June 30, 2014
Several of Germany’s leading publishers recently initiated legal action against Google claiming a share of Google’s gross sales revenues. They claim that they are entitled to a portion of the revenues as Google makes money from providing public access to excerpts of the publishers’ content. This action is one of several legal challenges faced by Google in Europe, and it has significant potential impact on the company and other online service providers.
Major German publishers including Axel Springer and Burda initiated an arbitration proceeding in Germany against Google. The publishers claim that Google derives substantial advertising revenue from its use of the publishers’ content. They allege that, by making excerpts from the online versions of newspapers and magazines available, Google attracts consumers and is able to command advertising fees as a result of that online traffic.
The publishers seek a share of Google’s gross advertising revenues. More specifically, they claim that they are entitled to eleven percent of the revenues Google obtains as a result of use of the publishers’ online content.
The claims raised by the publishers are not new. There has been a long-standing debate between Google and content providers regarding the extent to which those content providers should be compensated in return for access to their materials. Content owners claim that Google enriches itself by selling advertising based in part on the traffic it attracts based on their content. Google argues that by providing access to the content it increases the value of the content for the owners and it attracts more customers for the content owners.
If Google is required to share a substantial portion of its revenues with content owners, Google’s business model will be significantly disrupted. If print publishers are entitled to compensation, it would seem that providers of all forms of content could make similar claims against Google.
This case also illustrates the increasingly challenging operational environment for Google and other online services emerging in Europe. Google has recently encountered a variety of legal initiatives in Europe that can notably complicate its operations. An example of the increasingly complex European environment is the Spanish court order permitting individuals who are the subject of misleading or outdated online content to petition Google requesting that the links to such content should be removed.
The action by the German publishers has significant potential impact on Google’s business. It is also important as another illustration of the apparently growing resistance Google faces in Europe. It seems increasingly clear that Google and other online service providers are viewed significantly differently in different countries. The global nature of the Internet means that all of those different viewpoints are significant and must be effectively addressed.