Google’s struggle in Australia could change the future of media

Google is threatening to leave Australia because of a proposed media law. It is a battle that the search giant will certainly face in other countries.

Last month, Google said it could stop providing search results in Australia if the government passed a new law forcing it to pay publishers in the country for news links and excerpts from its search sites. Leaving Australia would deprive its 25 million citizens of the world’s most widely used search engine, which handles almost 95% of the country’s daily searches.

“We don’t respond to threats,” Australian Prime Minister Scott Morrison told reporters on Jan. 21. The country sets its own rules on “things you can do in Australia,” he added.

Since then, tempers have cooled and Morrison had a “constructive” conversation with Google CEO Sundar Pichai last week. But the seven-month battle over Australia’s News Media Bargaining Code bill, which also covers Facebook, is far from over. He moved to a new phase on Friday, when a bipartisan Senate committee released an inquiry report recommending that the House of Representatives approve the bill.

The clash between Google and Canberra will spread far from Australia’s pristine beaches. Countries around the world are recognizing the destruction that Google, Facebook and other technology companies have caused in their media scenarios. A Canadian minister supported the Australian Media Code proposal and asked Google and Facebook to pay publishers in their country. Alex Saliba, a member of the European Parliament, told CNET that he wants to include similar measures in the forthcoming EU legislation. Competitors are also watching. Microsoft, Google’s main rival in the search engine, has called for similar regulations in the United States.

“It will be a very powerful precedent,” said Frank Pasquale, a professor at the Brooklyn Law School who researches technology laws and policies. “It is emblematic of Google’s global struggle for regulatory action at all levels.”

Entering the House of Representatives last December, the News Media Trading Code bill was drafted by Australia’s competition watchdog, the ACCC, to force Google and Facebook to negotiate with publishers. It would be necessary for Google and local publishers to reach an agreement within three months of the law coming into effect, or a government-appointed panel will decide compensation. It would also require Google to inform publishers about changes to its algorithm before they take effect.

Google says paying for snippets that appear in searches weakens the idea of ​​an open internet. The company also argues that the arbitration process is likely to result in unjustly high fees. Leaving the country’s search engine would be the “worst case scenario,” a Google spokesman said in a statement. “We remain committed to finding a solution to a viable Code, as we have done throughout the process.”

Google demo strategy

Google’s threat to remove Search from Australia is not without precedent. The company removed its Google News product from Spain in 2014, when the government passed a copyright law forcing it to pay publishers for headlines and snippets of news. Removing research from Australia will have little financial impact on the company: it had more than $ 160 billion in revenue in 2019, with about 2.5% of that coming from sales in Australia.

But cutting uncomfortable markets is not a long-term strategy. Google search is already blocked in China, the most populous country in the world. The EU, which is also examining the company, will be much more difficult to abandon.

Google hopes to avoid legislation like Australia’s by expanding its News Showcase, a feature of the Google News app on Android and iOS that offers selected news from participating publications. After launching the News Showcase in Germany and Brazil last October, Googled took the initiative to Australia in early February, when the Australian Senate deliberated on the News Media Code bill. Google has committed $ 1 billion to publishers through the News Showcase over the next three years.

Seven Australian publishers joined the project in early February. One of the country’s largest media companies, Seven West Media, has also signed up since then. But confidentiality agreements prevent them from revealing how much Google pays them. The Australian Financial Review reported that publications will be paid between AU $ 200,000 and AU $ 2 million (US $ 150,000 to US $ 1.5 million). In France, 90 million euros ($ 109 million) will be divided between 120 publications over three years, according to the Sydney Morning Herald.

This satisfies some publishers such as Reuters, which signed a contract to be part of the News Showcase worldwide. The national vehicles Der Spiegel from Germany and Piauí from Brazil also welcomed the initiative.

But Nine Entertainment, a major publisher that owns the Sydney Morning Herald and the Australian Financial Review, says Google and Facebook should pay publications about AU $ 900 million (US $ 695 million) each year. News Corp, which owns Fox News, is another big proponent of the Australian Media Code proposal.

“This is what monopolies do, they place an offer, in the form of Google Showcase, but they do not offer to negotiate,” said a Nine spokesman. “It has to be everything on your terms, and this is not an approach in which we will participate, we support legislation that the government is proposing as the best way to guarantee a fair payment for our content.”

Good regulation?

Australia’s proposal has critics, including some editors, who say the Media Code can have unintended consequences. The editorial boards of Bloomberg and the Financial Times argued that news publications get more from Google and Facebook, through search engines and social media traffic, than platforms get from publications.

Amanda Lotz, professor of digital media at the University of Technology, Queensland, agrees with that sentiment. She points to a recent survey in the UK, which found that only 3% of an average person’s time online is spent reading news.

“If the news was no longer available on the Facebook feed, people would still spend the same amount of time on Facebook,” she explained. “With Google, it’s the same thing. Most of Google’s revenue comes from searches, and most searches have nothing to do with news.”

Google says that 2% of searches in Australia are related to news.

Smaller publications have expressed concern that the Code balances power between Big Tech and Big Media, but does little for them. Last September, a group of 10 editors wrote a statement to the ACCC outlining concerns about the Code. If the Code becomes law, many outlets will be too small to be eligible for payment, they said. Smaller publishers would also find it more difficult to compete with Nine or News Corp if they lost the traffic that Google and Facebook provide, they added.

“We believe that it is important that measures are introduced to bring the Australian media industry to a more balanced playing field,” says the statement, “however, we are concerned that the current proposal has the potential to only further strengthen large media companies. traditional media and accidentally destroying media diversity in the process. “

A ‘paradox’ of a threat

Still, the Australian government’s effort is inspiring lawmakers around the world.

The EU is preparing two laws, the Digital Services Act and the Digital Markets Act, aimed at large technology companies. The DSA will hold Google responsible for illegal content on its platform, such as articles that encourage terrorism, and the DMA will enforce stricter anti-competition measures. The proposed Media Code in Australia has already caught the attention of Alex Saliba, a member of the European Parliament in Greece.

“Australia’s plans to make Facebook and Google pay for news content address the serious imbalances in the bargaining power they have over the media organizations that provide news services,” he said in a statement to CNET. “The only question is whether DSA and DMA are the appropriate legislation to introduce such a system.”

In the United States, Google’s search and advertising companies are under increasing attack from lawmakers, as well as state and federal prosecutors. Google faces three major antitrust lawsuits, including a historic Justice Department case and a complaint from a bipartisan coalition of states. In response to these cases, Google argued that the competition “is just a click away”.

Australia, however, highlights Google’s dominance. Microsoft says its Bing search engine is ready to replace Google, but few see it as a real alternative.

Google’s threat to withdraw from Australia is a “paradox,” said Pasquale, a professor at the Brooklyn Law School, because it undermines the company’s argument in the face of antitrust criticism. If competition were so abundant, Google’s ultimatum would not be such a powerful bargaining chip.