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Australian treasurer Josh Frydenberg said it was “inevitable” that Google and other tech giants would have to pay for the use of media content, responding to the threat from the internet giant to disable its search engine in the country if forced to pay local publishers for news.
Google said on Friday that a proposed law, aimed at compensating publishers for the value their stories generate for the company, is “impractical”, in opposition to the requirement to pay media companies to display excerpts from articles in the search results.
While Google has intensified in a months-long standoff with the government, Frydenberg said Australia could be a “world leader” in defending the code or waiting to follow others in passing similar legislation.
“It seems that the digital giants did themselves a great disservice last week, when they openly and publicly threatened the Australian public with the effective withdrawal from Australia, in the quest to see if the legislation continues as it is,” said Frydenberg.
The threat is the most potent of Google’s, as the digital giant tries to stem a flow of regulatory actions worldwide, but such a radical step would deliver an entire developed market to rivals. At least 94% of online surveys in Australia go through the Alphabet Inc. unit, according to the local competition regulator.
Google sees business within reach of world pioneer law to pay for news
Still, Google’s market share puts the company in a position to increase revenue in other businesses to offset higher costs.
“The company’s product leadership in search of rivals like Yahoo, Microsoft’s Bing and DuckDuckGo makes it unlikely that advertisers and publishers will be able to migrate to competing platforms to drive referral traffic in the short and medium term,” according to Bloomberg analysts. Intelligence Mandeep Singh and Matthew Martino. “The company could compensate for this by increasing ad prices and reducing the traffic acquisition costs paid to mobile network operators.”
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Facebook Inc., the only other company targeted by legislation, is also opposed to the law in Australia. The social media platform reiterated at Friday’s hearing that it is considering blocking Australians from sharing news on Facebook if the law passes.
Frydenberg also accused the tech giants of changing the goals when it came to expressing their resistance to the code, after they rejected a final arbitration model, to now oppose the idea of paying for any clicks displayed in search results.
“If clicks to media content are such a small proportion of your overall clicks on your search, then ultimately, independent arbitrators will find that this should reflect that payment for the content – reflecting the benefit to Google and the Facebook for having this media content on their websites, ”he said.
The legislation is designed to support a local media industry, including Rupert Murdoch News Corp., which has struggled to adapt to the digital economy. Google’s tougher stance drew criticism from lawmakers at the hearing, with Prime Minister Scott Morrison saying on Friday that “we don’t respond to threats”.
“It’s about control and power,” said Johan Lidberg, associate professor at Monash University in Melbourne, specializing in media and journalism. “They are signaling to other regulators that they will have a fight on their hands if they do that.”
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– With the help of Angus Whitley
(Adds the analyst’s comment in the seventh paragraph.)