BRUSSELS: A major battle is brewing in Brussels over an EU reform plan that would force Internet aggregators such as Google News to pay newspapers for displaying snippets of their articles online.
Google is furious at the reform idea, but powerful publishers, including Axel Springer in Germany or Rupert Murdoch’s Newscorp in the UK, affirm that a tax is the only hope to save a news industry starving for revenue.
The fight, which will play out for the rest of the year, is the latest row straining ties between Google and the EU, which slapped the Silicon Valley giant with a 2.4 billion euro ($2.8 billion) fine over unfair competition in June.
The proliferation of free news on the Internet has brought the newspaper industry to its knees, with many consumers unwilling to pay for online service, preferring zero-cost platforms such as Google News or Facebook.
“Unauthorized Internet use of media content” by aggregators and search engines “is threatening citizens’ sustainable access to quality news content,” said the European Alliance of News Agencies, of which AFP is a member.
“It is therefore crucial that neighboring rights be created for news agencies and other publishers, covering all activity” on the web, the agency said.
“Neighboring rights” is EU-speak for the obligation for online platforms such as Google or Facebook to pay for showing short quotes from copyrighted content, such as news articles.
The so-called “snippet tax” proposal is only one of several components of a major EU draft law intended to update European copyright law in the digital age.
The “snippet tax” is largely based on a tax introduced in Spain that critics say actually harmed publishers when Google decided to close down its news aggregator in response.
A similar law in Germany saw publishers swiftly give Google open access to their content following a steep drop in online traffic.
Based on these examples, the Computer and Communications Industry Association (CCIA), whose members include Google and Yahoo, called the idea “ill-founded, controversial and detrimental to all players.”
In a blog post published last year, Google said: “It would hurt anyone who writes, reads or shares the news — including the many European startups working with the news sector to build sustainable business models online.”
The two camps on the issue are now battling it out at the European Parliament and the EU council, the institution that gathers the national governments of the 28 member states.
Diplomats said the snippet tax has divided member states, with no compromise in sight for this year. Approval will require a special EU majority that must account for 65 percent of the bloc’s population and not solely a majority of member states.
For now, France, Spain and Germany have declared their support for the tax while Ireland, UK and the Nordic countries are against.
In the European Parliament, three committees have approved a version of the tax proposal, but the key Legal Affairs Committee has still to decide, with lobbyists working hard to influence its decision.
French MEP Marc Joulaud said the committee is expected to approve the law on October 10 with an eventual vote on the overall copyright reforms at a plenary session in December or January.
Then the hard work begins. EU member states, MEPs and the commission must negotiate a compromise of their separate texts.
“This is a very sensitive topic in parliament but also for journalists, some for, some against,” said Andrus Ansip, Commission vice president in charge of the Digital Single Market.
“I didn’t promote this idea, but publishers are very keen for neighboring rights,” he added.
Europe battles Google News over ‘snippet tax’ proposal
Europe battles Google News over ‘snippet tax’ proposal
Global brands shut Middle East stores as conflict causes chaos
- Luxury brands and retailers close stores in Middle East
- Conflict threatens the region that has been luxury’s fastest growing
- Mass-market retailers monitor situation, adjust operations in region
PARIS: In Dubai and other major Middle Eastern shopping hubs, many stores are closed or operating with a skeleton staff as the escalating conflict in the region causes chaos for businesses and travel.
The US-Israeli air war against Iran expanded on Monday with no end in sight, with Tehran firing missiles and drones at Gulf states as it retaliates for a weekend of bombing that killed Iran’s supreme leader and reportedly killed scores of Iranian civilians, including a strike on a girls’ primary school.
Chalhoub Group, which runs 900 stores for brands from Versace and Jimmy Choo to Sephora across the region, said its stores in Bahrain were closed, while other markets, including the UAE, Saudi Arabia, and Jordan remained open though staff attendance was “voluntary.”
“We operate with a lean team formed of members who volunteered and feel comfortable to come to the store,” Chalhoub’s Vice President of Communications Lynn al Khatib told Reuters, adding that the company’s leadership team personally visited Dubai Mall and Mall of the Emirates on Monday morning to check in with workers.
E-commerce giant Amazon closed its fulfillment center operations in Abu Dhabi, suspended deliveries across the region and instructed its employees in Saudi Arabia and Jordan to remain indoors, Business Insider reported on Monday, citing an internal memo.
Gucci-owner Kering said its stores were temporarily closed in the UAE, Kuwait, Bahrain and Qatar and it has suspended travel to the Middle East.
Luxury growth engine under threat
Shares in luxury groups LVMH, Hermes, and Cartier-owner Richemont were down 4 percent to 5.7 percent on Monday afternoon as investors digested the knock-on impacts of the conflict.
The Middle East still accounts for a small share of global spending on luxury — between 5 percent and 10 percent, according to RBC analyst Piral Dadhania. But the region was “luxury’s brightest performer” last year, according to consultancy Bain, while sales of expensive handbags have stalled in the rest of the world.
Now, shuttered airports have put an abrupt stop to tourism flows into the region and missile strikes — including one that damaged Dubai’s five-star Fairmont Palm hotel — are likely to dissuade travelers, particularly if the conflict drags on.
“If you assume that it’s a $5 billion to $6 billion (travel retail) market and let’s say it’s going to be shut down for a month, we are talking about hundreds of millions of dollars that are definitely at risk,” said Victor Dijon, senior partner at consultancy Kearney.
If Middle Eastern shoppers cannot travel to Paris or Milan, that could also hurt luxury sales in Europe, he added.
Luxury brands have been investing in lavish new stores and exclusive events across the region. Cartier unveiled a “high-jewelry” exhibition in Dubai’s Keturah Park just days before the conflict started.
Cartier and Richemont did not reply to requests for comment.
Luxury conglomerate LVMH has also bet big on the region. Last month, its flagship brand Louis Vuitton staged an exhibition at the Jumeirah Marsa Al Arab hotel, and beauty retailer Sephora launched its first Saudi beauty brand.
LVMH does not report specific figures for the region, but in January Chief Financial Officer Cecile Cabanis said the Middle East has been “displaying significant growth.” LVMH did not reply to a request for comment on how its business may be impacted by the conflict.
The Middle East has also attracted new investment from mass-market players. Budget fashion retailer Primark said in January that it plans to open three stores in Dubai in March, April and May, followed by stores in Bahrain and Qatar by the end of the year.
“Primark is set to open its first store in Dubai at the end of March but clearly this is a fast-moving situation which we are monitoring closely,” a spokesperson for Primark-owner Associated British Foods said.
Apple stores in Dubai will remain closed until Thursday morning, the company’s website showed, while Swedish fast-fashion retailer H&M said its stores in Bahrain and Israel are closed.
Consumer goods group Reckitt has told all employees in the Middle East to work from home, temporarily closed its Bahrain manufacturing site and suspended all business travel to the region until further notice.
