Google's 'link tax' negotiations break down as France talks tough over new laws

Negotiations between Google and French media companies seem to have ground to a halt, while a government enquiry has came up with a fresh idea: tax big online companies based on the user data they collect.
Written by Valéry Marchive, Contributor

Negotiations between Google and French media companies over a so-called "link tax" have come to a standstill, according to the French newspaper Le Monde.

Last autumn, Google's executive chairman Eric Schmidt met with the French president François Hollande to discuss the "link tax" — an idea put forward by French newspaper publishers that would see the search giant having to pay the media companies for linking to their stories in Google News. Hollande initially called for an agreement between the two parties to be found by the end of December.

That deadline has since been postponed till the end of this month, but an agreement seems unlikely: Le Monde reported on Friday that Google offered to pay an annual contribution to the media companies of €50m, only a third of which is guaranteed — the remainder will depend on how Google's bottom line fares that year. For their part, the publishers are looking for Google to dig deeper, and are seeking a stipend in the region of €70m and €100m per year.

"I don't know if Google really wants to find a resolution," an editor present at the discussions said, according to Le Monde.

Aurélie Filippetti, French minister for culture, predicted earlier this month that the disagreement would be solved quickly, before the government's deadline of the end of January — on the grounds that, should an amicable arrangement not be found, the government would begin passing laws to solve the issue instead. Last week, Hollande confirmed that "a legal or tax measure will be taken" to force Google and others who similarly "profit from information" produced by the French media to contribute to their financing. 

A government enquiry set up to look into the issue of taxation and the digital economy — called "Colin et Collin" after the two civil servants appointed last July to lead it, Nicolas Colin and Pierre Collin — published its conclusions late last week, and could provide hints as to what "legal or tax measures" the French government may take.

Colin and Collin chiefly focus on what they see as the core of the digital economy: the data produced by internet users, willingly or not. The pair suggest the creation of a new tax (PDF) based on the data collected "to regularly and systematically monitor users' activities in a given area," such as a country.

And, in order to limit the extent of tax optimisation practices, the enquiry calls for a change in the way European income tax is administered, especially the way the head office of a company is defined "to link it to the data coming from end users' 'free work'"; that is, content produced and provided for free to online heavyweights like Facebook or Pinterest by their users.

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