Google Going in Oz

Australia’s intention to introduce a new law to make tech companies like Google and Facebook pay publishers for news content has prompted Google to threaten to withdraw its search engine from Australia.

What Law?

The proposed law is currently a Bill for an Act to amend the Competition and Consumer Act 2010 in relation to digital platforms, and for related purposes.  It goes by the catchy name of the Treasury Laws Amendment (News Media and Digital Platforms Mandatory Bargaining Code) Act 2020.  Full details of the Bill can be found here:  https://www.legislation.gov.au/Details/C2020B00190

In short, the Australian government argues that because big tech companies like Google and Facebook acquire customers from people who want to read the news, these tech companies should, therefore, pay newsrooms a “fair” amount for their journalism through the process of paying the news sites for snippets and links. 

The Australian government also argues that having a strong news media helps democracy, but ‘traditional media’ (e.g. newspapers) have experienced a decline in sales and ad revenue, and this traditional media needs financial support. 

While traditional news media has seen falling ad revenues (particularly during the pandemic), Google’s revenue has been growing.  Google revenues, for example, amounted to 160bn (£117bn) globally in 2019.

Google, Facebook, and other tech companies are also facing the lobbying might of Rupert Murdoch’s News Corp Australia to encourage a change in the law that could see tech firms paying.

Google Says

Google says that it would prefer a fair code to a law (referring to a “News Media Bargaining Code”) and lists its main objections to the law in a blog post.  In short, Google argues that:

– It is unworkable because paying news sites for snippets and links would break how search engines work and undermine the principle of the open internet.

– The law/code is currently one-sided because it only takes into consideration publishers’ costs and attempts to discount the benefits publishers receive from Google.

– Giving news publishers “special treatment” in terms of a 14-day algorithm notification would delay updates and disadvantage website owners.

– The code breaks Google Search and puts Google’s business in Australia at risk and undermines the ability to freely link between websites (a bit like making a telephone directory pay businesses to feature in the directory).

– Others support Google’s argument that paying for links and snippets damages the web, such as The Business Council of Australia, Tim Berners-Lee (inventor of the World Wide Web) and Scott Farquhar, co-founder of Australian tech company Atlassian.

– Google believes that it has a better proposal for an amended version of the code that will support journalism without breaking Google Search, i.e. paying publishers through Google News Showcase, not for links and snippets in Search.

– Google does not “use” news content, but simply provides links to it without showing the full article.

– Google is not to blame for the decline in newspaper revenue over time.

– Google argues that it has helped to grow the digital economy in Australia and has provided $53 billion in benefits to businesses and consumers each year.

– The financial and operational risks of complying with such a law as its stands would mean that Google could not continue to offer a service in Australia.

– Google has also said that it will be blocking Australian news sites from its search results for around 1 per cent of local users as an experiment to test the value of Australian news services.

Not Responding To Threats

The Australian Prime Minister, Scott Morrison, has said that his country’s lawmakers would not give in to what they appear to see as threats and a kind of blackmail from Google.

The Australian Prime Minister has also stressed that it is very much the country’s parliament that makes the rules for what happens in Australia, not tech companies.

What Happens if Google Does Pull Out?

Google has a massive 90-95 per cent share of the search engine market in Australia and, as is also the case here, businesses rely heavily on Google’s search and advertising (AdWords) for a lot of their business, something that has become particularly important during the pandemic. Also, businesses use the other tools/products that come as part of Google e.g., YouTube and Google are essentially a technology as much as it is a browser, a suite of tools and an effective advertising platform. Losing Google altogether sounds as though it would have a devastating initial effect on businesses.  That said, Google has been made unavailable before in a whole country, i.e. China since 2010 in a row over censorship of search engine results.

There are, of course, other browsers that people could use if Google disappears, e.g. Bing, DuckDuckGo and Yahoo!, although this could lead to major turbulence and changes in many markets.

France Example

Even though Google is making some frightening noises, the fact that it has recently agreed deals with some publishers of newspapers in France does provide some hope that it will not disappear from Australia altogether.

New Competition Rules for Facebook and Google in the UK

Back in December, the UK’s Competition and Markets Authority (CMA) said that Facebook and Google would face new rules in 2021 to prevent abuse of their market dominance.

Google To Pay Publishers $1 Billion

Back in October, Alphabet Inc.’s CEO, Sundar Pichai said that Google would pay $1 billion to publishers globally for their news over the next three years. Sundar Pichai said that Google will pay publishers to create and curate high-quality content for what Google is calling its ‘Google News Showcase’.  This new product will launch in Germany first, where Google will be paying German newspapers such as Der Spiegel, Stern, Die Zeit, and in then in Brazil where Google will be paying Folha de S. Paulo, Band and Infobae for content.  Further similar rollouts of paid-for content as part of the Google News Showcase will then take place in Belgium, India, the Netherlands, and other countries.

200 Publishers

It has been reported that so far, 200 publishers in Argentina, Australia, Britain, Brazil, Canada, and Germany have signed up to the product.

Sundar Pichai says that the financial commitment Google is making to publishers is “our biggest to date”.

What Does This Mean For Your Business?

Many tech commentators agree that Google is essentially threatening such a drastic step to stop a precedent being set that could then be extended to other countries.  Rather than being forced to comply with different laws in different countries which would be complex and see Google paying lots of money to different publishers, if it does have to do something, Google would rather do things on its own terms, i.e. agree to pay a set amount per year to large groups of publishers as part of its ‘Google News Showcase’.

Google has clearly been doing well while traditional publishers have been struggling and lobbying hard to make Google pay.  For businesses who rely heavily on Google for their advertising and more, this threat is a real worry that comes at a particularly challenging time.  Businesses may take some comfort from the fact that Google has made an agreement with some publishers in France (and could do the same in Australia) and that US trade representatives have suggested that the proposed law is perhaps too tough, should be dropped, and would be to the detriment of the (big) US-based tech companies.