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Spanish "Google Tax"

In January 2015 Spain will introduce its so-called “Google tax”, a measure which has caught the attention of lawyers and online news aggregators all over Europe. But Spain is not the first EU jurisdiction to attempt to introduce a means of compensating original content providers for the activities of those such as Google News and Yahoo News who aggregate online news content. In March 2013 Germany introduced its version of the tax.

What is Spain’s “Google tax”? Broadly speaking, Article 32(2) of the Spanish Copyright Act provides that online news aggregators (for example Google news and Yahoo news) must pay newspapers and other providers of original online news content for aggregating their content. The so-called Google tax is not really a tax at all. Rather, it is a levy to compensate providers of original online news content for the fact that their content is aggregated without their permission.

In essence, publishers must tolerate their news content being aggregated by aggregators, and the aggregators must pay them to compensate for this. The right to receive this compensation cannot be waived by publishers, even if they use what is known as a Creative Commons licence.

Who is affected by the Google tax? This is not yet clear. The use of the term “electronic service providers” within the legislation indicates that not only services such as Google News and Yahoo News might have to pay compensation to publishers, but many other aggregators (such as Digg and similar businesses) might also be caught.

However, the law includes an exception applicable to news items featured by service providers in response to users’ queries entered into search engines that are based on “isolated words”, provided that making those news items available to the public occurs “not for their own commercial purposes” and is strictly limited to what is necessary to provide results in response to users’ queries. This exception seeks to exclude search results arising in search engines from the payment obligation in Article 32(2). Consequently, the idea of the Spanish Government is to make news aggregator services (such as Google News) pay, but not search engines (like Google Search), provided that the requirements of the exception are met.

When will it enter in force? The law is expected to enter into force on 1 January 2015. 
 
What has the reaction been to the new law? Although many media outlets and publishers celebrate the approval of the Google tax (mainly those belonging to the Association of the Spanish Publishers AEDE), some others position themselves against the Google tax (for example, the Spanish Association of Periodical Publications AEPP). Typical arguments given by some of those who are against the tax are that content providers benefit from the traffic that the news aggregation services generate and that news aggregation services contribute to freedom of information. On 16 December 2014, Google announced that it has removed Spanish publishers from Google News and closed Google News in Spain (see here). AEDE is now analyzing whether closing the service may breach any law, with a special focus on competition law.

In terms of its legal basis, some believe that the Google tax may infringe EU law because the Spanish government failed to notify Brussels of the version of the law that included the Google tax. The version that Spain notified to Brussels did not include Article 32(2). According to EU law, Member States are obliged to notify Brussels with any measure or law that may affect the Information Society. For this reason, the Internet Users Association (AUI) has brought a claim against Spain before the EU Commission.

Secondly, there are arguments that the Google tax could be, in essence, a State Aid measure that is non-compliant with Article 107 Treaty of the Functioning of the European Union and that Spain would be subsidizing the media sector by obliging news aggregators to pay the Google tax.

In addition to the above, there are arguments that this tax is contrary to the general principles of EU law such as the freedom of provision of services within the EU (namely, the tax would create a barrier to access the Spanish market of content aggregation) and the freedom to conduct businesses (the non-waivable nature of the right prevents editors and publishers from negotiating with news aggregators and reaching agreements on compensation that are preferable for both sides).

Regarding the compatibility of the tax with EU Copyright law, it seems that the tax may contravene the recent decisions of the CJEU.  Firstly, it may be incompatible with the decision in the Svensson case. In Svensson the CJEU held that the provision on a website of clickable links to works freely available on another website does not constitute an act of communication to the public, where there is no ‘new public’, i.e. the linked content has already been made  available by the copyright owner on the internet without restrictions. In the context of the Google tax, if publishers disseminate news online without restrictions  then, applying the Svensson decision, offering links to that content is not an act of communication to the public and should not be subject to payment of the Google tax.

The Google tax may also be incompatible with the CJEU’s decision in Padawan v. SGAE. The conclusion reached by the CJEU in that case was that compensation must compensate for the harm or loss suffered by copyright holders. The question is: do news aggregators harm the publishers whose content they aggregate? It is clear that publishers may opt out from services such as Google News (by using the exclusion protocols) and it has not been evidenced that Google News and other aggregators effectively harm the publishers. On the contrary, publishers might gain traffic. Moreover, it may also be argued that through the benefits of using news aggregators (more traffic, more clicks, etc.), publishers are already being compensated. Thus, compensation takes the form of increased traffic and the resulting increase in the number of visits and earnings from advertising.

For further information regarding the Google tax, contact Miranda Cass or Adrian Sim
.