It's being called the “Google tax.”
A report commissioned by the French government and released this week suggests slapping a tax on the online ad revenue of the Web giant and of other major Internet portals. The purpose? To finance France's ailing cultural institutions, which the government believes are being hit hard by illegal downloading made possible in part by the search services of companies such as Google GOOG-Q .
Critics panned the proposal as a lazy reaction to innovation in the digital age. But it's France's answer to the same question that is being asked in array of industries ranging from news to telecom, books and music: What do you do when Google comes along and changes everything?
A decade ago, the Web company made its name by helping people find things on the Internet. But Google no longer believes the future of the Web is on the personal computer. Instead, the company predicts most people will soon be connecting to the outside world through mobile devices. If that prediction is right, it means that's where advertising dollars are going too.
Today, Google is expanding into more areas than at any time in its history: smart phones, e-readers, operating systems, on-line stores. Its unveiling this week of the first Google-branded phone running on the Android system, the Nexus One, was just the latest such expansion.
And in almost every sector it touches, Google is disrupting the ecosystem, creating a new wave of winners and losers in its wake.
No doubt Google benefits from the ability to index lots of high-quality information – news or otherwise. But the other part is the value we deliver for publishers: Just in traffic alone, in any given month, Google News sends a billion clicks to publishers worldwide. — Josh Cohen, Google News
THE FUTURE OF NEWS
In the battle between News Corp. and Google over the future of digital news, Josh Cohen comes armed with the persuasive power of billions of eyeballs.
Of course, the senior business product manager at Google News doesn't frame the tirades that News Corp. chairman Rupert Murdoch has unleashed against Google as anything other than a continuing conversation between friends. But when he talks about Google's effort to act as a one-stop hub for the world's news, Mr. Cohen emphasizes that publishers are getting something out of it, too.
“No doubt Google benefits from the ability to index lots of high-quality information – news or otherwise,” he says. “But the other part is the value we deliver for publishers: Just in traffic alone, in any given month, Google News sends a billion clicks to publishers worldwide.”
Rupert Murdoch— Kevin Lamarque/Reuters
The tensions between the Web giant and Mr. Murdoch heightened last month when the media mogul accused Google of stealing information – and revenue – from his company's many news websites.
“Our customers are smart enough to know that you don't get something for nothing,” Mr. Murdoch told the U.S. Federal Trade Commission.
“And yet there are those who think they have a right to take our news content and use it for their own purposes without contributing a penny to its production.”
There's more at stake in this battle than Mr. Murdoch's threat to have his news sites – including such heavy-hitters as Barron's and the Wall Street Journal – removed from Google's search engine. The news industry represents a prime example of a sector where Google's innovation has changed the entire landscape. While several news outlets, including The New York Times and The Washington Post, have embraced Google's news services as a means to survive, others still believe the search engine is engaging in little more than high-tech theft.
Some newspapers have focused on beefing up their digital offerings in order to better compete against myriad blogs and other Web outlets, while others have also turned a critical eye to where many of those Web outlets are getting their news in the first place.
