Google's threat to remove search from Australia if it's forced to pay news media for content draws industry, government ire

News Media Bargaining Code Senate hearing kicks off, Google and Facebook continue to protest 'unworkable' approach

Google’s threat to remove its search engine offering from Australia unless a ‘workable’ solution is found to the proposed News Media Bargaining Code has drawn the ire of the Prime Minster through to industry groups and media organisations.

Google Australia managing director A/NZ, Mel Silva, made the threat today as part of Senate Parliamentary Hearing to debate the mandatory News Media Bargaining Code, developed by the Australian Competition and Consumer Commission (ACCC) and tabled in the House of Representatives in December. The code would see both Google and Facebook required to pay news media organisations for showing links and excerpts of content from their websites and be subject to arbitration if deals cannot be reached.

Paying for links breaks and “undermines the way search engines work” comercially and technically, Silva stated in both her Senate submission today and video post articulating Google’s objections to the bargaining code to consumers.

The most critical concern for Google is being required to pay for “links and snippets” in search, Silva said. She noted Google serves 19 million Australians every year and 1.3 million small businesses and argued the ability to deliver a diverse range of news links for free is as important as delivering search results on local businesses.

“The principle of unrestricted linking between websites is fundamental to search and is coupled with the unmanageable financial and operational risk,” Silva 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.

“This is our worst-case scenario, we do not want to be in this situation, we would love to get to an outcome where there is a workable outcome for all parties.”

The threat also came after Google Australia commenced a trial in recent weeks on Australian users hiding selected Australian news media sites, including the ABC, from its search results. The company has not confirmed how many consumers are affected by the test or which sites are specifically involved. However, the figure of 1 per cent of total local search users was used several times today in the Senate Hearing.

This ‘experiment’, along with the comment today around potential pulling search products from Australia, have met with heavy criticism from many parts of the industry and government ecosystem.

In response to Google’s position today, Australian Prime Minister, Scott Morrison, said the government doesn’t “respond to threats”.

“Australia makes our rules of things you can do in Australia. It’s done in our parliament, it’s done by our government, and that’s how things work here in Australia. People who want to work with that, you’re very welcome. But we don’t respond to threats,” the PM stated during a press briefing.  

During the Senate Hearing, representatives from News Corp Australia, Nine and The Guardian Australia also repeatedly referred to Google’s threat and experiment on Australian search users as examples of how much potentially harmful power Google wields in directing which news services Australians can access via search.

Chris Cooper, the executive director of Reset Australia, the local arm of a global initiative lobbying for a democratic digital ecosystem, said Google’s threat was of grave concern.

“Today's egregious threats show Google has the body of behemoth, but the brain of brat,” Cooper said. “When a private corporation tries to use its monopoly power to threaten and bully a sovereign nation, it's a sure-fire sign that regulation is long overdue.  

“Internet search is necessary for society and the economy. Google enjoys the enormous advantage of being a giant in the space but thinks it can eschew the responsibility. That's just not how things should work.  

“The Australian Government needs to stand firm and set an example for governments around the world.”

The ACCC-led News Media Bargaining Code, which was finalised in mid-2020, sets out mandatory steps both news media organisations and digital platform providers, Google and Facebook, are required to take in order to negotiate payments for news media content featured across their platforms. The code’s release came on the back of the ACCC’s initial Digital Platforms Inquiry, first established in late 2017 by the Federal Government. This reported significant detrimental impact resulting from the dominance of digital platform giants, Google and Facebook, on Australia’s media and advertising landscape.

In December 2019, a program of work including a voluntary code of conduct for news media content negotiation kicked off. But by April 2020, this had become a mandatory negotiation code, driven by accelerated concerns around the future of news media organisations in the COVID-19 crisis.

In his Senate appearance, ACCC chair, Rod Sims, said that without the code, there was no impetus for the bigger tech platforms to negotiate with news media organisations. It was a comment echoed by all news media organisations in their appearances earlier in the day.

Google and Facebook remain against the code’s approach in its current form and have come out in recent days publicly with their latest messaging and initiatives to highlight their objections. Both also argue the code will not achieve its overarching objective of fuelling more investment into Australia’s news media journalism.

In a blog post earlier this week around its Senate submission, Facebook A/NZ MD, Will Easton, said the latest version of the code still fails to acknowledge the "commercial and technical realities" of how publishers use Facebook and the value it provides in return, most notably via referral traffic.

“Ultimately, the legislation does not provide solutions that will help the news industry over the long-term,” Easton stated. He noted Facebook sent 4.7 billion clicks from news feeds to Australian news websites between January and November 2020.

In its defence, Easton said Facebook over the last two years has reached commercial agreements and launched funding programs with 30 Australian news organisations and hundreds more globally. Yet Facebook News has put that on hold in Australia and is prioritising the UK, France and Germany instead because of uncertainty around the mandatory code.

Facebook’s three key issues are firstly mandating commercial arrangements with every single one of a large number of publishers regardless of the value they provide to the people who use our products, a number it estimated at 1000 organisations. “It also prevents us from introducing new products unless we roll them out to everyone, which seriously inhibits our ability to bring Facebook News to Australia,” Easton stated.

“There’s no other law like this in Australia. No other business is forced into a highly uncertain binding arbitration process where the government decides who enters these agreements and forces payment from the provider of a free service. It also allows publishers to decide what they share on Facebook without setting any limits or caps on the volume of content we’re compelled to pay for.”

Defending the code during the Senate committee, Sims again echoed news media organisations earlier in the day by stressing the need for the code to get the digital platform giants to come to the negotiating table.

“You can’t have a commercial arrangement when you’re dealing with this kind of one-sided monopoly,” Sims told the Senate Hearing. “The only way if you have a commercial deal is if you have some muscle in the news media businesses. And that muscle is the code. The code is the only way you get a commercial deal.”

Google’s response to a way forward out of the code debate on payments for news in search was its Showcase offering, which is available in several locations overseas but not currently available in Australia. Silva cited an investment budget of $1.3 billion globally for Showcase.

In response, Sims said the industry and ACCC haven’t seen any live examples or been given sufficient insight into the value of Showcase as an alternative. He also noted Showcase, which was previously known as Discovery, was removed from the code after requests from Google during the drafting phase.

“If you have the code with arbitration in relation to the value of news media businesses on search, deals can be done outside the code and could involve Showcase. But given news media businesses have an ability for arbitration for the value of search, you’d expect digital platforms to show us what it can do, lock deals in place for several years,” Sims commented.  

“Showcase – we don’t know what it is, it is in Google’s control, and the value under arbitration is completely under Google’s control.”   

Follow CMO on Twitter: @CMOAustralia, take part in the CMO conversation on LinkedIn: CMO ANZ, follow our regular updates via CMO Australia's Linkedin company page, or join us on Facebook: https://www.facebook.com/CMOAustralia.

 

 

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