VZCZCXRO0601
RR RUEHIK
DE RUEHFR #1729/01 3521647
ZNR UUUUU ZZH
R 181647Z DEC 09
FM AMEMBASSY PARIS
TO RUEHC/SECSTATE WASHDC 7937
INFO RUCPDOC/USDOC WASHDC
RUEHRC/DEPT OF AGRICULTURE WASHDC
RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHGV/USMISSION GENEVA 3061

UNCLAS SECTION 01 OF 02 PARIS 001729 
 
SENSITIVE 
 
BUSINESS SENSITIVE INFORMATION NOT FOR INTERNET DISTRIBUTION 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECPS ETRD EIND KIPR SCUL FR
SUBJECT: The Googlisation of France 
 
PARIS 00001729  001.2 OF 002 
 
 
¶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. 
 
RIVKIN