NEW YORK (TheStreet) -- As the aggregation strategy utilized by Google's (GOOGL) Google News continues to upset many news outlets, international blowback has begun in earnest from a few places.

Spain recently passed new copyright licensing regulations requiring Google and other Internet companies such as Yahoo!  (YHOO) to pay for aggregated content. Under the new Spanish regulations, which have become known as the "Google Tax," fines up to nearly $750,000 could be assessed for posting links and news story excerpts considered to be pirated content.

Google was not amused. Like the kid who doesn't get chosen to play the game and takes his ball home, the world's largest search engine said it will shut down Google News in Spain on Dec. 16 and also will not carry Spanish media outlets on Google News.

Since people can continue to access directly publisher sites, the Spanish example probably mostly hurts smaller companies with less brand recognition, according to online news innovator and media analyst Jeff Jarvis. Larger media companies will continue to get clicks due to their overall brand recognition, analysts say. Google itself will likely not be hurt since media companies still need Google News to drive traffic to their sites, even if they sometimes feel Google is stealing their content.  

European Union legislators last month passed a non-binding vote urging the European Commission to require search engines to spin off their news-bot aggregation operations. The EU also is investigating Google's news practices for antitrust transgressions.

Germany implemented a law similar to Spain's in October, but German publishers reached an agreement to work with Google two weeks later after they saw page views plummet following Google pulling the plug on its content aggregation.

Google also faced similar challenges in France and Belgium but reached an agreement to create a $74 million fund to aid French publishers in their digital performance.

"Consider the damage to Spain's, Germany's, and Europe's hopes to build their own futures in technology, to attract entrepreneurs and investment and the risk that invention requires," Jarvis said.

Richard Gringas, chief of Mountain View, California-based Google News, on Thursday published a blog post describing Google News as free and inclusive of all types of content.

"Google News creates real value for these publications by driving people to their Web sites, which in turn helps generate advertising revenue," Gringas wrote, adding that Google News didn't host ads and actually made no money, implying it was a public service. But users of Google News are, of course, led to use Google search and engage more with the brand and its services.

According to Gringas, Google News directed more than 10 billion clicks to publisher Web sites each month. Its Adsense product contributed $10 billion in revenue in 2014, up from $7 billion in 2013. The news service is available in 70 global editions and 35 languages. Gringas added Google looked "forward to continuing to work with our thousands of partners globally, as well as in Spain, to help increase their online readership and revenue."

The major change due to Google, and lesser aggregators, is most news organizations feel the need to gear content to what will play highest on Google News search results. The higher the play, the better the financial pay.

Data provided Wednesday by analytics partner Parse.ly found that 35% of all referral traffic came through Google News searches in 2013 and 2014. Facebook (FB)   directed 10% to 20% of traffic while Yahoo! accounted for around 10%. Direct traffic accounted for around 8% of overall site traffic.

Long story short, Google News will get by and most publishers will play along due to Google's importance in driving traffic to them. The tendency of some European governments to push back will generally be muted due to the overwhelming negative reaction from the public and many publishers.


TheStreet Ratings team rates GOOGLE INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate GOOGLE INC (GOOGL) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

You can view the full analysis from the report here: GOOGL Ratings Report

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage. At the time of publication, the author held no positions in any of the stocks mentioned.

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