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Beware of Dragon Slayers Bearing Bad Ideas. They Might Not Be Fair. Or Useful

As should be obvious to nearly everyone with an internet connection these days, Google is both really useful and kind of terrifying given the scope of how much Google knows about nearly all of us and how much it controls what we know [1]. The fact that Google’s list of corporate ambitions includes things like ‘owning the internet’ [2] and owning the internet’s pipes [3] doesn’t really help. And then there’s the killer robots [4] and wage-theft [5]. All in all, it’s not hard to hope Google gets Scroogled [6]. Soon.

But there’s more than one way to screw Google and not everyone that fears Google is some random consumer. Major corporate entities [7] also fear Google and it just so happens that a coalition of many of the largest publisher in Europe has a plan to slay the Google Dragon [8] they fear so much. Unfortunately, this coalition might slay “fair use” [9] across the internet in the process. That’s right, copyright law could be getting a big ‘upgrade’ in the digital realm as part of a new anti-Google initiative in a way that upgrades the bottom line of the biggest publishers and downgrades everyone else’s general ability to find news articles and talk about the world. This is happening.

So here’s a quick summary of what just happened:
The European parliament is set to vote a motion proposing that Google and other internet technology companies [10] be broken up in the EU. The parliament itself can’t break up these firms, so it’s really more a plea to EU regulators. Considering that Google controls 95% search engine market share in the EU, it’s not a shocking move and maybe even appropriate.

What is shocking is manner in which the new laws that, right now, are focused on rein in Google will also radical overhaul of how we use the internet and, even more consequently, it might change how we read the news and understand our world. And it’s the EU’s major publishers that are effectively writing these new laws. THAT’s what’s so shocking. The EU’s new “competition minister”, Germany’s Günther Oettinger, is already calling for reviving something that’s been in the European publisher’s wish-list for years: implementing at the EU-level laws that have been percolating across EU member states that make Google and other “news aggregators” [11] pay a fees to publishers for listing their news headlines and a tiny snippets on their sites.

Google’s competitors are also calling for regulating Google’s search engine algorithms [12] and there’s even the possibility that Google might even be forced to share customer information with rivals if that information is deemed “indispensable” for competition [13]. These are the kinds of new rules Google’s rivals are asking for and it appears to be the case that the EU parliament is now planning on making many of these industry initiatives law. Soon. Which one’s will become law? That remains to be seen, but big changes are coming to the EU’s internet regime and, in the words of the EU competition minster Günther Oettinger [14]:

“We are seeking unified data protection across Europe, one which American companies will have to abide by as well. If this is not the case there is scope for punitive measures and fines,” the digital economy commissioner warned. On the copyright question he also said, slightly mysteriously: “We want European copyright legislation and we want companies like Google to adhere to European copyright standards. We have the legal jurisdiction for this and we want to bring a degree of fairness into the relationship between the users, Google and its competitors.”

In other words, making these new EU changes apply to US firms (and presumably firms everywhere else), means the EU is potentially going to change how the internet and copyright law work globally (the rest of the world is interested in EU news too, after all). Again, soon.

All of this is happening as part of an initiative to rein in Google. And since Google is so big and scary these days, it means some potentially very big and scary new rules and regulations that impact much more than just Google could become the new law of the internet (or at least large parts of the internet) under the banner of slaying the Google Dragon [8]. Dragon slaying might come with a lot of associated fanfare and deservedly so. Dragon slaying is hard. But that doesn’t mean others kinds of corporate beasts aren’t already waiting in the wings. And and doesn’t mean those beasts didn’t get the fancy idea of going into the dragon slaying business themselves [15]:

Financial Times

November 21, 2014 6:23 pm
Google break-up plan emerges from Brussels

Henry Mance, Alex Barker and Murad Ahmed

The European parliament is poised to call for a break-up of Google, in one of the most brazen assaults so far on the technology group’s power.

The gambit increases the political pressure on the European Commission, the EU’s executive arm, to take a tougher line on Google, either its antitrust investigation into the company [16] or through the introduction of laws to curb its reach.

A draft motion seen by the Financial Times says that “unbundling [of] search engines from other commercial services” should be considered as a potential solution to Google’s dominance. It has the backing of the parliament’s two main political blocs, the European People’s Party and the Socialists.

A vote to effectively single out a big US company for censure is extremely rare in the European parliament and is in part a reflection of how Germany’s politicians have turned against Google this year.

German centre-right and centre-left politicians are the dominant force in the legislature and German corporate champions, from media groups to telecoms, are among the most vocal of Google’s critics [17].

Since his nomination to be the EU’s digital commissioner, Germany’s Günther Oettinger has suggested hitting Google with a levy for displaying copyright-protected material; has raised the idea of forcing its search results to be neutral; and voiced concerns about its provision of software for cars.

Google has become a a lightning rod [18] for European concerns over Silicon Valley, with consumers, regulators and politicians assailing the company over issues ranging from its commercial dominance to its privacy policy. It has reluctantly accepted the European Court of Justice’s ruling on the right to be forgotten, which requires it to consider requests not to index certain links about people’s past.

The European parliament has no formal power to split up companies, but has increasing influence on the commission, which initiates all EU legislation. The commission has been investigating concerns over Google’s dominance of online search for five years, with critics arguing that the company’s rankings favour its own services, hitting its rivals’ profits.

“Unbundling cannot be excluded,” said Andreas Schwab, a German MEP who is one of the motion’s backers.

Unbundling of services. That’s clearly one of the top priority of the EU parliament’s new initiative, led by a coalition of German MEPs and the new EU digital commissioner, Günther Oettinger.

But as we’ll see in the excerpts below, unbundling is really just one of the goals EU MEPs and Oettinger are going to be fighting for in the coming months and years. EU publishing giants, led by the German giants like Axel Springer, are calling for a fundamental overhaul of how internet copyright works, at least for companies operating in the EU. It’s an agenda that would force Google to pay publishers for using their headlines and snippets while linking to their articles. Interestingly, just earlier that month, before the EU parliament called for breaking up Google and the EU’s competition minister “suggested hitting Google with a levy for displaying copyright-protected material”, German publishing giant Axel Springer appeared to have given up on that very plan. So this recent announcement that the EU was going to attempt to implement new copyright laws that would charge Google fees for news headlines must have been extremely revieving to Axel Spring and the other German publishers that were suing Google for similar copyright fees very unsuccessfully [19]:

German publishing giant Axel Springer caves in over Google news snippets row

Summary: Could the long-running battle between the publishing giant and the search engine finally be at an end?
By Liam Tung for The German View | November 6, 2014 — 10:12 GMT (02:12 PST)

German publisher Axel Springer has withdrawn its demand that Google pay to publish news snippets from its publications, in the latest twist to the scuffle over copyright fees.

Under a new ‘free license’, Axel Springer is allowing Google to display portions of text from news stories published by four of its sites: welt.de, computerbild.de, sportbild.de, and autobild.de.

The move by the German publishing giant follows a standoff over Germany’s ancillary copyright law which Axel Springer argued enabled it to demand licensing fees from search engines like Google for republishing portions of a story. Google has maintained that its service benefits publishers and so it should not have to pay a fee.

In June, fee-collecting body VG Media – a consortium of publishers including Axel Springer – sued Google over the issue. Google responded in October [20] by halting its indexing of news snippets and thumbnails of VG Media content, instead only displaying headlines. At the time, VG Media said it was being blackmailed by Google.

Announcing the free license for Google yesterday [21], Axel Springer said that traffic to the sites had declined by nearly 40 percent since Google stopped producing snippets and thumbnails on October 23. It also claimed that traffic to the German sites from Google News was down by almost 80 percent.

Withholding the free license was part of the publisher’s plan to demonstrate what it sees as Google abusing its dominant power to force publishers into licensing their content for free. As Axel Springer noted, its aim was to “document the effects of the downgrading of search results as part of ongoing legal proceedings to enforce the existing press ancillary copyright law”.

Axel Springer was one of the primary forces lobbying for the ancillary copyright bill [22], which came into effect on August 1 last year. What hasn’t been clear is whether the bill granted the German publisher a right to demand fees, which Google has never paid.

At its quarterly earnings update yesterday, the publisher’s CEO Dr Mathias Döpfner called the move “the most successful failure we have ever experienced”.

“As sad as it is, we now know very precisely just how far-reaching the consequences of the discrimination are, as well as the real effects of Google’s market power and how Google punishes everyone who exercises a right that has been granted to them by the German Bundestag.”

The battle over copyright is likely far from over, however. Incoming digital chief for the European Commission, Günther Oettinger, last week suggested Google be slugged with a copyright tax [23] if it uses European intellectual property.

Well that clearly didn’t work out well for Axel Springer. Google de-indexed Axel Springer-owned content after Axel Springer sued for headline/snippet fess and the publisher’s traffic declined 40 percent, including an 80 decline in traffic from Google News. It certainly demonstrates the power of Google News in driving traffic to German news sites and it’s a reminder that the people critical of Google’s monopolistic size do have a very valid point. Google is wildly important. That’s one reason the EU parliament’s new plan for breaking up Google and/unbundling its services might have some significant successes. Google really has gobbled up much of the European digital market for core services like searching.

A New Standard (For Squeezing Websites)
And yet it’s hard to ignore the fact that forcing Google to pay German publishers for headlines and blurbs is just about the scariest thing you could imagine for the internet if that catches on. How far is the “pay us for headlines and blurbs” trend going to go? We’ll have to wait and see but, again, it’s with noting that EU competition minister Oettinger said, “We are seeking unified data protection across Europe, one which American companies will have to abide by as well. If this is not the case there is scope for punitive measures and fines” [14]:

European Parliament reportedly wants Google to be broken up
David Meyer
Nov. 21, 2014 – 11:10 AM PST

The European Parliament is about to call for the “unbundling” of Google’s search business from the rest of its operations, as one potential way to challenge the company’s market dominance, according to a report in the Financial Times [24].

The FT said Friday that it has seen a draft motion that has the backing of the European People’s Party and the S&D (the Socialists), which are by far the two biggest blocs in the Parliament, with a combined weight of around 55 percent. The motion apparently urges the European Commission – which unlike the Parliament does have the authority to break up companies – to “take a tougher line on Google”, in the FT’s words.

The Parliament reportedly would like the Commission to tackle Google’s dominance either through its ongoing antitrust probe into the firm’s search tactics – currently on pause as new competition commissioner Margrethe Vestager re-evaluates where things stand [25] — or by some other means. It is worth noting that Vestager’s predecessor, Joaquin Almunia, was of the opinion that Google could not be broken up under existing competition legislation [26]. Then again, he was also keener than everyone else to agree an early settlement with the firm, and ultimately failed to do so.

Google has a much higher share of the search market in Europe – well over 90 percent – than it does in the U.S., which is why its practices matter so much [27] there. Some of the criticisms call out clearly anticompetitive practices, such as Google promoting its own services over those of rivals [28] in its results, but others have been piling into the case in recent months.

Of particular note is the campaign against Google [29] by press publishers, particularly those in Germany. The new digital economy commissioner, the German Günther Oettinger, has the copyright reform brief and has indicated that he wants to take the publishers’ side [30] in their quest to extract money from the firm for using snippets of their text in its search results.

Beyond antitrust, Google has also repeatedly shrugged off [31] data protection fines across Europe, as national privacy regulators try desperately but unsuccessfully to force a change in its ways. Oettinger said [32] in a Thursday public Q&A session with the German Press Association (DPA) that “if companies based outside the EU want to operate with their digital services within the European digital market and have access to data which they then store or evaluate, then they must adhere to our rules.”

“We are seeking unified data protection across Europe, one which American companies will have to abide by as well. If this is not the case there is scope for punitive measures and fines,” the digital economy commissioner warned. On the copyright question he also said, slightly mysteriously: “We want European copyright legislation and we want companies like Google to adhere to European copyright standards. We have the legal jurisdiction for this and we want to bring a degree of fairness into the relationship between the users, Google and its competitors.”

As the article points out, Google has repeated flouted the EU’s data-privacy laws “as national privacy regulators try desperately but unsuccessfully to force a change in its ways”. And that’s certainly a large [33] concern [34]. Google’s size and the Panoptican-ish nature of its business model [35] makes it legitimately scary (not to mention Google’s ever-growing military contracting business [36]). But is creating an internet model imposed at the EU level where EU publishers, possibly all EU publishers someday, get paid for headlines or blurbs really part of the solution we want to be pursuing? Doesn’t that threaten to make search engines biased towards fewer news results in general? Do we really want to set up a legal precedent at the EU level where headlines and blurbs are a fee-based luxury?

If the fees are limited to Google and other giants who cares [37]. Google will be fine [38] and the publishers could probably use the money more. But it seems highly questionable to assume that these fees are going to be restricted to large search engines and big ‘news aggregators’ in the long run. At least not as long as it’s the big publishers that are leading the way.

And now that Günther Oettinger has made it one of his goals to champion the agenda of the German publishers, keep in mind that early indications were that those publishers had far grander agenda the headlines/snippets fees [39]:

Google lashes out at German copyright ‘threat’
David Meyer
Aug. 21, 2012 – 8:39 AM PST

Google has launched a broadside against a proposed law in Germany that would see search engines forced to pay license fees for linking people to news stories.

Well, actually that’s slightly inaccurate: the draft law would make search engines pay for reproducing newspapers’ headlines and first paragraphs. So, take those away and the links are fine. Even if nobody will have the faintest idea what they’re linking to.

Oberbeck also pointed out the obvious: that Google send readers to the publishers’ sites. And that anyone who doesn’t want their content to be indexed by Google can just throw a robots.txt file in there. And that publishers make money off Adsense.

But wait, let’s back up. To appreciate the full [40] absurdity of the situation, we should take in a little history.

The German publishing houses, particularly Axel Springer, are very powerful in their country, with relatively strong influence in government circles. As Matthias Spielkamp of the copyright news site iRights [40] put it to me:

“If you look at the U.S., if print houses there want something, they are up against American companies like Google and Yahoo. Here we have local publishers that are enormously powerful and are trying to target U.S. companies. I wouldn’t say it’s anti-American – it’s just that German politicians are much more inclined to protect German publishers’ interests when balancing that with a [foreign] company or industry.”

A couple of years ago, a leaked draft showed what plans the publishing houses were pitching to their friends in the coalition government. The first official draft legislation showed up in April [41]. What it proposed was breathtaking.

The government was calling for a form of ‘ancillary copyright’ to be brought in, that would force companies to pay publishers license fees for using their work in a commercial setting. As in, employers would have to pay up for letting their employees read the news online at work.

German industry bodies were predictably apoplectic, as were opposition parties, and the government beat a hasty retreat. The second draft, which appeared in the last couple of months, drastically narrowed the scope of the legislation, so that it would only apply to search engines.

So now Google is furious for being picked on, when it actually drives traffic to the publishers.

And the publishers aren’t happy either – Anja Pasquay, a spokeswoman for the Federal Association of German Newspaper Publishers (BDZV), told me that the second draft “won’t help”, and her organization would rather see a revival of the first draft.

On balance, it’s difficult not to take Google’s side on this one. The whole idea of this kind of ancillary copyright is ridiculous, and it puts the likes of Axel Springer in a very poor light indeed.

It’s not as though Axel Springer isn’t plunging headfirst [42] into the web industry itself – only today, it announced the purchase of an online news and classified portal [43].

The German publishing giants are big enough to compete in the real world. Sure, it’s tough monetizing free web content. But cooking up hokey and self-defeating new copyright laws is a pretty shabby way to go about it.

Let’s hope this was an exageration, but once again:

The government was calling for a form of ‘ancillary copyright’ to be brought in, that would force companies to pay publishers license fees for using their work in a commercial setting. As in, employers would have to pay up for letting their employees read the news online at work.

And when that proposal was cut out of the first draft of the German legislation:

And the publishers aren’t happy either – Anja Pasquay, a spokeswoman for the Federal Association of German Newspaper Publishers (BDZV), told me that the second draft “won’t help”, and her organization would rather see a revival of the first draft.

And now we have an EU digital commissioner Oettinger is openly expressing interest in reviving the publishing giants’ ‘headlines/blurb royalties’ request.

The French (and Spanish and Belgian) Connection
So just how crazy might this going to get? Keep in mind that while Germany’s officials are clearly leading the way on this initiative, this is far from being a Germany-only project. Spain [44], France, and Belgium are already making Google pay similar fees. So if there’s a push to make this the model for the entire EU there’s already plenty of precedent:

Why Google’s settlement with French publishers is bad for the web
Mathew Ingram
Feb. 4, 2013 – 8:10 AM PST

After much diplomatic maneuvering and a series of face-saving gestures on both sides, Google finally signed an agreement with French newspaper publishers [45] late Friday that puts to rest a long-standing legal battle over Google’s behavior in excerpting stories on Google News, which the French have argued is copyright infringement [46]. But while the search giant may be relieved to put the whole kerfuffle behind it, there’s an argument to be made that it has actually done more harm than good — not only to its own interests, but to the interests of the open web as well.

Veteran tech blogger Lauren Weinstein describes this risk well in a recent blog post, in which he calls what the government of France is doing “extortion,” [47] and warns of the long-term risk of Google acceding to such demands that it pay for the simple act of linking and excerpting content:

“There is little evidence to suggest that ‘paying off’ a party making unreasonable demands will do much more than quiet them for the moment, and they’ll almost inevitably be back for more. And more. And more. Even worse, caving in such situations signals other parties that you may be susceptible to their making the same (or even more outrageous) demands, and this mindset can easily spread from attacking deep-pocketed firms to decimating much smaller companies, organizations, or even individuals.

As my colleague Jeff Roberts noted in his post on the Google settlement, the French originally wanted the company to pay as much as $100 million [46], and wanted almost all of that to go into a fund that publishers could use for their own purposes, rather than into ad buying or other joint ventures. And he also noted that with the latest deal — which comes on the heels of a similar settlement with Belgium [48] — Google is sending a very obvious message to other countries such as Germany that it is prepared to pay.

Google’s tactics set a dangerous precedent

This may make sense for Google, since it is trying to avoid as much litigation as possible, and wants to be on good terms with European countries (where it has already run into multiple roadblocks and barriers around services like Street View and privacy concerns [49]). But I think Weinstein is right when he argues that this is only going to encourage countries like Germany — and plenty of others as well — to assume that if they push Google on the subject of linking, they will get cash.

Google wants these payments to be seen as a helping hand to publishers, which is why the fund is described as ““supporting digital publishing initiatives,” [50],” and why it puts so much emphasis on the strategic partnership angle. But regardless of the picture it is trying to paint, the settlement is being described by many as a “pay for links” deal, and that perception is dangerous. As Weinstein puts it:

“France’s complaints regarding Google related to activities that are absolutely part and parcel of the fundamental and fully expected nature of the open Internet when dealing with publicly accessible Web sites [and its] success at obtaining financial and other concessions from Google associated with ordinary search and linking activities sends a loud, clear, and potentially disastrous message around the planet, a message that could doom the open Internet and Web that we’ve worked so long and hard to create.”

In other words, this issue is much bigger than just Google. While it may serve Google’s purposes to settle with France and Belgium, and perhaps other countries as well, all that does is encourage other governments and companies to see payment for links as an appropriate strategy [51]. How long until U.S. newspapers and publishers start to argue the same thing? What about other companies? Director Harvey Weinstein (no relation to Lauren) said in a recent interview that the U.S. should have legislation [52] to make this a reality — and Google is helping that kind of thinking gain momentum.

And just a month after Google made that settlement with France big publishers, Germany’s lower house passed a bill similar to what Axel Springer was asking for but somewhat watered down [53]:

Ars Technica
Germany wants Google to pay for news citations, passes re-publishing bill
Google can post “short excerpts” freely—but what that means, nobody knows
by Cyrus Farivar – Mar 1 2013, 7:00pm CST

The lower house of the German parliament, known as the Bundestag, has approved [54] a new bill that would require search engines to pay a license fee for re-publishing content longer than “individual words or short excerpts.” The bill passed [55] by a vote of 293 to 243, with three abstentions.

However, the law does not define exactly what such a “snippet” would entail. For the law to take effect, it would need to be ratified [56] by the upper house of the German parliament, the Bundesrat. By all accounts, this bill is a watered-down version of what had originally been lobbied [57] for by the German publishing and media industry.

Yes, the bill was a water-down version on what German publishers asks for since it was somewhat vague in terms of what constitutes a “snippet”. But now that the EU parliament and EU digital commissioner are openly prioritizing the passage of something similar to this law, but for the entire EU, it’s looking like may find out soon! This “ancillary copyright” law went into effect for Germany back in August 2013 [58]. It’s the same law that grants German publishers the exclusive rights to commercially exploit their products online [11] and Google and other search engines and ‘news aggregators’ now have to pay a license fee to publisher if they listed more of an article than “single words and smallest excerpts” [11]. And as we saw above, it’s the same law that Axel Springer and others sued Google over when Google refused to pay the fees, leading to Google dropping Axel Springer and other plaintiffs from Google’s search indexing (and the subsequent fee waiver issued by Axel Springer earlier this monthth so Google would start linking to them again) [19].

11 Percent. Just For These Guys.
So how much are the publishers hoping to get from Google if everything goes well for their in thier ancillary persuits? Well, back in June, we learned another fun-fact about what we might expect from the EU’s copyright regime: Several German media giants, including Axel Springer (but not Spiegel Online, Handelsblatt, Sueddeutsche.de, Stern.de or Focus), sued Google, Yahoo, and Microsoft for 11 percent of their “gross sales, including foreign sales” that come “directly and indirectly from making excerpts from online newspapers and magazines public.” [59] That 11 percent would presumably be set aside for just those German media giants that participated in the lawsuit. The rest of the EU will have to fight over the remainining 89% of Google, Yahoo, and Microsoft’s “gross sales, including foreign sales” that come “directly and indirectly from making excerpts from online newspapers and magazines public.”

Breaking Up As A Last Resort. A Last Resort That Was Just Chosen
So some very signficant changes could be in store for the European internet markets and the US markets based on Günther Oettinger’s comments above about making US companies abide by this new framework too. And why wouldn’t this apply to the world? So we’re now looking at a new source of global legal pressure to allow major publishers to start charging for news snippets. One of the fun parts about globalization is the crap can get globalized too as laws get harmonized and publishers everywhere would LOVE this.

And it’s not just a cut of the revenues from companies like Google and other ‘news aggregators’ that are on the horizon for the internet. Back in July, the Financial Times issued a rather interesting report suggesting that hinting at what else to expect: a 42-page internal review of the European Commission’s probe into Google’s practices by the German competition/cartel authority (the Bundeskartellamt) suggested that Google’s proposed settlement with the EU over competition concerns (a settlement that did not involve fees for snippets at all) was adequate and as far as EU law could go. But that initial opinion by the Bundeskartellamt was been clearly ignored [60]:

Financial Times
Brussels reaches legal limits on Google antitrust settlement

By Alex Barker in Brussels
July 21, 2014 4:56 pm

Google’s draft antitrust deal with Brussels reaches the limits of what is allowed in EU law, according to a German policy paper highlighting the constraints on European politicians railing against US tech groups.

A 42-page internal review by Germany’s competition authority, seen by the Financial Times, offers a cautious assessment for ministers seeking legal means to curb the clout of US internet companies and safeguard consumer data.

At a moment when Google is political siege in Germany [61], the Bundeskartellamt offers qualified support for the European Commission’s heavily criticised probe into whether the US group rigs search results to divert traffic from rivals.

It argues that Google’s draft EU settlement [62] is a “suitable approach to counter the barriers to competitors” and says the commission went as far as is possible under existing EU competition law.

The paper offers some legislative options – at both national and EU level – to toughen antitrust law and reinforce the Brussels’ draft pact, but warns that steps to break up Google and “unbundle” services would be harmful and misplaced.

French and German ministers have demanded Brussels toughen up its planned settlement or serve charges against the US group. Yet Joaquín Almunia, the EU competition chief, is still expected to push for the pact to be formally adopted this autumn if he thinks he can overcome reservations of some EU commissioners and a barrage of criticism from Google’s rivals.

Even if the search pact is adopted, Mr Almunia has made clear to colleagues that Google would face antitrust scrutiny in other areas – such as YouTube and its Android mobile operating system – and potentially face legislative curbs over data protection or copyright.

In May Sigmar Gabriel, the German economy minister and vice-chancellor, called for radical steps to curb its market power [63], including as a last resort the possible break-up of Google and its regulation like a utility. His intervention came shortly after the Bundeskartellamt delivered its paper to his ministry.

Yes, back in May, German Vice Chancellor and Minister of Economic Affairs Sigmar Gabriel called for radical steps to curb Google’s market power shortly after the competition/cartel ministry (the Bundeskartellamt) made its 42 page internal report recommending the EU commission’s anti-trust investigation accept Google’s proposed settlement over claims of unfair search results. On top of that, Gabriel also suggested that Google might need to be regulated like a utility.

A Search Utility?
Recall that EU digital commissioner Oettinger is already talking about regulating Google’s search results [15]. So what might a Google search regulatory regime look like? Well, if the European publishing industry gets its way (which looks quite possible at this point), regulating Google searches will involve regulating Google’s search algorithms [12]:

Google should be regulated like utilities, say rivals

Market testing of Google remedies ends Thursday

By Jennifer Baker

IDG News Service | Jun 25, 2013 3:08 PM PT

Companies who have been assessing Google’s planned remedies to anti-competitive practices called on the European Commission on Tuesday to reject them and to consider regulating Internet search.

Google has been under investigation by the Commission since November 2010 after rivals accused the search giant of setting its algorithm to direct users to its own services by reducing the visibility of competing websites and services. It was also accused of content-scraping and imposing contractual restrictions that prevent advertisers from moving their online campaigns to rival search engines.

On April 25 Google proposed specific measures to address these complaints and rivals and interested parties were invited by the Commission to “market test” them. That testing period ends on Thursday.

Google has proposed to label its preferred links to its own sites in search results. But publishers say that this will mislead consumers into thinking these were somehow tailor-made results for search queries and interests, thereby causing even greater harm to competition.

Google also proposes to include links to rival search engines for specialist restaurant search results that generate revenue for Google. Google’s paid-for services would be separated from general search and treated more like advertising.

Finally, Google has agreed to remove exclusivity provisions from all future contracts and any legacy advertising contracts and will offer tools to prevent Web scraping by allowing content owners to opt out.

But many complainants who met in Brussels on Tuesday to present their position on the remedies said that search is such an important Internet tool that it should be regulated like a telecommunications or electric utilities.

“Everyone relies on it,” said Weber. “Unfortunately no one planning the digital single market thought that a single company would control access to the Internet.” Google has 95 percent of the search market in the E.U.

Meanwhile hundreds of publishers and their trade associations wrote an open letter calling on Competition Commissioner Joaquin Almunia to reject Google’s draft remedies completely.

“As a minimum requirement, Google must hold all services, including its own, to exactly the same standards, using exactly the same crawling, indexing, ranking, display and penalty algorithms,” said one of the signatories, Helmut Heinen, president of the Federation of German Newspaper Publishers.

Feedback from the market test will be taken into account in the Commission’s final analysis. However, it is the Commission that Google’s remedies must satisfy, not any other party involved. If a solution isn’t found, the Commission could still fine the company up to 10 percent of its annual global revenue.

“As a minimum requirement, Google must hold all services, including its own, to exactly the same standards, using exactly the same crawling, indexing, ranking, display and penalty algorithms.” What exactly will that entail? We’ll find out since all signs coming out of the EU parliament right now are that Google’s searches are about to get regulated [64]. Will search regulations be limited to Google? With Google holding 95% of the EU search market share it’s hard to see other major competitors that are also in monopoly territory. So the scope of these new search regulation will be something to watch going forward in part because they might start off only impacting Google (and Google is easy to hate). But, with all European publishers pushing to get exclusive rights to commercially exploit their products online [11] and extract fees for headlines and snippets, we probably shouldn’t be surprised if this “regulated search” initiative doesn’t just include Google and if categories of media of that involve licensing fees expands beyond just the news.

What Other Types of Regulations Might Emerge? A Different Kind of Sharing Economy?
So some very big changes are coming for how the internet functions. Given Google’s gargantuan size and the profoundly scary amount of personal information the company is gathering on the global population it’s not as if a regulatory look at how a firm like Google handles are personal information and directs traffic across the web is inappropriate. But as we’ll see in this Out-Law.com [65] interview below, when Google’s industry rivals are basically writing the news laws regulating Google, maybe we shouldn’t expect all those new regulations intended to limit the collection and commercial use and abuse of private data to apply to the entire industry. Maybe we should expect the opposite result [13]:

Opinion on big data, privacy and competition may be latest marker in closer scrutiny of Google, says expert

A new opinion issued by an EU watchdog on ‘big data’, privacy and competition issues can be read as a “shot across the bows” of Google and other large technology players, an information law specialist has said.

01 Apr 2014

Lore Leitner of Pinsent Masons, the law firm behind Out-Law.com, said that data protection authorities (DPAs) in the EU are becoming increasingly frustrated with limitations to their ability to control Google’s power in collecting and using personal data.

She said, however, that the new preliminary opinion issued by the European Data Protection Supervisor (EDPS) has highlighted the potential for EU scrutiny of Google’s activities to shift from an assessment of whether the company is compliant with EU data protection laws to whether the way Google gathers and uses personal data gives the company advantages in a way that is in line with competition rules.

In his opinion, EDPS Peter Hustinx said that an investigation into the “costs and benefits” associated with the way companies often provide free services to consumers in exchange for the right to gather and use their personal data is “overdue”. He called for DPAs and competition regulators to work closer together so as to help “stimulate the market for privacy-enhancing services”.

Competition law specialist Sammy Kalmanowicz of Pinsent Masons said competition issues around how the use of personal data is controlled has been discussed previously at EU level, including when the European Commission assessed Google’s takeover of advertising business DoubleClick in 2008.

However, Kalmanowicz said he expects competition authorities to pay closer attention to competition issues as the need to analyse big data becomes a more prominent part of doing business. He said competition law could be engaged in a variety of ways.

“Regulators are likely to become increasingly interested in the way companies with significant market power use personal data and will be on the look out for activities that could be said to constitute an abuse of market dominance and thus a breach of competition rules,” Kalmanowicz said.

“In particular, the imposition of restrictions on rivals gaining access to consumers’ personal data is likely to be scrutinised closely as the data becomes an ever more important currency in providing better targeted services. Interoperability with competitors’ platforms and giving consumers the right to transfer their data to rival services [66] will become more important for major businesses as a result,” he said.

An abuse of dominance can occur when a dominant company refuses to supply or provide access to an essential facility. The expert said that businesses’ mere collection and processing of personal data may be scrutinised by competition authorities more closely in future “because big data may be considered an asset giving significant advantages”.

Kalmanowicz also said that competition authorities may also review how companies involved in potential merger deals can exploit the amalgamated personal data records and whether the advantages that can be accrued by the merged entity could raise barriers to entry in certain markets, including advertisement, technology and innovation markets.

“Information is power as services can be tailored better to consumers from analysing their personal data,” Kalmanowicz said. “Proposed merger deals may be affected if they lead to a concentration of a great volume of personal data or tools for analysing such information so that the merged company has significant consumer insights. In such circumstances competition authorities may, for example, require the data to be made available to rival companies if it is felt that such access is indispensible to ensure effective competition and innovation.

Well, at least according to the competition law specialist interview above, one of the areas the EU is probably going to be looking at in this era of overhauled data privacy rules is the possibity that major data aggregators, like Google, that gain competitive advantages by having so much different personal information on consumers might be required to make that data avilable to rivals if the data is deemed indispensable to competition and innovation:

Proposed merger deals may be affected if they lead to a concentration of a great volume of personal data or tools for analysing such information so that the merged company has significant consumer insights. In such circumstances competition authorities may, for example, require the data to be made available to rival companies if it is felt that such access is indispensible to ensure effective competition and innovation.

In other words, one of the models that’s being looked at for firms like Google that might grow too big for comfort (‘too big’ in terms of how much data they have on us) is to examine how how so much data creates new competitive advantages that make some data “indispensable” and “to ensure competition and innovation” those data giants might be force to make the data available to rival companies. So it’s sort of the opposite approach to the ‘unbundle and break up Google’ approach. Almost the exact opposite approach. It’s possible that the EU’s new data privacy regulations will ensure that whatever shared with rivals doesn’t create new avenues for abuse, but is that’s a realistic scenario given everything we’ve seen?

So it’s going to be important to keep in mind that the concerns over data privacy can be in direct competition with concerns over industry competition. Industry likes having more consumer data. Consumers don’t. Yes, competition concerns can be mitigated by actions like breaking Google up and forcing an unbundling of it’s services (since it’s the bundling that provides so much of the additional personal data). But those competition/anti-trust concerns can also be addressed by forcing Google to share its information with competitors if that information is considered necessary for competition.

And which approach is more likely now that we’ve seen how the publishing industry and other Google rivals are clearly influencing the regulatory/legislative agenda on this topic? Less data collected for Google or more data shared by Google? Or why not both? Couldn’t we see both a push to break up/unbundle Google in Europe and attempts to force Google to share its customer info with rivals? Given the rapidly changing attitude to Google in Europe it sure seems possible.

Isn’t This All Alarming?
Given that we’re now looking at a new EU-level internet regime that might grant publisher such exclusive rights over their online content to extract fees for headlines and snippets, and given that Google’s search algorithms could be regulated and it could possibly be forced to give “indispensable” data to rival firms, it’s becoming clearer and clearer that some potentially scary new laws could be in the works that sort of trashes the internet. Google-bashing is fun and healthy, but Google-bashing at the behest of a coalition of international publishing giants that are just out to increase their own empires is dangerous. Especially if it involves new policies that extent beyond Google.

Just imagine how that would change the internet if an international legal framework was set up that made it really easy for websites to charge you for linking to their site with a little blurb. Because there’s no way this is going to be limited to Google/Microsoft/Yahoo. Isn’t creating a framework where everyone, big and small, has to pay publishing giants for even the smallest bit of content basically the dream of publishing giants? So shouldn’t we expect an extended push get sites much smaller than Google to be forced to pay these snippetting fees too? That’s obviously the dream and the publishers are obviously in the legislative drivers seat with Germany, France, Belgium, and Space already passing headline/snipper fee legislation. So why isn’t this a sign of things to come for everyone?

Isn’t this one of those potential nightmare corporate initiatives that people should be starting to freaking out about? Just imagine how lame making web content would get if the websites you link to with a snippet can come asking for a chunk of your revenue stream. Content producing media giants might LOVE that particular world but is it really good for everyone else? It’s the digital playing field of dreams for Axel Springer: if you build [that legal and technical [67] framework] Axel Springer will come [and ask for a cut of your revenues if it’s an option [59]]. Sorry poor websites. No link-blurbs for you. Media giants should LOVE that world [68] but what about everyone else?

Society needs to figure out how to drive more revenues into the hands of small and mid-sized content producers, not just the media giants although even the giants are dying these days. So something clearly needs to change in terms of how content producers are paid for their work, big and small. It’s a serious crisis since society is just gets more insane the less quality news society consumes. But is the Axel Springer plan that obliterates fair use and places a cost of cross-site linking really going to do anything for the small and mid-sized content producers and really save the internet from the corporate giants? Are the non-huge content producers all going to be getting revenues streams from Google and other sites in some systematic way? Maybe Google, with all its traffic info, can get into the fee collection business for all the small-time content producers that need to extract fees from all the small to large search/aggregation sites. For a fee, of course. Linking could get commercialized fast if the the giants get their way.

And if the framework is set up to make the ‘Google tax’ available for all the little guys (which is only fair) won’t that same technical/legal framework that allows a large number of participants to monetize a single site’s link traffic/snippets now be in place to apply to a much larger group of websites having to pay those fees? And how broadly will the ‘news aggregators’ license fees apply? Will big forums like Daily Kos and Free Republic get charged by EU publishers in a few years? Drudge presumably will fall under the ‘news aggregator’ which could be hilariously disasterous for US/EU relations if the ‘Google tax’ on Drudge turns the right wing blog-o-sphere against the EU (since the US right-wing has been unusally silent in its Europe bashing ever since the austerity-regime took over).

So the monetization of linking and snippets just might suck for almost everyone. Small and mid-sized websites might have to pay all link/snippet fees and change their structures and code to adapt to the new legal framework. And small and mid-sized content producers are likely to get a raw deal out of any general compensation framework. Or maybe sites will just stop linking to EU news which doesn’t help anyone.

Maybe it will turn out differently. Maybe a robust, populist legal framework that prioritizes the small and mid-sized content producers and eliminates the impact the small and mid-sized websites that might otherwise be taxed. But it sure seems unlikely that Axel Springer and its coalition partners driving this movement are going to voluntarily limit their potential customer fee base to Google and the other giants. There are a whole lot of smaller websites that could be called ‘news aggregators’ out there in internet land and those definitions can be changed. What won’t be changed easily once it’s set up (or ignored easily), is an international framework for automatically levying these fees.

Recall the words of the EU competition minster Günther Oettinger [14]:

“We are seeking unified data protection across Europe, one which American companies will have to abide by as well. If this is not the case there is scope for punitive measures and fines,” the digital economy commissioner warned. On the copyright question he also said, slightly mysteriously: “We want European copyright legislation and we want companies like Google to adhere to European copyright standards. We have the legal jurisdiction for this and we want to bring a degree of fairness into the relationship between the users, Google and its competitors.”

“A degree of fairness into the relationship between the users, Google and its competitors” sounds nice, but keep in mind that balancing “the relationship between the users, Google and its competitors” isn’t going to be an easy or straightforward process since the interests of Google’s competitors and the interests of its customers are often in direct conflict with each other. It’s not just “Google vs the consumer” and “Google vs its competitor” that we have to worry about. It’s also “Google’s consumers vs Google’s competitors” and it’s not at all clear that the solutions being proposed by Google’s industry competitors aren’t going to be wildly in favor of Google’s competitors over everyone else.

If Google was a person it would be a shitty, manipulative person like almost all large profit-oriented corporations [69], but Google’s corporate competitors are going to be awful too. That’s one of the meta-problems of the day. So it’s not a bad sign to see a mega corporation like Google get reined in, especially these days when corporate giants are have basically unchecked power in the world. And the open question of how society should best deal with mass data aggregators like Google is a fascinating one that’s going to be asked over and over as time goes on. Similarly, the question how best to save the news industry from the unrelenting pressures the digital landscape and pay journalists is also going to be asked over and over (hint: society would read the news more if people it worked less [70] and were paid more so let’s all support working less for a hopefully [71] saner society).

But it’s a really bad sign that slaying the Google Dragon is being done by a coalition of publishing giants that clearly want to use this ant-Google campaign as a trojan horse for laws [8] that would add licensing fees for “individual words or short excerpts” of third party content [53] and it’s going to be even worse if this same corporate coalition that’s trying to make Google get regulated “like a utility” also manages to force Google to share information with rivals deemed “indispensable”. And yet, since the EU parliament suddenly made it clear that very big changes for Google are coming and the EU industry is probably going to be writing the new rules, crazy possibilities like the forced sharing of Google’s consumer data could now be on the way [13].

If Axel Springer’s industry coalition is the knight that slays the Google Dragon [8], the new post-dragon era of peace and prosperity in the Kingdom of the Internet might give the internet more of a fascist feel [72] than one would have hoped for. That’s what happens when the publishing industry writes the copyright laws and right now it’s looking like the European publishing industry is poised to write EU copyright laws for the internet, a global platform. As much as Google sucks, it’s just one part of the problem when it comes to the corporate abuses our digital selves. There are other parts of the problem, and those other parts of the problem have their own solutions they would like to see implemented like headline and snippet licensing. If the Google Dragon is going to be slain, the dragon’s spoils [1] can either be shared amongst its competitors or shrunk entirely for everyone else’s sake. Google’s rivals clearly want to share in the spoils that come with slaying the dragon. Beware of dragon slayers bearing death certificates for the “fair use” angels too. Those kinds of brave corporate-techno-dragon slayers might be carrying beasts of their own. Be afraid, be very afraid [73].

It’s too bad society is so captivated by evil dragons and their highly questionable slayers. An obsession with ducks would have been a lot healthier. [74]