Google threatened to block its search engine for all users in Australia if a controversial new profit-sharing proposal from the federal government moves forward, according to testimony Friday by Google’s top executive in the region. Google is upset about a plan by the conservative government — strongly backed by Rupert Murdoch’s News Corp. — that would force tech giants to share profits with some news companies. But the Australian government is not backing down.
The Australian proposal, deemed the News Media Bargaining Code, would compel Facebook and Google to pay whenever they linked to the content of many media companies and would prohibit tech companies from using even small portions of text for products like Google News. Australia, unlike the U.S., does not have a fair use exemption to copyright law.
“The latest version of the Code requires Google to pay to link to news sites, breaking a fundamental principle of how the web works, and setting an untenable precedent for our business, the internet, and the digital economy,” Mel Silva, the managing director of Google Australia and New Zealand, told a government committee on Friday.
“This is not just Google’s view. Many other respected voices have raised similar concerns in their submissions to the Senate Committee,” Silva continued.
But the ruling Liberal Party government in Australia is not impressed with Google’s threat, suggesting they’d rather see Google leave than be pushed around by Silicon Valley.
“Let me be clear, Australia makes our rules for things you can do in Australia,” Prime Minister Scott Morrison told reporters Friday during a press conference that was largely focused on the covid-19 pandemic.
“That’s done by our parliament, that’s done by our government, and that’s how things work in Australia,” Morrison continued. “And people who want to work with that in Australia are very welcome. But we don’t respond to threats.”
Morrison’s comments were livestreamed by media outlet SBS on YouTube, a video-sharing service owned by Google parent company Alphabet, which perhaps speaks to part of the problem with going up against the Google monopoly.
News companies around the world have struggled with the rise of digital media over the past two decades, as international companies like Google have captured the vast majority of ad revenue that previously went directly to news publishers. From an advertiser’s perspective, why pay for an ad with Rupert Murdoch’s the Australian newspaper, the country’s largest daily, when you can pay a platform like Facebook or Google that’s presenting the news and capturing user eyeballs for a more extended period of time?
It’s a difficult situation, even for tech evangelists who believe in an open web. We’ve all grown accustomed to getting news for free, and any digital native’s gut reaction is that there should be absolutely nothing like a tax on hyperlinks. Maybe newspapers like the Australian should be grateful they’re getting clicks at all and thank Google for the traffic, the thinking goes.
But if the Australian can’t make money selling ads on its own site because Google ate its lunch, it can’t produce its content in the first place. Getting tons of web traffic is worthless to an organisation that can’t sell ads against that traffic. It’s a difficult balancing act that has led to massive layoffs and significant financial pain in an industry that has, even historically, been a loss leader for many larger entertainment companies.
Google believes the way forward is for Australian media companies to sign up for Google’s News Showcase program which pays some publishers for certain content.
“This workable solution would see Google pay publishers through News Showcase, a licensing program with nearly 450 news partners globally,” Silva told Australian lawmakers today.
“By making News Showcase subject to the Code, Google would pay publishers for value, and reach commercial agreements with publishers, with binding arbitration on Showcase,” Silva continued. “In addition, we’ve also proposed amendments to the arbitration model that will bring it in line with widely accepted models and lead to fair commercial outcomes, and algorithm notification requirements that are workable for Google and useful for news publishers.”
Australia is far from the first country to propose a kind of profit-sharing agreement between big tech companies and legacy media companies. When Spain floated something similar, Google just pulled Google News from the country. France, on the other hand, was able to secure a negotiated deal that will soon see Google pay something to publishers, though the details of that agreement are still sketchy and confusing, as Gizmodo reported on Thursday.
If Morrison is serious about letting Google leave, internet users in Australia might want to get acquainted with Bing. Or maybe see if AltaVista is still around. It’s not? Then Australians better get a VPN.
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