and the warning to Google that its practices will attract daily fines if it persists in ignoring the injunctions put the tech giant on notice that the detail of commercial deals won't be allowed to fly under the radar in France.
Any more attempts to shape a self-serving version of 'compliance' are likely to attract further sanction from the watchdog -- which also recently applied a number of interoperability requirements on Google's ad business (and slapped it with a $268M fine), also acting on complaints from publishers.
While anything Google agrees to in France on the neighbouring rights issue is likely to set the bar for what it can achieve with commercial deals elsewhere -- at least in other EU markets, where the copyright extension also applies (once it's been transposed into a Member State's national law).
In a statement responding to the authority's sanction, Google expressed disappointment with the outcome of the investigation -- claiming to have acted in good faith throughout negotiations with publishers:
“We are very disappointed with this decision -- we have acted in good faith throughout the entire process. The fine ignores our efforts to reach an agreement, and the reality of how news works on our platforms. To date, Google is the only company to have announced agreements on neighbouring rights. We are also about to finalize an agreement with AFP that includes a global licensing agreement, as well as the remuneration of their neighbouring rights for their press publications."
The tech giant went on to suggest that the authority's decision is "primarily" related to negotiations in France which took place between May and September 2020, further claiming it has continued to engage with publishers and press agencies since then to find "solutions".
By way of example it pointed to a January 2021 framework agreement inked with the Alliance de la Presse d’Information Générale -- which it claims covers every IPG title (Information de Presse Générale) in a "transparent and non-discriminatory way". It also pointed to agreements it has inked with other publications in the market, including Le Monde, Courrier International, L'Obs, Le Figaro, Libération, and L’Express.
Google also reiterated its confident it can sign a global licensing agreement with Agence France Presse -- which it said it also wants to include remuneration of neighbouring rights for press publications from the agency.
"Our objective remains the same: We want to turn the page with a definitive agreement," it added, saying it would take the French Competition Authority’s "feedback into consideration and adapt our offers" and that: "We are already engaging with press publishers and agencies beyond IPG, by covering publications that are recognised by the CPPAP as 'online press services', and we reiterate our offer to have an independent third party in a position to evaluate our offers and allow us to base our discussions on facts."
Other major fines for Google in France in recent years include the aforementioned $268M for adtech abuses last month; $120 for dropping tracking cookies without consent back in December; $166M in December 2019 for opaque and inconsistent ad rules; and $57M for privacy violations in January 2019.
Beyond the EU, Australia recently passed a law which requires tech giants, Google and Facebook, to enter mandatory arbitration with publishers for reuse of their content if they fail to agree commercial terms on their own.
Its law has attracted considerable attention worldwide as legislators grapple with how to rein in powerful tech platforms and ensure the sustainability of traditional news businesses whose revenues have been hit by the Internet-driven shift to digital publishing.
The UK's Competition and Markets Authority has, for example, described Australia's backstop of mandatory arbitration if commercial negotiations fail as a “sensible” approach -- at at time when the government is working on shaping an ex ante regulation regime to enable competition authorities to pro-actively tackle abuses by platforms with strategic market power.
Ahead of Australia's law being passed, Google had warned that it might have to close its services in the country if legislators went ahead and also suggested the quality could degrade or that it may have to start to charge for products. In the event, it did not shut up shop down under.
The tech giant was also an active lobbyist against the EU's plan to extend digital copyright to cover snippets of news content -- and, as recently as 2019, it was vowing never to pay for news.
A few years later it announced the $1BN pot to pay publishers to licence content. But Google's eventual bill for its ad business piggybacking upon others' journalism may be rather larger than that.