Google Threatens to Stop Search in Australia Over Paid-News Legislation

Patrick Frater
·3-min read

A senior Google executive on Friday told the Australian government that it would stop offering its search functions in the country if legislation forcing it to pay for news goes ahead unchanged.

The threat was made by Google Australia MD Mel Silva at a senate committee hearing. “Coupled with the unmanageable financial and operational risk if this version of the (proposed legislation) were to become law, it would give us no real choice but to stop making Google Search available in Australia,” he said. The end of search would also likely cause a degradation of YouTube in the country.

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Australia is planning to approve laws that would make tech giants including Google and Facebook pay local publishers and broadcasters for content included in search results or their news feeds.

The “Draft Mandatory Code of Conduct Governing Digital Platforms and Media Businesses” was drafted by the Australian Competition and Consumer Commission, and first unveiled in late July.

Under the current draft of the law, the tech firms must negotiate with the publishers to settle a price for news. But if they cannot agree the government will appoint an arbitrator. The U.S. tech giants and the U.S. government want the mandatory arbitration requirement to be dropped.

Silva’s comments quickly drew a response from Australia’s conservative Prime Minister, Scott Morrison. “(Australia makes rules for) things you can do in Australia. That’s done in our parliament,” he said in comments to reporters. “People who want to work with that in Australia, you’re very welcome. But we don’t respond to threats”

The exchange is only the latest skirmish in a war of attrition between the U.S. tech giants and Australia. The government has argued that the firms don’t pay enough tax in the country, and that the Australian media industry has undergone upheaval in the last decade as a result of the rising power of online firms.

The Morrison regime also says that the tech firms have become overly powerful. A review that led to the proposed changes found that for every $100 spent on online advertising, Google earns $53 while Facebook accounts for $28.

The battles have included Facebook, back in August, announcing that it would stop allowing news publishers and individuals in Australia from sharing local and international news via Facebook and Instagram. Earlier in January, Google stopped directing searches to some Australian news sites. Google called it an experiment, but others saw as a warning shot.

In December, the tech giants appeared to win some concessions over which of its services would have to pay – Instagram and YouTube were excluded – but the government stance may have hardened again.

The argument over news payments reveals starkly different readings of which party benefits from having news stories published on the platforms.

“(The law) would force Facebook to pay news organizations for content that the publishers voluntarily place on our platforms and at a price that ignores the financial value we bring publishers. The ACCC presumes that Facebook benefits most in its relationship with publishers, when in fact the reverse is true. News represents a fraction of what people see in their News Feed and is not a significant source of revenue for us,” said Facebook MD in Australia and New Zealand, Will Easton, in August 2020.

“News organizations… encourage readers to share news across social platforms to increase readership of their stories. This in turn allows them to sell more subscriptions and advertising. Over the first five months of 2020 we sent 2.3 billion clicks from Facebook’s News Feed back to Australian news websites at no charge – additional traffic worth an estimated $200 million to Australian publishers.”

“There is a clear pathway to a fair and workable code, with only slight amendments,” Silva said. The U.S. government this week weighed in on the side of the American firms, calling Australia’s mandatory arbitration process “fundamentally imbalanced.”

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