Major Spanish publishers might have snagged a legal victory over Google with the passage of a law that required news aggregators, the biggest of which is Google News, to pay all publishers big and small fees for publishing thumbnails and snippets of their content, whether publishers liked it or not. That victory, however, is quickly proving to be an empty one.
Following the law's passage, which was hugely the result of lobbying done by the Spanish Newspaper Publishers' Association (AEDE), Google announced that it will have to close down Google News. The search company believes having to pay royalties to Spanish news websites with links to their stories published on the website every day is an unsustainable business model because Google does not make money from Google News.
As of press time, the Spanish Google News website is still available. However, instead of the usual lineup of the day's hottest news stories, Google has published an explanation as to why it decided to shut down the service in Spain.
"Sadly, as a result of a new Spanish law, we had to close Google News in Spain," says Google. "This legislation requires every Spanish publication to charge for services like Google News showing even the smallest snippet from their publications. Whether they want to or not. As Google News itself makes no money (we do not show any advertising on the site), the new approach was not sustainable."
The AEDE responded by asking the Spanish government to intervene against Google shutting down, saying that Google's decision "will undoubtedly have a negative impact on citizens and Spanish businesses."
"Given the dominant position of Google (which in Spain controls almost all of the searches in the market and is an authentic gateway to the Internet), AEDE requires the intervention of Spanish and community authorities and competition authorities to effectively protect the rights of citizens and companies," AEDE spokesperson Irene Lanzaco told The Spain Report.
Lanzaco also said that the publishers have always been "open to negotiations with Google" and that they were not asking Google "to take a step backwards," but the search company, which owns a whopping 90 percent of the market share in Europe, "has not taken a neutral stance."
The effects of Google News closing down in Spain could be felt by the publishers right away. Although AEDE director José Gabriel González told the Wall Street Journal that the group's member publications received only five percent of their traffic from Google, data from real-time analytics firm Chartbeat says otherwise. Chartbeat tracks around 50 Spanish websites and says that the number is enough to evaluate just how big of an impact Google's pulling out has on the websites.
Chartbeat chief data scientist Josh Schwartz says Spanish media websites saw their external traffic drop by 10 to 15 percent just hours after the removal of the Spanish publishers from the service, indicating that Spanish news publishers receive more traffic from Google than González claims. The data is inconclusive, though. As Schwartz points out, the early figures are a "correlation and not causation."
"We'll have a better read on whether there's a consistent trend with a few more days to check things out," he said.
Caught in the middle of the legal hullabaloo are the small Spanish publishers, which are classified as "electronic news aggregation systems" by the new law and have been most vocal against it. Spanish social news aggregator Menéame, a software-based aggregator similar to Digg and Reddit, said it is considering moving its business out of Spain.
Although the Ministry of Culture has specified that social networks will not be affected by the new law when it comes into effect next year, Menéame co-founder Ricardo Galli says the company is "completely lost" and "in a state of judicial insecurity."
"There's been a lot of alarm about us disappearing and we've received a lot of help and proposals to set up Menéame in other countries," Galli said. "There's a risk but the probability of us disappearing is minimal."
Spain must not have learned from a very similar situation in Germany, where instead of shutting down Google News, Google gave the publishers what they asked for: remove the links to their websites if Google refused to pay for providing them a free marketing venue.
Just two weeks after Google gave in to the publishers' demand, German media heavyweight Axel Springer asked that Google News bring back its links, saying that it would have "shot ourselves out of the market" if it continued to stop Google News from publishing its snippets while using the opportunity to call out Google's compliance with its demands as a revenge of sorts. Google agreed but on the condition that publishers waive all rights to a fee to be included in Google News.
"As sad as it is, at least now we know precisely how enormous the consequences of discriminating are, how Google's market power really plays out, and how Google punishes those who exercise the right to protect content," Axel Springer CEO Mathias Döpfner said at the time.
By pushing for fees as an "inalienable right" for all publishers instead of something that can be waived as the German publishers did, Spain assumed it was outsmarting the search company when, in fact, it's hard, possibly impossible, to out-Google Google.