The Friday Roast - the nutty Spanish Google tax

Profile picture for user gonzodaddy By Den Howlett July 31, 2014
Summary:
The ill thought out Spanish Google tax could lead to a loss of €1,1 billion annually. Do legislators realize this or are they blindly caving into media interests?

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‘The Friday Roast’ talks to topics that represent recurring themes in technology implementation, deployment and ongoing operations. They are aimed squarely at de-fluffing, de-cruffing, de-mystifying or just downright flaying of topics that line of business managers and IT often find annoying.


The Spanish Google tax is one step closer to becoming law. It is a bad idea.

In the second of my The Friday Roast series, I'm aiming my guns at the Spanish lunatics who are creating legislation designed to tax pretty much any digital media property that uses aggregated material. It is the so-called Spanish Google Yax. The source for this story comes from Julio Alonso, owner of Weblogs SL, one of the most popular digital media groups in Spain.

Alonso is someone I met back in the early days of blogging. He is very popular among the Spanish interwebs and respected among the international community of digital media providers.

In an article entitled: The Story of Spain’s Google Tax, Alonso points out:

As has happened elsewhere, France, Belgium and Germany come quickly to mind, Spanish newspaper editors have been arguing for long that Google is taking unfair advantage of them. They say that Google is using their contents on Google News without any retribution and have long being lobbying the Spanish government on it. Now it seems like they are going to get away with it.

Last February Canon AEDE, Spanish for the Google Tax pushed by AEDE, the Spanish newspaper association that represents the largest newspapers, got included by surprise in the Governments’ Intelectual Property Law Reform Proposal. This reform was on it’s own already very controversial and had been much criticized by the Spanish internet community.

Last week (July 22nd 2014), the proposal was passed in the Congreso de los Diputados (low chamber in the Spanish two chamber system) and it will most likely be passed in the Senate in September and turned into law.

What makes this piece of legislation unusual is that Spanish legislators have made the right to tax an inalienable right. Unlike in Germany where similar legislation was passed, there is no opt out by the media groups who say they are affected by Google or other media aggregator activity. They cannot as in the case of Germany, offer Google and others an exemption.  This is how Alonso phrases it:

The Spanish law proposal declares that editors cannot refuse the use of “non-significant fragments of their articles” by third parties. However, it creates a levy on such use to compensate editors and declares it an inalienable right (derecho irrenunciable).

Most commentators believe that if this law comes into force then Google will simply stop operations in Spain. That in turn will mean that none of the Spanish news operator with a digital presence like El Pais will appear in Google search. But it is much worse than this.

...the tax is not even aimed only at Google. It is aimed generally at “electronic news aggregation systems”, and, therefore it includes basically anyone who links with anything more than an anchor text. Center on its target is Spanish aggregation site Menéame. A Spanish free software based version of Digg/Reddit launched in 2005, Menéame is a very popular destination for news discovery in Spanish.

There is plenty of vocal opposition to the Spanish Google tax. Carlos Fenallosa describes the legislation as 'immoral and vomitive.'  Marilin Gonzalo sees a more sinister aspect to this issue:

All the internet community is against it but it seems we are not being heard, as the mainstream print newspapers stand to benefit from this new law, and won't publish news about it.

A coalition of organizations opposed to the new law estimate the damage to the Spanish internet economy will run €1.1 billion annually. That is a huge chunk of change for a country already ravaged by recession and where unemployment rates, especially among the young, are north of 50%. I've seen first hand what this means.

AEDE impact
Impact of Spanish Google Tax

I've seen towns where the young people have melted away, some going abroad, some attempting to eek out a living on the costas, still others returning to their parents' houses as they cannot afford to live independently. Most recently, one ex-pat business owner told me that if it wasn't for the fact they have a decent second hand furniture business, their main ex-pat aimed goods shop would close. He said the ex-pat community is fast disappearing in his town.

None of this surprises in a country where the answer to Spanish economic woes is to tax everything and anything that hasn't already been taxed - sometimes retrospectively. The most recent attack on drivers is a perfect example where exceeding the speed limits by 1kph results in swingeing fines.

It therefore does not surprise to discover that Telefonica, the Spanish equivalent of Ma Bell cynically avoids investing in telephony infrastructure in all but a handful of large cities. Instead, it seems content to tinker around the edges while the majority of the population languishes with one of the slowest and most expensive DSL services in the EU.

It strikes me as absurd that a country with so much to offer and the potential to lift itself out of the rut, consistently finds ways of making it more rather than less difficult to do business.  This is but one example of that crazy thinking in action. What was once a benign democracy has become a place that seems intent on defending the indefensible.

Despite my thoughts on Google having a brilliant business model, the net good of being able to freely link and fairly use content wherever it arises is something that feeds those who want to learn, those who seek and those who wish to use Google's power to surface their stories. Imposing a scatter gun Spanish Google tax will drive Google and many others out of the country. This article would be almost impossible to construct without that ability.

If powerful media interests remain successful in muzzling opposition and politicos remain reportedly barely aware of the legislation's potential impact, then it will be no surprise if this ends in tears. Spanish legislators cannot prevent external commentators and observers like me calling them out for what they really are - a bunch of ill informed nut cases.

The Spanish Google tax must be stopped. The question is, how?

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