German parliament passes ‘Google tax’ law, forcing royalty payments for news snippets

This story was updated at 5 a.m. PT with comment from Google, and again at 6.45am with thoughts following on from that comment.

The German parliament has passed a controversial law that will force search engines and news aggregators to pay publishers royalties for providing snippets of their articles in results.

The Bundestag passed the Leistungsschutzrecht für Presseverleger (LSR), or “ancillary copyright for press publishers” law, on Friday by 293 votes to 243. Germany’s coalition government was the driver behind the law, and the main opposition, the SPD, now says it will try to defeat the law in the country’s second legislative chamber, the Bundesrat.

The text that got passed in the Bundestag exempts individual words or “small text snippets,” although it does not state how short a text snippet has to be to be royalty-free – if it is shorter than a headline, this will probably mean the wholesale removal of all German news publications from Google(s goog)’s search results.

Google has been a vocal opponent of the law, for obvious reasons. In France and Belgium the company has settled related disputes with publishers in deals that many have seen as tantamount to a payoff.

Google’s spokesman in Germany, Ralf Bremer, hailed the watering-down of the law but still bemoaned the lack of a proper settlement:

“As a result of today’s vote, ancillary copyright in its most damaging form has been stopped. However, the best outcome for Germany would be no new legislation because it threatens innovation, particularly for startups. It’s also not necessary because publishers and internet companies can innovate together, just as Google has done in many other countries.”

Who won?

Google’s attempt to paint this as a victory — claiming the recently-added exemption clears it — is only partially on-target. You can tell this by the fact that the German publisher’s association is also claiming a semi-victory.

According to that association, the BDVZ, the legislation’s passage will “enable [publishers] to set the conditions under which their content is used by search engines and aggregators for commercial purposes”. Crucially, the BDVZ also points out that “an automatic right of use” is not permitted by the law, leaving it “open to publishers to make the business decision that they agree with search engines and aggregators who wish to use the content for commercial publishing”.

In other words, the publishers now have an even stronger hand in their behind-the-scenes negotiations with Google than their counterparts in France and Belgium did, because they have a rather muddled law they can point to. And I doubt Google will stand its ground for long in such talks — the company has seemed increasingly willing of late to quietly settle issues that it previously yelled about as matters of principle.

So who really won here? The publishers. Google just didn’t lose as hard as it was going to before the text got revised.