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Google has threatened to remove its search engine from Australia because the nation tried to share royalties with news publishers for the tech giant.
Australia is introducing the world’s first law that will force Google, Facebook, and potentially other tech companies to pay media for their news content.
But US firms have struggled, warning that the law would force them to withdraw some of their services.
Australian Prime Minister Scott Morrison said lawmakers would not give in to “threats”.
Australia is a long way from Google’s largest market, but the proposed message code is seen as a possible global test case of how governments might try to regulate large tech companies.
Tech companies are facing increasing pressure to pay for news content in other countries, including France, where Google signed a landmark deal with media companies on Thursday.
In Australia, the proposed message code would tie Google and Facebook to brokered negotiations with publishers about the value of news content if an agreement could not be reached beforehand.
Google Australia chief executive Mel Silva said in a Senate hearing on Friday that the laws were “impracticable”.
“If this version of the code became law, we would have no choice but to make Google search unavailable in Australia,” she said.
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However, lawmakers questioned this, accusing Google of “blackmail” and harassing Australia for driving reform.
Mr Morrison said his administration remains keen to push the laws through parliament this year.
“Let me be clear: Australia sets our rules for things you can do in Australia. That is done in our parliament,” he told reporters on Friday.
Why is Australia pushing for this law?
Google is the dominant search engine in Australia and has been described by the government as a near essential utility with little competition in the market.
The government has argued that the tech giants should pay the newsrooms a “fair” amount for their journalism as the tech platforms attract customers from people who want to read the news.
In addition, it has been argued that the financial support for the embattled Australian news industry is necessary as strong media is vital to democracy.
Media companies, including News Corp Australia, a unit of Rupert Murdoch’s media empire, have campaigned for the government to bring tech firms to the negotiating table in the face of a long-term decline in advertising revenues.
Meanwhile, Google’s revenue has grown significantly over the same period, reaching more than $ 160 billion (£ 117 billion) globally in 2019. In the same year, Google reportedly achieved gross sales of USD 3.7 billion in Australia.
Of that revenue, $ 7.7 million was generated in news content, Google said on a blog last year.
Google’s threat of removing the entire search product is the most serious yet. According to lawmakers, news only makes up 12.5% of Google searches in Australia.
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If the law is passed, the message code would initially only apply to Facebook and Google, the government said.
If Google withdrew its search engine, Australian internet users would be forced to use alternatives like Microsoft Bing, DuckDuckGo and Yahoo!
This is a very unusual threat.
Google dominates the search engine market with a market share of almost 90%. Almost all of the revenue comes from ads. If Google threatens to pull out of an entire country, the company is concerned.
Australia is nowhere near the largest market. However, Google executives are concerned about the precedent these new laws could set.
Google has had a very profitable pandemic so far while many local newspapers have struggled. This doesn’t look good – Australian politicians are not the first or the last to point this out.
Google wants to help fund original, local journalism.
However, it clearly believes that what is being proposed in Australia could profoundly affect its business model if repeated elsewhere.
What is Google arguing?
Ms. Silva said the laws would “create an untenable precedent for our businesses and the digital economy” if Google had to pay for link and search results.
This is not compatible with the free-flowing exchange of information on the Internet or the “functioning of the Internet”, she argued.
Image rightsGoogleImage descriptionGoogle has placed advertisements in its browsers in Australia promoting this case
“In view of the financial and operational risks, we see no way to continue offering a service in Australia,” she said.
Last week, Google confirmed that Australian news sites were banned from search results for around 1% of local users. It was an experiment to test the value of Australian intelligence services.
Facebook also threatened last year to prevent Australian users from sharing messages on the platform when the law goes into effect.
The social media giant reiterated that position on Friday when CEO Simon Milner told the Senate it was “a possible worst-case consequence.”
He said Facebook got almost no commercial benefit from having news content on its platform.
Both companies have argued that news organizations are already benefiting from platforms that bring readers to their websites. Google has also cited its Google News partnership as evidence that it supports journalism.
Where the profits are currently going
Posted by Katie Silver, business reporter
Australia’s news industry is struggling. For every A $ 100 (£ 56; $ 77) spent on digital advertising, A $ 81 goes to Google and Facebook. And Covid-19 only made that worse.
As companies cut their spending on digital advertising, some branches in Australia have had to close.
Google, on the other hand, has done well. Last year, the social media giant made nearly $ 4 billion with Australia and paid $ 45 million in taxes.
Meanwhile, the Australian competition watchdog has accused both Facebook and Google of misleading Australian consumers about how their data is being used and has initiated inquiries about digital advertising and the app store market.
What was the reaction?
Australians have expressed confusion and anger online on both sides. Some have discussed whether they could get by with other search engines.
Others have questioned whether removing the search engine would also remove Gmail, Google Maps, and Google Home services – which the company hasn’t made clear.
Earlier this week, US sales representatives urged Australia to drop laws they said were trying to regulate “to the clear detriment of two US firms.”
Sir Tim Berners-Lee, the inventor of the World Wide Web, said Australia’s plan would make the web “unusable worldwide”.
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