You will never find a finer example of a certain German business model popular in the internet age than in an open letter to Google’s Eric Schmidt written by Mathias Döpfner, head of the conservative German publishing giant Axel Springer. (English translation courtesy of the all-seeing, all-powerful Google here.)
The essence of that business model, as practiced especially by German and sometimes French legacy publishers, is to stomp their feet like pouty kindergartners missing a turn at kickball, whining “that’s not fair” and yelling that everything wrong on this playground is the fault of another kid, then running to hide behind the skirt of the teacher. That is what Döpfner does here, demonizing Google (and Mark Zuckerberg while he’s at it) for numerous perceived sins I’ll explore below and — here’s the real agenda — demanding that the European Commission rescue the dinosaurs (his word) with regulation.
What a humiliating moment it must be for a powerful businessman to admit that he cannot compete in the marketplace. The entire letter struck me as an act of economic self-castration. It must also hurt for the head of a bastion of political conservatism in Germany — the publisher of the newspaper Bild, a Fox-News-with-boobs, and the leader of the company that constructed its headquarters ass-on the Berlin Wall just to extend a middle finger to the communists across it — to now beg government (the EU at that) for regulation. You’d think Döpfner lived in San Francisco and was a dancer in clown suit blocking Google buses. This is a call for big-government interference in the market we wouldn’t see even from the Guardian or The New York Times.
There’s history here. Döpfner and Springer led a fight by German publishers to stop Google from, in their view, stealing snippets of their articles on Google News — even though, as Eric Schmidt likes to point out, Google sends 10 billion vists to publishers every month. Here, too, the big boys of publishing ran to hide behind the skirts of government, getting a law called the Leistungschutzrecht passed. That seemed like victory until all the publishers went ahead and allowed Google to quote and link to them because, to paraphrase Woody Allen, they needed the eggs. Insert pouty foot-stomping here.
In the meantime, the antitrust forces of the European Commission investigated Google and negotiated an agreement. But this doesn’t go far enough for Döpfner. And, besides, a defanged, pacified, regulated, cooperative Google is no fun if you want to kick up dust on the playground and blame someone else for all your woes. Young Döpfner needs Google to be a big, bad bully.
So in his letter, Döpfner pulls out every last stop to demonize Google. He compares Google with the Mafia, complaining that the EC’s agreement with Google — stipulating the ability of competitors to buy ads on Google — smacks of “protection money.” (Would Springer’s Bild take ads from its competitors?) But that’s nothing. Döpfner says Mark Zuckerberg views on privacy could come from the head of the Stasi (I find this trivialization of an evil regime offensive); he says Google “sits on the entire privacy of mankind like the giant Fafner in the Ring of the Nibelung;” and then, giving up is last shred of subtlety, invokes Orwell. “Forget Big Brother,” Döpfner squeals, “Google is better!”
Döpfner complains about Google’s search-engine market share, not mentioning that German users — last I knew — gave Google its second-highest penetration in the world, and he also makes its success in creating great services in video, email, and mobile sound ominous. He complains about Google’s self-driving cars competing with Volkswagen and about Google buying Nest and entering our homes. Parody comes to life:
But Döpfner goes much farther in his effort to portray Google as a dark specter overtaking Europe when he frets about Google buying drone companies and allegedly planning huge ships and floating offices operating in stateless waters and wonders whether it will create a superstate floating free of laws. “One needn’t be a conspiracy theorist,” he says, “to find this disturbing.”
Then Döpfner makes a series of recommendations that I am confident he knows are absurd, for I know Döpfner and he is as very smart man. He asks that Google reveal the quantitative criteria behinds its search algorithm, though, of course, that would only enable every spammer on earth to game Google, making it worthless as as service. He asks Google to not store IP addresses and to delete cookies after every session, making targeted advertising impossible and also making Google and its advertising business worthless. He complains about Google and other companies — singling out Jawbone — collecting and using behavioral data to support free services, concluding that “it is better and cheaper to pay with something old-fashioned: simply with money.”
Aha. That is — or was — Springer’s business model until it failed at newspapers and sold most of them, except Bild and its ever-struggling Welt — buying digital enterprises to replace them. Döpfner would like to force the world into his model: People used to buy our content with money so they must continue. To invent new models, well, that’s just not fair, is it? Anything else should be stomped out by government protecting the incumbents. There’s his real agenda.
I find this more tragic than comic. Just as Germany is moving past its reputation for being skittish with entrepreneurial risk and failure, just as it is giving up its bad habit of copycatting American internet startups rather than inventing their own, and just as Berlin’s start-up scene — very near Springer’s headquarters in what used to be the East — is coming into its own as a real creative, technical, and entrepreneurial powerhouse, here comes a titan of old industry making his nation appear technophobic, uncompetitive, and even slightly anticapitalistic.
I don’t think Döpfner believes most of what he wrote, just as Springer and its fellow travelers really didn’t believe in their Leistungschutzrecht. I heard publishers there say that they pushed for the law just so they could strengthen their negotiating position with Google. Too bad for them it didn’t work. So now Döpfner continues to play, thinking that by bullying Google in the press and with government, he can get a pity turn at kickball. But he should beware the unintended consequences of his game, affecting the reputation of Germany as a source of technological and industrial innovation and inviting greater government regulation and interference in markets.
I am surprised you fear Google, Mathias. I thought you were stronger than that.
[Disclosures: Axel Springer flew me a few years ago to speak at its managers’ retreat in Tuscany and I’ve also been engaged to speak at its headquarters. Google is flying me to its headquarters — with no other fee — in two weeks to speak to its privacy group. I own Google stock. I have always found Döpfner and the editor of Bild, Kai Diekmann, to be charming and smart and I’ve said much of what I just said here to them over wine.]