Cablegate: The Googlisation of France

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RR RUEHIK
DE RUEHFR #1729/01 3521647
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R 181647Z DEC 09
FM AMEMBASSY PARIS
TO RUEHC/SECSTATE WASHDC 7937
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RUCNMEM/EU MEMBER STATES COLLECTIVE
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E.O. 12958: N/A
TAGS: ECPS ETRD EIND KIPR SCUL FR
SUBJECT: The Googlisation of France

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1. (SBU) Summary: Google's fortunes may be rising in France as the
GOF announced a government-funded digitization project that will
likely include a partnership with Google. But Google still faces
setbacks that include possible corporate tax fraud charges,
continued public ire against Google's digitization of French
cultural works, and the loss of a lawsuit brought by French
publishers. A new French start-up boasts it can rival Google but
real competition is years away. End Summary.

Google Books Program Enrages Cultural Elite
-------------------------------------------
2. (SBU) French publishers and culture experts were enraged last
August when news broke of Google's negotiations with the French
National Library. Serge Eyrolles, president of a group of French
publishers, called the project "cultural rape." Discussions were
suspended. Overnight, Google went from being everyone's favorite
search engine to a symbol of voracious American capitalism and
cultural insensitivity. French publishers sued Google for
counterfeiting and copyright violations for digitizing works under
their control, and competing EU and French digitization efforts
(Europena.eu, Gallica2) accelerated. Culture Minister Frederic
Mitterrand appointed Marc Thessier, former head of France
Television, to produce a report by late December on digitization of
France's cultural heritage. Mitterrand requested 753 million euros
(USD 1.1 billion) from the "grand emprunt," France's special debt
offering to fund future-oriented investment, to pay for government
digitization of French works and to keep them out of commercial
hands, i.e., Google's.

Culture Minister Mitterrand Extends Olive Branch
--------------------------------------------- ---
3. (SBU) Mitterrand's position has since taken a more positive and
productive tone. He met December 7 with David Drummond, a Google
senior vice president and chief legal officer, and agreed to visit
Google's Mountain View campus in March. According to Google staff,
Mitterrand said he was not anti-American and hinted that Google may
have a role in the digitization program to be funded by the "grand
emprunt." Mitterrand's peacemaking efforts are all the more
surprising given his efforts on November 27 to unite his European
counterparts against commercial digitization of European works.
Mitterrand was also behind the EU decision to appoint a council of
"wise men" to create an EU digitization plan.

French Culture Goes Digital
---------------------------
4. (SBU) President Sarkozy announced his plans for the grand emprunt
in a December 14 speech, including nearly USD 1.1 billion for
digitization of French works. Sarkozy emphasized that France would
not be stripped of its heritage by "a big company, no matter how
friendly, big, or American it is." But French National Library
President Bruno Racine told the press that the money will finance a
public-private partnership, with possible Google involvement.
Racine claimed opposition to Google stemmed more from its dominant
place in the market rather than the fact it was a private company.
(Note: Post contacts at the Ministry of Culture also oppose
Google's alleged "exclusivity contract," which they claimed gave
Google exclusive rights to the books Google digitized. According to
company contacts, Google's stipulation is that the actual digital
file created by Google cannot be given to another competing search
engine for 25 years. But a library could give the same book to a
competing search engine to be digitized with its own technology.
The library would also control use of the Google-generated digital
file for all other non-competing uses. End note.)

No Tax On Internet Ads, But Possible Charges
Of Anti-Competition, Corporate Tax Fraud
----------------------------------------

5. (SBU) Google SVP Drummond also met with Patrick Zelnick, the
record producer appointed by the GOF to develop a legal alternative
to illegal downloading including a funding mechanism for cultural
development. French publishers oppose Google's free use of their
content to enrich its search engine and sell advertising, and had
urged Zelnick to tax online ads as a way to compensate them for
their alleged losses. Google staff said Zelnick seemed likely to
drop the tax idea, a position he had also indicated to post, but
said Zelnick mentioned that the French Competition Council may go
after Google based on the market share of its ad revenues. In
addition, Mitterrand's press advisor, Vincent Peyregne, accused
Google of corporate tax fraud because firms that advertise with
Google France and any of its EU-based operations pay their
subscriptions to Google Ireland, where corporate taxes are among the
lowest in Europe.

Google Loses French Copyright And
Counterfeiting Lawsuit

PARIS 00001729 002.2 OF 002

----------------------

6. (SBU) On December 18, the court upheld the French publishers'
complaint, barring Google from using their works and assessing
300,000 euros in damages. The precedent is damaging and the
plaintiffs will claim a moral victory, but given the complaint's
initial request for 15 million euros in damages, Google escaped
serious financial penalties. Google has one month to comply with
the ruling.

Competitor Could Ease Pressure
-------------------------------

7. (SBU) Polinum, a new consortium of French technology companies
and government-backed IT research labs, says its digitization
technology will rival Google's in three years, and hopes to capture
much of the European library market. With only four million euros
(USD 5.7 million) in financing, however, Polinum is unlikely to be a
viable player any time soon.

8. (SBU) Comment: The change in Mitterrand's position may be due to
the GOF recognition that it would take USD 1.5 billion and real
expertise to digitize just the French National Library's 14 million
books and several million other documents. Google's willingness to
create jobs in France may have also helped: Google agreed to open a
scanning facility in Lyon when it entered into a digitization
agreement with the University of Lyon's library. With the court's
ruling following on the heels of this potential thaw, however,
Google's troubles in France are not over.

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