“We are afraid of Google. We are forced to cooperate with it to survive, but we are afraid of it.” The shocking confession of Matthias Deppner, CEO of the German publishing group Axel Springer, in an open letter published in the Frankfurter Allgemeine Zeitung, stirs up the debate about the omnipotence of the Internet giant. Not only because the word “fear” does not exist in the vocabulary of “players” as powerful as Deppner, but because it symbolizes the clash between the old and the new order in the flow of information.
For decades, the Springer group (which publishes Bild, the largest newspaper in circulation in Europe, Welt and owns dozens of print and electronic media) represented “evil” in the eyes of some, as a pillar of the “information system” in a country where publishers remain comparatively robust, informing 80% of the public over the age of 14 every day through their print and electronic products. Simply put, never before have they faced such sweeping competition. The giants of the digital age, led by Google of course (and closely followed by Facebook, Apple, Amazon), do not simply dominate the markets: they deregulate them.
Some took Deppner's letter to Google's Eric Schmidt as a sign of serious concern, others as an admission of defeat. It is certainly the first time that such a "big fish" of the media has publicly asked for protection from being swallowed by a "whale" of the digital age. The problem, for better or worse, is that he is right.
The "Big Brother"
When Döpfner says that Axel Springer is David and Google is Goliath, he is right. When he compares the speed and reach of the spread of Internet behemoths to that of an aggressive virus, he is right. He rightly states that the freedom that Google provides to users or content producers who do not approve of its methods to turn their backs on it is as utopian as telling an opponent of nuclear energy that he must live without electricity. When he accuses Google of “sitting round on the treasure trove of humanity’s data like the giant Fafner in Wagner’s operas, he is not far from the truth. His fears that all of its investments and future plans (from home technology and driverless cars to floating facilities in international waters) portend a dystopian future, where Google as a super-state will oversee every aspect of our lives, are well-founded. And his claim that the argument “he who has nothing to hide has nothing to fear” is a reference to the Stasi is logical. “Only dictatorships prefer to have transparent citizens to a free press,” he says.
Unmanageable size
Döpfner is not a technophobe – quite the opposite. 62% of his group’s revenue already comes from digital media and he is determined to expand that share. But he is also a sharp manager who knows how to read numbers. Google has a 92% share of search engines in Germany – even higher than in the US. Google “sends” 10 billion visitors a month to content producers around the world. When Google decided to change one of its algorithms, traffic to the website of an Axel Springer subsidiary – coincidentally a competitor to its own services – fell by 70%. With a market capitalisation of 350 billion euros, revenue of 60 billion and profits of 14 billion euros in 2013, Google is 20 times more profitable than Axel Springer. "Google is to the Internet what Deutsche Post or Deutsche Telekom were to the era of state monopolies. In fact, it is a global digital supermonopoly," he says.
The problem, according to Deppner, is that Google invokes freedom on the Internet and the interest of the user, whom it naturally has the technological infrastructure to "file" – from which websites they visit to what they write in their professional or personal emails. The problem is how it manipulates search results, displaying first websites of its own interests, regardless of whether they are better or more popular. The problem is the arrogance and cynicism with which Google, through Eric Schmidt, proclaims: "We know where you are, we know where you went, we can know more or less what you are thinking". The main problem is that the European Commission's Competition Commission is watering down its wine and is oriented - according to him - towards a compromise with Google, which will simply ensure its competitors privileged advertising space on its results pages: if they want to appear, they will have to pay.
"We are obligated to cooperate with you, but we are not talking on equal terms," admits Deppner, noting that without a legal arsenal, Google's power and size are unmanageable.
This was clearly admitted by members of a British Parliament committee in a report last September on the “Creative Economy”. They directly denounced that Google has an open channel with Downing Street, that it “gifts” British intellectual property and enriches itself from advertising, that it continues to direct users to pages that violate copyright law… “The problem is that Google has become so big and so powerful not only for the British, but also for the American government,” they conclude. “What can we, as legislators, do to help trapped users?”
The answer is not simple, since users do not perceive the problem: Google services are so easy, convenient, and helpful that the general public consumes them without caring (or ignoring) that the price is their potential “file.” The most serious legislative effort to date has mainly concerned the protection of publishers from plagiarism: last year, around this time, the previous Merkel government passed the so-called “Google tax” – a much-criticized bill that banned the free reproduction of journalistic content and in which Axel Springer had taken the lead. However, the bill was cut at the last minute, exempting “short excerpts” of articles from the obligation to pay copyright fees, without clearly defining how “short” they had to be (one word? a headline? half a paragraph?) and remained inactive in practice, because no publisher can be deprived of the traffic that Google ensures. In short, no European law obliges it to pay for the third-party content that it reproduces and distributes.
"Why are you fighting us?"
One of the most well-known American analysts of the digital economy, Jeff Jarvis, who has been invited to speak at conferences by both the Springer Group and Google, faced the "attack" of German publishers with irony: They are looking for someone to blame for all their problems, they are pursuing state protectionism and undermining Germany's efforts to establish itself as a country of innovation, they are reminiscent of children in a kindergarten playground who think they are being unfairly treated in a game and run after the teacher's skirt - some of what he wrote.
Google, however, denies that it plays the role of a “schoolyard bully.” In his original article in the FAZ, which prompted Döpfner’s letter, Eric Schmidt asks the question “Why are you fighting us?” and essentially identifies his company with “the magic of the Internet, which gives each of us immediate access to information that was previously difficult to find.” Compromising and down-to-earth, although from a position of strength, he cites numbers (the Internet has contributed 25% to the growth of German exports in the last decade; Google products alone have helped to establish approximately 28,000 small German businesses between 2007 and 2011, contributing €8 billion to GDP and 100,000 jobs; in 2013 alone, Google has returned €7 billion in advertising revenue to its partner publishers, and so on). "Work with us and you will win, we are ready to respond to your concerns," he says. Omitting, of course, the phrase "if you can, do it differently.".
The French "Resistance"
Nikos Smyrnaios, associate professor of political economy of the media at the University of Toulouse, has been researching the subject for a decade. The key word he repeats in our telephone conversation is deregulation. “Companies like Google have created an oligopolistic network, economic and technological, by installing themselves at the most strategic point: between content providers and the public. In order to access information, we are forced to use their services. The balance of power is in their favor and against traditional “players” in industries like mass media,” he says. “The question is how strategic intermediaries operate in a completely deregulated context, where there is no law outside the US to which they must obey. They impose their rules on how information is shaped to circulate through their channels, while at the same time retaining a very large part of the surplus value created by content producers, putting their very existence at risk. The glaring example is tax avoidance techniques – in France, Google paid 2% of its turnover.” Last March, tax authorities raided Google’s offices in France to leave a hefty “bill” of one billion euros in unpaid taxes. “It will be interesting to see how this case develops,” Mr. Smyrnaios points out.
Ten years ago, he recalls, he would have been looked at as an alien when he brought up the issue. According to him, it is positive that the discussion has begun – he sees this from the interest his students show when the omnipotence of the Internet giants is raised, a phenomenon that has no historical precedent.
“Their role, their oligopolistic nature, their rights and obligations must be examined from the beginning. The issue does not only concern the media. So far we do not know how much the Commission has the political will to impose barriers. Alternative solutions always exist – what does not exist is education and awareness of the issue.” In France, at least, the debate has matured. Already in 2002, when Google launched its news service, publishers saw the threat and began to press – sometimes for the rationalization of search results (they succeeded), sometimes for a law to safeguard their revenues (they failed).
In 2013, in a key development, they reached a settlement with Google, which agreed to pay the sum of 60 million euros over three years, into a special fund “for the strengthening of the online presence of French publishers” (a similar agreement, for a much smaller amount, had also been made in Belgium). And in this case, the settlement was made on Google’s terms – in the form of a donation and not a legal obligation, so as not to create a res judicata. “Perhaps the Germans are now pushing in this direction,” speculates Mr. Smyrnaios.
