Google threatens to shut search engine in Australia over govt move to force it pay for local content

The Australian government plans to pass a media code that mandates big tech platforms to pay local media companies for sharing their content. The legislation would require tech giants like Google and Facebook to negotiate payments with local media firms for content included in search results or news feeds. In case of failure to strike a deal, a government appointed arbitrator would decide the price.

Australia’s Competition and Consumer Commission drafted the upcoming News Media and Digital Platforms Mandatory Bargaining Code. The drafting of the code follows an inquiry in 2019 that  found that these tech giants were enjoying a disproportionately large share of online ad revenue even as their content came from media organistions.

Google on Friday said the proposed legislation would cause irreparable financial loss to the search giant,

Mel Silva, managing director of Google for Australia and New Zealand, has told an Australian senate committee that the arbitration model of the proposed code poses unmanageable financial and operational risk for Google.

“The principle of unrestricted linking between websites is fundamental to Search. Coupled with the unmanageable financial and operational risk 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. That would be a bad outcome not just for us, but for the Australian people, media diversity and small businesses who use Google Search,”she told the senate panel.

"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," she added.

“People who want to work with that in Australia, you’re very welcome. But we don’t respond to threats,” Australian Prime Minister Scott Morrison said in a sharp rebuke to Google's threat.

The US government has also suggested that Australia withdraw the legislation and instead propose a voluntary code.

The legislation was part of Australia’s move to curb rising market powers of the tech giants in the media industry that has rendered media companies unprofitable, with digital media subjugating mass media using their financial muscle and technological edge. 

Earlier in April 2020, The Australian government had, in April last year, ordered digital platforms like Google and Facebook to share revenues with media companies amid a crash in advertising revenue as consumers shift increasingly to online and digital platforms.

Google, however, failed to negotiate any deal with media companies. Instead it announced a three-year $1.3 billion push to support publishers worldwide.

Google, on the other hand, proposed a licensing programme through which news businesses publish and promote their stories online through Google. Publishers would get paid for their expertise, but the proposed Google News Showcase would only show up in Google News and  without the usual  links in Google Search.

The Associated Press quoted Australian Prime Minister Scott Morrison as saying that it is not his government ’s job to respond to threats. “Australia makes our rules for things you can do in Australia. That’s done in our Parliament. It’s done by our government. And that’s how things work here in Australia,” the news agency quoted him as saying.