A French proposal to tax online advertising revenues to subsidise struggling newspapers and music companies has drawn fire from the internet community.
The proposal was contained in a government-sponsored research paper following claims that news aggregators such as Google, Microsoft, AOL, Yahoo and Facebook are profiting from their work without paying for it.
Google refuted such claims, saying it provided a platform where customers could find such publishers more easily and exposed their material to a wider audience than they could find with other methods.
French president Nicolas Sarkozy backed the report's call for French competition authorities to look into the dominant market position of big online firms. He said that when internet companies made money from online advertising in France, but avoided paying tax there, it distorted competition, the AFP news agency reported.
Google has drawn similar criticism in Britain because it remits UK profits to its head office in Ireland, where taxes rates are lower.
The French plan, led by record producer Patrick Zelnik, could raise up to €50m a year to aid creative sectors, such as the music industry, which are struggling to adapt to the age of downloads.
The UK government has proposed using part of the BBC's budget to subsidise local TV news producers.
Google France said it hoped the French government's plans would lead to innovation rather than new taxes, AFP reported.
Internet activist Quadrature du Net said the tax would make all taxpayers pay for "out of date businesses".
In a separate response to a European Commission consultation on creative content in the digital age, it said the authorities should seek to "reorganise the internet-based creative economy around the emancipatory practices enabled by new technologies, such as the sharing and re-use of creative works."