What’s at Stake in Google News’ Exit From Spain’s Web Content Market

by Don Reisinger

New regulatory laws in Spain typically don’t garner international attention. However, when it comes to Google News, things are different. Google News acts as a news aggregator, providing headlines, snippets and links to stories across the Web. Google has argued that its offering serves the common good by exposing publishers’ content to a broader audience and giving it a chance to win attention in highly competitive Web news environments. Some governments around the world don’t accept this view.

The anti-aggregation argument has been in place for years, stemming from concern among publishers that when news aggregators provide the basic gist of a story, they lose traffic to their sites and therefore generate less revenue. Countries like Spain and Germany have sided with publishers, arguing that aggregators are purely self-serving and provide little benefit to content creators. Some countries, like Spain, contend that Web content aggregation is tantamount to content theft and wholesale copyright infringement.

In 2012, Harvard University and Iowa State University jointly conducted a study to see the impact news aggregators have on news consumption. Their study, which spanned some of the most popular aggregators on the Web, including Google and Yahoo, found that aggregators actually improved overall public news consumption and general knowledge about the world. That insight has proved to be an important component in the debate between government regulators and aggregators. The argument is that by trying to rein in one-stop shops for news content, governments in effect reduce information access and consumption.

Not only will people in Spain lose out by no longer having Google News, but some news outlets have pointed out that many people in Latin America rely on Google News as well to keep up with world news written in Spanish and originating in Spain. It’s not clear which countries use it most, but considering that Google News is not available everywhere, the service was especially useful for people living in certain countries. Now that it’s going away in Spain, it’s unclear where those folks might find easy access to so many Spanish language news stories.

At the crux of this argument is the fact that Google has decided to close its Spanish news service because it doesn’t want to pay licensing fees required by the new law. The new Spanish rule, which is going into effect in January, authorizes content publishers to charge a licensing fee to Google or any other aggregator to display their articles online. So, if Google really wanted to, the company could continue to offer its service in Spain. But as noted in his blog post, Google’s Gingras believes the fee is onerous and would ultimately kill Google News. Still, it’s Google’s decision to end its Google News service in Spain, not a government order.

While governments around the world have said that Google News hurts Web traffic to publishers, the actual data seems to deny that theory. The aforementioned Harvard study showed that Google News actually increased traffic to linked sites. And as the Electronic Frontier Foundation points out, after similar fees were put into effect in Germany, a consortium of about 200 German publishers moved to block Google News. Soon after, many of these sites discovered that traffic fell and so they backtracked, opting to not take a fee from Google and allow the service to link to their content. Just last month, Germany’s largest publisher, Axel Springer, also turned its back on the consortium after discovering that its traffic was severely diminished after it cut ties with Google News.

Although some larger Spanish publishers that generate only a small portion of their traffic from Google News can weather the storm, smaller publishers could be out in the cold. According to Similar Web, a firm that measures online traffic referrals, some major Spanish Websites generate as much as 21 percent of their traffic from Google News. Similar Web argues that if a major site is generating that much traffic from Google News, it’s likely that much smaller publications are getting far more site visits from the service. It’s entirely possible—though not proven—that small publishers could be hurt the most by this move.

Not surprisingly, publishers in Spain are pushing for the imposition of licensing fees on Google News and other aggregators. These content publishers believe Google News is stealing their traffic and reducing their page views and their advertising revenue. They believe that their content will stand on its own and draw readers organically. This is particularly important to long-established print publishers whose business model has been severely disrupted by the Internet. They contend that Google News is eating their lunch. Google has argued that it’s allowing millions of additional readers to discover content that they otherwise would never see.

The Spanish government put out a statement on Google’s decision and called the new regulation a “Google tax.” The use of the word “tax” is by no means coincidental. Over the last couple of years, an increasing number of European countries have taken aim at technology companies that they say hide profits in more tax-friendly nations and do not pay their fair share of taxes. Some organizations, including the Electronic Frontier Foundation, believe that the regulation on Google News is an attempt by the Spanish government to recoup some of the taxes it believes it has been unable to collect from the search giant. While taxes are not the only driver for the new regulation, Spain is one of the countries that have complained of Google’s use of tax havens, such Ireland and others, to shelter profits.

There is a big difference between the Spanish regulation on content license fees and the German approach. Spain’s law essentially forces publishers to charge Google for its use of their content, even if they do not wish to do so. In Germany, publishers have the right to abstain from the fee based on how it could impact their business. That’s an important distinction and what ultimately drove Google to close its Spanish operation. Absent that provision, it’s possible that Google News would still be available in Spain next year.