Google seals 'link tax' deal with French publishers with €60m fund

Google and French publishers have finally reached an agreement: the search engine will contribute €60m to a fund designed to help them adjust to the digital age.

After months of negotiations, Google has finally come to an agreement with the French government over the so-called 'link tax' .

Google's chairman Eric Schmidt announced in a blog post on Friday that the company and French president François Hollande had agreed two initiatives "to help stimulate innovation and increase revenues for French publishers".

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Taxing times for Google as France turns up the pressure

This week Google executive chairman Eric Schmidt met with the French president François Hollande. On the agenda: the subject of a 'link tax' and, reportedly, how much the search giant contributes to the country's coffers.

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The initiatives will see Google establish a €60m "Digital Publishing Innovation Fund to help support transformative digital publishing initiatives for French readers", as well as work with French publishers to "help increase their online revenues using our advertising technology".

According to the French newspaper Le Monde, the Digital Publishing Innovation Fund will be aimed at newspapers that have an online presence, although "pure online players" will also be eligible for financial support even if they have no print activities. No more details of the nature of the agreement have been made public.

The announcement comes just weeks after negotiations between Google and French media companies over the link tax appeared to have ground to a halt . The link tax was a idea proposed by newspaper publishers that would have seen the search giant having to pay for linking to their publications' stories on Google News. Hollande had initially called for the two sides to find an agreement by the end of December. Despite missing the deadline by over a month, the Google and the publishers have now reached an accord.

So far, it seems to be a good deal for Google: by reaching an agreement, the company has been spared the prospect of the French government introducing a law that would make the link tax mandatory. It's an idea that has found favour elsewhere in France's creative industries: representatives of the French music industry recently called for a tax that would allow them to collect part of the revenues generated by search engines linking to their content. 

But this agreement won't solve all the problems the French media industry faces. According to Louis Dreyfus, president of the executive board of the French newspaper Le Monde, it "has come at the right time for the weakest daily newspapers and small magazines... But it doesn't change the media business model and those who rely on government support to avoid failure are wrong. The media will only be able to count on itself and on the renewal of its offerings."

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