It was realised that it was not the most effective method to maintain profits for those established individuals and organisations that have the clout to influence government policy. Let's hope that one day this changes, but I'm not holding my breath.

I'm not even sure we're in a period where this is more pervasive than usual. That said, I agree that in 99% of cases corporate welfare is a terrible idea.

The companies that own the search engines are already paying tax on their advertising revenue. See other person's comment above.

Why should this case be any different.

The origination of revenue concept, residency, etc. in tax law is continuously being tested, both by governments and by companies, in a tug of war.

Consider this case of affiliate advertising (which, although different in specifics from the French case, has the same tone and a similar legal path):

http://venturebeat.com/2009/04/24/california’s-proposed-“ama...

In particular, this bit: "Here’s how it would work: If you have a web-based business in California and collect revenue by showing out-of-state companies’ ads on your site, Bill AB178 will claim that both you and the businesses you advertise on your site have residence in California, and are therefore required to pay California sales tax. For example, say your Santa Monica-based web site shows banner ads for Amazon.com. With Bill AB178 in place, Amazon.com would be classified as a California-based business based on the fact that your business draws affiliate advertising sales revenue. Amazon would then be required to collect sales tax on all sales into California. The idea behind the bill is that California could force out-of-state retailers to collect and pay California sales taxes."

You can also read more about it here: http://www.amazon.com/gp/help/customer/display.html?nodeId=4...