France Considers 'Google Tax' From Web Ads

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The French government has been considering a plan to tax Google, Yahoo, Microsoft, Facebook and other Internet companies based on revenue from advertisements. Country officials suggest using the proceeds to fund cultural projects, from art and books to movies and music.

France recently introduced tough legislation aimed at removing those who continually download illegal content from online. President Nicolas Sarkozy has taken a tough line on the increasing dominance of digital content, and has recently gone head-to-head with Google regarding its plans to digitize the world's books, according to the BBC.

"We don't think introducing an additional tax on internet advertising is the right way forward as it could slow down innovation," says Olivier Esper, senior policy manager, Google France. "The better way to support content creation is to find new business models that help consumers find great content, and reward artists and publishers for their work."

Google supports content creation through partnerships with many French publishers and content creators. In fact, the company admits to distributing more than 4.2 billion Euro worldwide last year to its partners, helping to fund content creation.

Although there are few details on how it would work exactly, one thing is for certain -- the proposed tax on content remains in the early stages and will require patience to work through.

Evidently, the French government proposes some sort of tax about every few years. Adrianne Kandel, who lived in France during the 1980s, remembers a government tax on blank audio cassettes. The tax went to the music industry. "Those where the days when you recorded music on tapes from records for friends," she says. "Audio cassettes at the time were rarely used for people just to record themselves talking. They were used more for entertainment."

London-based Greenlight Chief Operating Officer Andreas Pouros remembers that tax. The French government often attempts to influence their culture on other countries, he says. "It's cultural arrogance," he explains.

Pouros explains that the proposal suggests taxing businesses that operate from other countries on clicks from paid-search ads. For example, if a French person accesses Google's search engine, the French government will attempt to tax Google in the United States on any ad revenue generated from the search.

The program is estimated to earn the French government about $29 million per year, about 20 million Euros, according to the report. The U.S.-based companies would become the main payers. It's not clear how France intends to enforce the levy. Most of the money would come from ads on Google, because the Mountain View, Calif. search engine holds the dominant position for search in France, as well as most of Western Europe.

The 69-page report is not specific to the advertising industry. It supports about 22 proposals, from increasing spending on digitizing books and creating Internet portals to aggregate online content, cutting the tax for online cultural sales, and setting up bodies to ensure that artists are paid for work downloaded from the Web.

The report explains how the French government wants to develop cultural services to enable small and medium-sized businesses to access markets they can benefit from, such as wider exposure via the Internet. The mission aims to give priority to diversity in a digital marketplace that promotes culture, and to legally facilitate the movement of content.

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