The core problem with this scheme is one that's endemic to this sort of legislation. It's a basic assumption that economic interactions are all ultimately zero-sum, which is simply untrue. The idea that Google (or anyone else) must necessarily derive its success from somehow, somewhere screwing people denies the fact that the healthiest economies are packed with non-zero-sum interactions.

The president is said to have been made keenly aware of the problems illegal downloads pose musicians by his supermodel-turned-singer wife, Carla Bruni-Sarkozy.

This may explain why the French first lady's producer, Patrick Zelnik, was tasked with leading the commission, which came up with the proposals.

Wow, no conflict of interest there.

I'm constantly amazed that France's economy is as good as it is, given how much they love shooting themselves in the foot.

This will lead the way so they can start taxing BMW and Mercedes to revive buggy whip manufacturing. Truly visionary.

Also in France we have a tax on CD-R, DVD-R, hard drives, mp3 players which is given to the music companies to compensate their losses from pirating (you pay that tax whether you pirate or not. And still haven't the right to pirate after paying it).

The ISP also give 1% of their income to those companies.

So yes I think taxing the search engines is the logical next step.

Aren't they just simply proposing to tax online advertising revenue? What's the big deal?

This is a very interesting subject. Countries in the EU have competed to provide a better business environment to foreign companies. Eire has gone for the 10% corporation tax break. Other EU countries are threatening the companies with sanction. Witness the recent story concerning Google's UK tax bill:

http://www.timesonline.co.uk/tol/news/uk/article6122329.ece

Google avoids £100m UK tax "The website hailed as a ‘paragon’ is accused of adding to the public’s burden."

Google's advertising first, then Facebook's (er, pardon - Livre de Visage's), then Reddit's (LuLui's) self service ads.

To then dish it out to non-profitable ventures is astonishing, it's like the levy I had to pay on C60 tapes to save my programs, or the levy in some countries on blank CDs and DVDs that goes into the publishing pot.

Then again, I get money from the Lottery Fund and I've never bought a ticket so I should shut up :)