The Autorité de la concurrence fines Google € 500 million for not complying with interim measures in neighboring rights case

Today the French Autorité de la concurrence (the “Autorité”) handed down a damning decision finding that Google has failed to comply with an earlier interim measures decision adopted in April 2020 with respect to press publisher’s neighboring rights. The Autorité fined Google € 500 million and ordered Google to comply with its interim measures on pain of a daily penalty payment of up to € 900 000.

This decision is particularly significant as it is a total repudiation of Google’s strategy of luring news publishers into signing up its new Showcase product in return for a small sum of money and abandoning all claims they had as per their neighbouring rights under the Copyright Directive as transposed in national law. This was a trick used by Google for effectively not compensating the use of their content by its search engine, something they have always refused to do on the ground that they owe nothing to the publishers.

This decision could have wide repercussions in the EU (and beyond) as Google’s Showcase strategy is not limited to France; it is global.

The background to the case

The case concerns Google’s dispute with French publishers for remuneration of their copyright-protected content, following the transposition of Directive (EU) 2019/790 (the “Copyright Directive”) into French law in 2019. France was the first Member State to transpose the Copyright Directive, which creates a new neighbouring right in favour of press publishers. In response to the French law, Google made it clear it would not pay for publisher protected content, effectively giving publishers two choices: either grant it a royalty-free license to reproduce their protected content or grant no license, in which case Google would not display the protected content in its Search Engine Results Pages. The vast majority of publishers eventually authorized Google to display their protected content without any remuneration, while those that did not suffered significant traffic losses.

In a decision in April 2020 (see here for a summary), the Autorité took the preliminary view that Google’s conduct was likely to amount to an exploitative abuse of its dominant position in general search. At the heart of the Autorité’s reasoning lay the fact that the French law transposing the Copyright Directive has as its objective to restore the balance of power existing between digital players and media operators by redefining the share of value in favour of the latter. Google tried to circumvent the law by placing publishers in a catch 22 situation.

The Autorité then imposed on Google a series of interim measures. Among others, Google was ordered to:

• enter into good faith negotiations with publishers that so desire over remuneration for their protected content (injunction 1) for a period of three months from the request of the publisher (injunction 4) ;
• communicate the information necessary for the transparent evaluation of the remuneration due (injunction 2);
• ensure strict neutrality during the negotiations, so as not to affect the indexing, ranking and presentation of the protected content included by Google on these services (injunction 5); and
• ensure strict neutrality of the negotiations on any other economic relationship between Google and publishers (injunction 6).

[Note: Google appealed the decision, but the latter was upheld by the Paris Court of Appeal in a ruling dated October 8, 2020]

However, as the Autorité found, for the most part Google refused to separately negotiate with publishers over remuneration for the inclusion of their protected content on its existing services. Rather, Google systematically steered the negotiations towards the conclusion of a global blanket license agreement, the subject matter of which is a new service called “Showcase,” which imposed new obligations on publishers.

Following fresh complaints from press publisher associations that Google did not comply with the interim measures, the Autorité launched an in-depth investigation. It eventually found that Google has violated in numerous respects several of the injunctions, and in particular the most important one, injunction 1.

Injunction 1

Google did not comply with injunction 1, according to which it should have entered into good faith negotiations with publishers, in that:

• Google unilaterally imposed that the negotiations should focus on a new Showcase service, in which the neighboring rights for the current use of protected content were only an accessory component without any distinct financial valuation;
• Google refused to negotiate with press publishers that do not have a Political and General Information certification, in what the Autorité describes as a deliberate circumscription of the law’s scope of application; and
• Google refused to negotiate with press agencies over remuneration for their copyright protected content.

Injunction 2

Google did not comply with injunction 2, in that it only provided information that was partial, late, and insufficient to allow the publishers to establish a link between Google’s use of protected content, the revenues it earns from it and its remuneration proposals.

Injunction 5

Google violated the obligation of neutrality with respect to indexing and ranking, in that it linked the negotiation for remuneration for the current use of copyright-protected content to the conclusion of other partnerships that could have an impact on the display and indexing of the content of publishers.

Injunction 6

Google violated the obligation of neutrality with respect to other economic relationships, in that it linked discussions about possible compensation for current use of copyright-protected content to discussions about its new Showcase service. The Autorité noted that Showcase is not limited to a new format for displaying protected content, but constitutes a new service, which did not exist at the time of the adoption of the interim measures, and which is based on new obligations placed on press publishers.

Google was also able to link participation in the Showcase program to the Subscribe with Google (SwG) service, which translates to additional benefits for Google, as the SwG service results in Google taking a percentage on subscriptions.

Very serious violations

The Autorité’s press release uses very strong language. It notes that Google’s practices are exceptionally grave, and states that Google’s behavior is part of a deliberate, elaborate and systematic strategy of non-compliance. Google’s negotiation strategy in France was considered part of a global strategy, aimed at:

• avoiding or limiting as much as possible the payment of remuneration to publishers;
• using the Showcase service to resolve the fundamental debate on the recognition of specific rights to publishers for the reproduction of press content; and
• using the negotiations to obtain the production of new content by publishers (via Showcase) and the subscription by the latter to the SwG service, which allows Google to collect additional revenues.

The fine and next steps

The Autorité imposed a fine of € 500 million on Google for non-compliance with its interim measures decision. It also ordered Google to:

• propose a remuneration offer that meets the requirements of the law and the interim measures decision for the current use of protected content on Google’s services (this corresponds to Google’s obligations under injunction 1 in the interim measures decision); and
• provide the information required per injunction 2 of the interim measures decision. This information must include an estimate of the total revenue generated in France by the display of protected content on Google’s services, and indicate the share of revenue generated by the publisher that has requested the offer of remuneration. This estimate will also have to detail a number of revenue items.  

Google will have to comply with the Autorité’s decision on pain of a daily penalty payment of up to € 900 000.

Photo by Charles Deluvio on Unsplash