A chance for growth
It was a complicated courtship. For years, German publisher Axel Springer challenged us on issue after issue, from copyright to competition. I travelled to Germany numerous times to meet Springer executives to propose a different path - profitable partnership. I argued that through innovation we could build new business models and achieve mutual benefit from emerging mobile and social technologies. Late last year, we walked down the aisle and signed a multi-year partnership for automated advertising, covering both web and mobile.
While many other European publishers including such marquee names as the Telegraph and the Guardian have signed similar partnerships, some publishers in Europe still seem to believe that the best way forward lies in calling for heavy-handed regulation, pushing for new copyright charges on links to their articles and calling for antitrust action against companies such as Facebook, Amazon and us. In the past week alone, both Germany’s FAZ and France’s Le Monde have published opinion pieces headlined “Fear of Google” and „Google or the road to servitude“. The pieces attack the entire Internet and its magic which gives anyone, anywhere access to previously hard-to-find information.
A different path towards a prosperous digital future
If adopted, this approach creates serious economic dangers. Above all, it risks creating an innovation desert in Europe. Some companies will leave and, worse still, others will never get off the ground - blocked by rules designed to protect incumbents. I am convinced that a better, more prosperous model exists through cooperation and commercial agreements.
As our path-breaking advertising deal with Axel Springer shows, Google is more than ready to do its part. Over the past decades, many American innovators have crossed the Atlantic and ignored local culture and sensitivities, fought regulators, and failed to listen. When the European Commission opened its antitrust case against Microsoft in the 1990s, the company dismissed all questions about its practices, wasting millions of taxpayers money as the investigation stretched out years.
We took a different path. We heard the Commission’s concerns and we offered solutions. While many of the changes that the Commission demanded are painful, we preferred compromise over conflict. In other ways, we have broken with the old adversarial model and attempted to create a prosperous digital future.
Google's contribution to the German economy
On a continent in search of economic hope, the Internet represents the main motor of economic growth. According to the OECD, the online world accounts for up to 13 percent of economic output and is driving the creation of new companies, new jobs, and new opportunities.
It allows, with a few clicks of a mouse, a Greek B&B owner, a French fashion designer and a German manufacturer of cuckoo clocks to reach a global marketplace. According to a new study by the Institute of the German Economy the web accounts for 25 percent of the increase in German export in the last decade. While many traditional industries are facing tough times, Internet industries are pouring billions into new offices, data centers and research laboratories.
German Institute for the Economy also states for the years between 2007 - 2011 that more than 28,000 small companies have been founded in Germany with the help of Google products. Those new companies stand for an annual revenue of more than 8 billion Euro and almost 100,000 jobs giving clear proof of the economic power of the web and of Google’s contribution to the German economy.
Innovation, not regulation, is the best way forward
Around the world, people admire Europe’s art, food, and lifestyle. The Internet makes these cultural treasures available to all. From the French base of our Cultural Institute, our engineers have created a platform that allows museums to share archives and show paintings in detail to a global audience. In the Belgian city of Ghent, we have digitized more than 200,000 out-of-copyright books written in Latin, French, Dutch, German and English from the 15th through 19th centuries at the local university’s library. Many of these works were viewed only a few times each year. Now, on the Google Books platform, they receive up to 100,000 views each day - and the library reports more researchers traveling to Ghent to peruse the physical works.
News publishers could see similar opportunities. Much ink has targeted Google News and how it allegedly “kills” journalism, so allow me to set the record straight: Google News was created after 9/11 to give people analysis and information about the attacks. Since launching in 2002, the service now exists in more than 70 versions around the world, and connects readers with news publishers big and small. There is no advertising on Google News.
In fact, each month Google sends more than 10 billion visits to publishers around the world. Each click is a business opportunity to grow audience and drive revenue. In 2013, through our AdSense product alone, we gave $9 billion in revenue to our publisher partners. All told, we have paid out over $30 billion to partners since the program launched a decade ago.
As with Germany’s Springer, we have been working with publishers on monetizing that traffic. Innovation and new business models, not subsidies and regulation, are the best way forward.
Eric Schmidt is the executive chairman of Google. This article is his response to Robert M. Maier's contribution „Angst vor Google“.