Google Escalates Dispute With Australia by Threatening Search Shutdown
Fight is over a proposed law requiring tech giants to pay publishers for news; 'we don't respond to threats,' prime minister says
Google threatened to shut down its search engine in Australia if a proposed law requiring tech giants to pay publishers for news isn't changed.
The warning escalates the long-running battle pitting the Alphabet Inc. unit and Facebook Inc. against the Australian government, whose efforts to compel tech companies to pay publishers is being widely watched globally and could offer a model for other countries. Last year, Facebook said it would restrict Australian users from sharing news articles on its platforms if the proposal became law.
The Australian code would require binding arbitration if publishers and the tech companies can't reach a deal on compensation. Media companies in Australia, including the local subsidiary of News Corp, owner of Wall Street Journal publisher Dow Jones & Co., have supported that provision, arguing that it would prevent the tech giants from walking away from negotiations.
Mel Silva, Google Australia's managing director, told a parliamentary committee Friday that under the so-called news-media bargaining code, Google would have to pay publishers for links to news articles that appear in search results. That would set an untenable precedent, she said, noting that unrestricted linking between websites is fundamental to how its search engine operates.
"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 said. "That would be a bad outcome not just for us, but for the Australian people, media diversity and small businesses who use Google Search."
Google and Facebook collect ad revenue based on visits to their sites and can increase their traffic by including links to news articles. But they argue that publishers also benefit because the links send readers directly to publishers' websites.
After long resisting paying for content, tech companies have recently made deals with some publishers globally. This week, Google reached an agreement with a French publisher association that provides a framework for determining compensation when negotiating with individual publishers.
Australian Prime Minister Scott Morrison didn't offer any concessions Friday. His government decided to pursue a mandatory code after an effort toward voluntary protocols floundered. The parliamentary committee will release a report on the code by Feb. 12.
"Australia makes our rules for things you can do in Australia," Mr. Morrison said. "People who want to work with that in Australia, you're very welcome. But we don't respond to threats."
Simon Milner, vice president of public policy at Facebook Asia-Pacific, told the parliamentary committee that his company wants to reach deals with Australian publishers. But the code gives publishers near-complete control of negotiations, he said, which will encourage unreasonable demands.
"Rather than increasing investment in news and journalism, it will have the opposite effect," Mr. Milner said of the proposed law.
Chris Janz, an executive at Nine Entertainment Co., which has radio, television and print assets, including the Sydney Morning Herald, told the committee that Google recently experimented with removing local news from its search engine. He said that deprived Australians of up-to-date information on the local coronavirus situation and illustrated Google's market power.
"Their market credibility, business models and substantial valuations have been built on having free and unfettered access to quality journalism and content," Mr. Janz said. "Content that is created and funded by others."
Google's Ms. Silva suggested that the code could be changed so that it applies not to links in its search engine but to a new product called News Showcase, which pays publishers and allows them to curate panels of news that appear on Google services. Ms. Silva also suggested changes to the arbitration process and rules determining when Google has to notify publishers of algorithm changes that could affect the search rankings.
Rob Nicholls, an associate professor at the University of New South Wales Business School who focuses on competition law, said the government and the tech companies would likely reach a compromise. Google's threat appears less credible than a more-limited measure such as Facebook's restricting the sharing of news articles, he said: It "sounds like an overreach, and in negotiations in Australia, if you overreach you're likely to have to backpedal a lot."