By Harro Ten Wolde and Eric Auchard
FRANKFURT (Reuters) - Germany's biggest news publisher Axel Springer has scrapped a bid to block Google from running snippets of articles from its newspapers, saying that the experiment had caused traffic to its sites to plunge.
Springer said a two-week-old experiment to restrict access by Google to its news headlines had caused web traffic to its publications to plunge, leading it to row back and let Google once again showcase Springer news stories in its search results.
Chief Executive Mathias Doepfner said on Wednesday that his company would have "shot ourselves out of the market" if it had continued with its demands for the U.S. firm to pay licensing fees.
Springer, which publishes Europe's top-selling daily newspaper Bild, said Google's grip over online audiences was too great to resist, a double-edged compliment meant to ram home the publisher's criticism of what it calls Google's monopoly powers.
Publishers in countries from Germany and France to Spain have pushed to pass new national copyright laws that force Google and other web aggregators to pay licensing fees - dubbed the Google Tax - when they publish snippets of their news articles.
Under German legislation that came into effect last year, publishers can prohibit search engines and similar services from using their news articles beyond headlines. Last week, Spain's upper house passed a similar law giving publishers an "inalienable" right to levy such licensing fees on Google.
Seeking to capitalize on the German law, two weeks ago VG Media - a consortium of around 200 German publishers, including Springer - said that Google could no longer publish snippets of text and images from their publications.
CALL TO REGULATORS
Springer said traffic flowing from clicks on Google search results had fallen by 40 percent and traffic delivered via Google News had plummeted by 80 percent in the past two weeks.
Doepfner said the resulting dramatic drop in traffic to his company's publications was proof of Google's overwhelming power in the search market. He said he hoped lawmakers, courts and competition regulators would take action to curb its powers.
"Others will have to pick up the ball now," the Springer boss told reporters on a conference call following the publication of the Berlin-based company's quarterly results.
A Google spokesman in Germany praised Springer's decision.
"The decision shows that Google is making a significant contribution to the economic success of news publishers," the spokesman said.
He said Google delivers more than half a billion clicks to German news sites per month. The search company has paid more than one billion euros in online advertising fees to German media publishers in the last three years, the spokesman said.
"Google wants to work in the future with publishers on new models to promote their websites and apps to increase traffic and to support digital publishing," he said.
The German cartel office in August decided not to pursue a complaint against Google by a group of publishers, including Springer, saying that the scope of new legislation was not yet entirely clear.
Google is the target of a European antitrust investigation into the operations of its online search business. The U.S. firm accounts for more than 80 percent of the European Internet search market and more than 90 percent of that in Germany.
The European Union's new digital commissioner Guenther Oettinger said last month that he was mulling a regional Internet copyright levy, taking aim at Google.
(Additional reporting Klaus Lauer in Berlin; Editing by Pravin Char)