Google has made a bold threat to Aussie internet users as it launches a bitter fight to avoid paying for local news content.
Google has made a bold threat to Aussie internet users as it launches a bitter fight to avoid paying for local news content.

Google issues huge threat to internet users

Google says it will have no choice but to make Google Search unavailable in Australia if the government succeeds in implementing its new media code forcing big tech companies to pay for Australian news content.

In a massive escalation of its opposition, Google Australia and New Zealand managing director Mel Silva said the trillion-dollar US firm would no longer allow Australians to use its search engine if the government enacted the news media bargaining code as proposed.

It is the first clear threat from Google in response to the laws.

Google and Facebook are fronting a senate inquiry on Friday, after threatening to derail future investments in Australia over the government's media law reforms.

Ms Silva conceded the company had only paid $59m in corporate tax last year, despite a gross revenue of $4.8b.

But she said a provision in the law, requiring company to pay for links and snippets, would make keeping Google Search unviable in Australia.

"The principle of unrestricted linking between websites is fundamental to search and coupled with the unmanageable financial and operational risk," she said.

"If this version of the code were to become law, it would give us no real choice but to stop making Google Search available in Australia.

"Now that would be a bad outcome for us, but also for the Australian people media diversity, and the small businesses who use our products every day.

"Now withdrawing our services from Australia is the last thing that I or Google want to have happen, especially when there is another way forward."

The removal of Google's search engine in Australia could have a significant impact on internet users and their ability to use the worldwide web.

The Australian Competition and Consumer Commission found Google dominated web search traffic in Australia, estimating that it handles 95 per cent of internet search traffic in the country.

Without Google search, Australian internet users could be forced to use alternatives including Microsoft's Bing, privacy-focused offering DuckDuckGo and Yahoo!

Rather than being forced to pay for links and snippets, Ms Silva said Google could be allowed to reach commercial agreements for publishers.
But Greens senator Sarah Hanson-Young accused Google taking a "my way or the highway approach … (and) wanting to put roadblocks in the way".

She said the tech giant was threatening to block all Australians from using Google Search, despite news searched making up just 1.25 per cent of searches on the platform.

"That's a hell of a threat," she told Ms Silva.

"And it doesn't seem to add up with the facts that you've presented yourself about the impact that this would have just on news content in Australia."

The bill also includes an independent umpire that would choose between offers put forward by each side, if the parties could not agree on a fee for news content.

Ms Silva said the arbitration process had been "chosen specifically to ensure speed and efficiency" but was a model used when there was not much debate over the cost of a fee.

She said Google was "not opposed to paying publishers for value, but the details matter".

"This is a very one sided and untested approach that's actually never been used in a mandatory code before without consent of both parties," she said.

"And what we're talking about here is something that no website has ever been paid for and no search engine has ever had to pay our approach, without workable code is that we would have standard commercial arbitration, based on comparable deals."

RELATED: Facebook and Google set for senate showdown

 

 

GOOGLE ADMITS TO HIDING SITES IN 'EXPERIMENT'

Earlier this month, Google admitted to hiding some news sites and stories from Australians.

Ms Silva said the measure was part of Google's "scenario planning" to help avoid the "worst case scenario" of withdrawing its service to Australians entirely.

"We've had this code since December 8, (and) we've seen various versions of it since July," she told the inquiry.

"There are a number of scenarios that we've been planning for at Google.

"We've also been planning for how we would operationalise, and comply with a workable code because that is a significant shift in our operations getting deals done compliance regulations. All of this we have planned for."

She said the experiments had only affected 1 per cent of users, and the timing had been "forced upon us" by the government.

She did not confirm whether users had been prevented from accessing the ABC.

Independent senator Rex Patrick has previously lashed Google for being "disingenuous" over the tests, describing them as a warning shot to the federal government.

He said Google was mimicking China's strongarming of Australia over its call for an independent inquiry into the origins of COVID-19.

 

 

 

"The Chinese response to that was to threaten our market to threaten our trade," he told Ms Silva.

"We've got a similar situation here where the Australian Government is leading on a proposal in relation to the Wild West web and trying to wrap some regulation around it.

"Our government steps out first, and the very large organisation that is Google threatens to leave our market.

"Do you think that's the proper conduct for a large international corporation like Google?"

Ms Silva claimed that, like any rational business, Google needed to assess the impact of legislation on its business model.

"You're going to pull out of every market, are you? Or is this all about stopping the precedent?" Mr Patrick replied.

Ms Silva said she "respectfully disagreed" with that claim, saying the legislation posed an "untenable risk" to the company's Australian operations.

GOOGLE COULD LOSE BILLIONS BY CUTTING OFF AUSTRALIA

If Google was to follow through with its threat to remove its search engine from Australian users, the company would cut off billions of dollars in advertising revenue every year.

Google Australia raked in $4.3 billion in advertising revenue in 2019 - the vast majority of its $4.8 billion in gross revenue in the country.

And Ms Silva told the Senate inquiry "the vast majority of our advertising business is search - showing an ad when someone types a query".

Asked by Senator Hanson-Young about whether Google would remove search from Australia - and give up this revenue - to avoid setting an international precedent to pay for the news it uses, Ms Silva said it was a "worst-case scenario" that it would have to take as a "rational" business.

"Our ability to offer the search service to our users is supported by a business model and that's not something we have ever denied," Ms Silva said.

"This code sets an untenable financial and operational precedent for us and any rational business would look at a piece of legislation and evaluation the technical and operational risk and financial risks association with that."

'THREAT TO DEMOCRACY': TECH GIANTS' MEDIA MONOPOLY

The legislation was introduced to parliament in December after an 18-month review process by the Australian Competition and Consumer Commission.

The review found democracy faced a potential threat from the market power wielded by tech giants over the media industry.

But Google and Facebook were outraged by the government's proposal, and tensions remained high despite a consultation period.

Google rejected the government's mandatory bargaining code in December, saying it "fell short" of being workable, but claimed it remained committed to creating a functional code.

Facebook threatened to prevent Australian users from sharing news on its platform in September.

The ACCC and a group of Australian news outlets, including News Corp Australia, the publisher of this article, will give evidence to the inquiry after Google and Facebook.

The government agreed to include public broadcaster SBS and the ABC after lobbying from the Greens.

The US has asked the federal government to suspend its plan to implement the laws, saying it could develop a voluntary code after "further studying the market".

"The US Government is concerned that an attempt, through legislation, to regulate the competitive positions of specific players … to the clear detriment of two US firms, may result in harmful outcomes," assistant US trade representatives Daniel Bahar and Karl Ehlers said in a submission.

Originally published as Google issues huge threat to internet users


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