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SPANISH SNIPPET TAX FOLLOWS TREND OF TARGETING INTERNET SERVICES

The transformative and occasionally disruptive effect of the Internet on traditional news publishing has been widely discussed, and as DisCo has previously covered, some European states are reacting to these changes with a form of tax-and-subsidy system that would benefit domestic news publishers at the expense of mostly foreign Internet services.

logoFrance and Germany have both made efforts in this direction, and in February the Spanish government began considering a similar proposal.  A provision appearing late in the development of Spain’s ongoing reform of its IP laws would subject normal Internet snippets — i.e., quotations — to a special “ancillary” copyright.

The proposed statute appears to impose a compulsory license each time a website provides even a small snippet of a newspaper article.  Curiously, it also subjects the reuse of any photo to permission from the news publisher, whether the photo is protected by copyright or not, once the photo is posted to any “periodically updated” website.  Not only does this sound like an administrative nightmare, it also runs afoul of international copyright norms in several ways.  The long-standing Berne Convention (a) prohibits nations from restricting the right to quote, (b) limits IP protection to expression, not facts, and (c) states that copyrights do not extend to “news of the day.”

By restricting Internet services like search and social media from functioning as they do elsewhere in the world, this proposal also represents a new trade barrier, upending how both the Internet and copyright law ordinarily function.  An IP-based tax on quotations is therefore not only bad policy, but it also appears to violate the EU and Spain’s international free trade commitments.

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The Spanish Google tax, or (twice) the perfect cartel

It is always tempting for firms in sectors in decline to collude. But a cartel may not always be feasible or successful. Sometimes, major competitors have no interest in playing the game (this may be so for various reasons; competitors may have a different cost structure, may be more efficient or use a different technology). The next trick is well known. If private collusion does not work, turn to the State to enforce an official cartel or to (bluntly) eliminate competition from other players. You want a well-functioning and sustainable cartel? Make sure that anti-dumping duties are imposed on your heartless competitors from other parts of the world.

Montebourg, who has become an endless source of competition-related stories, has been quite open (I admit he is very candid, both in the English and the Spanish sense of the word) about his dislike for Free Mobile and has even taken active steps to make its life more difficult. The operator has emerged as a phenomenal maverick, bringing much needed dynamism to the French mobile market. But apparently prices are too low for Monsieur le Ministre’s taste and French consumers, as responsible and forward-looking citizens of the Republic, should pay more for their calls (he has in fact referred to the ‘excesses of low-cost’). Needless to say, the three incumbent mobile operators are not particularly unhappy about the whole deal.

The proposed Google tax in Spain provides yet another example of State-enforced collusion, albeit a more subtle one (which is not difficult given that our dear Arnaud is leading the way in the abovementioned example). Traditional newspapers struggle to survive in Spain. Advertising revenues have been in steep decline for years and media groups are heavily indebted. The solution? Charge Google, which has become the default cash-cow (and access-cow), for the use of non-significant excerpts (which, I would mention in passing, sounds oxymoronic from a copyright law perspective).

cash-cow

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