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Google boss meets Hollande amid media row

Google's executive chairman Eric Schmidt was to meet French President François Hollande on Monday amid a revenue row with French, German and Italian media firms who want the Internet giant to pay for content.

Google boss meets Hollande amid media row
Photo: Guillaume Paumier. Montage: The Local

Google's executive chairman Eric Schmidt was to meet French President François Hollande on Monday amid a revenue row with French, German and Italian media firms who want the Internet giant to pay for content.

Google, which receives four billion hits worldwide every month, has warned it will exclude French media sites from its search results if France adopts a bill that forces search engines to pay for linking to its news sites.

Italian and German firms have also joined the demand that the search engine should share some of the advertising revenue from user searches for news in media websites.

France's Communication and Culture Minister Aurélie Filippetti on Monday adopted a combative tone ahead of the meeting.

"This European drive will not allow us to be penniless," she said on France Inter radio. "We must not think that all the fights against Internet giants are a lost cause."

Filippetti, who is also due to meet Schmidt, said it "was only normal that big search engines contribute to finance the press."

A letter sent by Google to several French ministerial offices this month said it "cannot accept" such a move and the company "as a consequence would be required to no longer reference French sites," according to a copy obtained by AFP.

Google said a law would "threaten (Google's) very existence".   

Leading French newspaper publishers last month called on the government to adopt legislation imposing a settlement in the long-running dispute with Google, forcing it and other search engines to share some of the advertising revenue.

Their demand follows the German government approving in August draft legislation that would force search engines to pay commissions to German media websites.

But it has not been adopted due to opposition from leftist parties in parliament.

Olivier Esper, a director at Google France, has warned that such a move will "be harmful both for the Internet and its users.

According to France's Le Figaro newspaper, Hollande appears favourable to forcing the Internet giant to pay for linking to newspapers.

Filippetti told a parliamentary commission last week that she backed the idea, calling it "a tool that seems important to me to develop".

She said she was surprised by the tone of Google's letter, telling AFP that "you don't deal with a democratically-elected government with threats."

French technology minister Fleur Pellerin meanwhile told the US niche website Quartz that if Google reached an agreement with Paris, legislation would not be necessary.

"We don't want to appear as a country that is anti-Google," Pellerin told Quartz.

"Obviously Google is a wonderful tool and Google is a major actor of the digital ecosystem. What I would suggest – and what I'm going to suggest to Google and to the press – is to start negotiating, to start discussions for maybe three months, and try to find an agreement on a negotiated basis. And if they don't, well we'll see."

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BUSINESS

Google flags higher ad rates in France and Spain after digital tax

Google has told customers that it will raise the rates for advertisements on its French and Spanish platforms by two percent from May to help offset the impact of a digital tax on profits.

Google flags higher ad rates in France and Spain after digital tax

France has collected the levy since 2019, and Spain since this year, under
pressure from voters to make US tech giants pay a greater share of taxes in
countries where they operate.

The ad rate increase is to “cover a part of the cost of conforming to laws
concerning taxes on digital services in France and Spain,” the internet giant
said in an e-mail seen by AFP.

In France, internet companies with more than 750 million euros ($895
million) in worldwide sales, and 25 million in France, must pay a three
percent tax on their French operations, notably advertising sales and
marketplace operations.

Spain also charges a three-percent tax on some of their businesses.

Jean-Luc Chetrit, head of the Union des Marques, an alliance of major
brands, said Google’s decision would “amputate the investment capacity of
brands at a time when all companies are going through an unprecedented crisis.”

Google did not respond to AFP’s requests for comment, but Karan Bhatia, its head of government affairs, warned in February that “Taxes on digital services complicate efforts to reach a balanced agreement that works for all countries.”

“We urge these governments to reconsider what are essentially tariffs, or
at least suspend them while negotiations continue,” he said.

Google as well as Apple, Facebook and Amazon – grouped together as “GAFA” – are in the crosshairs of European governments that accuse them of exploiting common market rules to declare all profits in the bloc in low-tax
jurisdictions such as Ireland or Luxembourg.

Critics say they are depriving national tax authorities of millions of euros even as they profit from a surge in online activities because of home-working and social distancing rules during the Covid-19 crisis.

The companies counter that they are being unfairly targeted by discriminatory levies.

Google logo
Google logo. Photo: Eva HAMBACH / AFP

Global deal?

Amazon had already responded to the French tax last October by raising the rates it charges France-based marketplace sellers by three percent.

Apple followed suit by raising the commission it charges developers who
sell apps on its platform not only in France, but also in Italy and Britain.

The French tax move on global digital companies made it a pioneer in the
struggle to find a fair fiscal system for internet multinationals whose tax
bill is often tiny compared to their income.

Contacted by AFP, Facebook said it had no plans to raise prices for ads in
France or Spain for now as it waited for a global accord on fiscal rules.

The French tax brought in 400 million euros to government coffers in 2019,
and the government applied the levy again last year despite pressure from the Trump administration to drop it.

With President Joe Biden in the White House, the Organization for Economic Cooperation and Development (OECD) – which is overseeing negotiations on a digital tax – has said it hopes a G20 finance ministers’ meeting in July will hammer out an agreement on the issue.

Last month, the new US Treasury Secretary, Janet Yellen, said Washington
would no longer insist on a “safe harbour” clause that would effectively make participation in a global tax scheme optional, removing a key sticking point with EU officials.

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