Google has threatened to remove
its search engine from Australia over the nation's attempt to make the tech
giant share royalties with news publishers.
Australia is introducing a
world-first law to make Google, Facebook and potentially other tech companies
pay media outlets for their news content.
But the US firms have fought
back, warning the law would make them withdraw some of their services.
Australian PM Scott Morrison said
lawmakers would not yield to "threats".
Australia is far from Google's
largest market, but the proposed news code is seen as a possible global test
case for how governments could seek to regulate big tech firms.
Tech firms have faced increasing
pressure to pay for news content in other countries, including France, where
Google struck a landmark deal with media outlets on Thursday.
In Australia, the proposed news
code would tie Google and Facebook to mediated negotiations with publishers
over the value of news content, if no agreement could be reached first.
Google Australia managing
director Mel Silva told a Senate hearing on Friday that the laws were
"unworkable".
"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.
But lawmakers challenged this,
accusing Google of "blackmail" and bullying Australia for raising the
reform.
Mr Morrison said his government
remained committed to progressing the laws through parliament this year.
"Let me be clear: Australia
makes our rules for things you can do in Australia. That's done in our
parliament," he told reporters on Friday.
Why is Australia pushing this
law?
Google is the dominant search
engine in Australia and has been described by the government as a
near-essential utility, with little market competition.
The government has argued that
because the tech platforms gain customers from people who want to read the
news, the tech giants should pay newsrooms a "fair" amount for their
journalism.
In addition, it has argued that
the financial support is needed for Australia's embattled news industry because
a strong media is vital to democracy.
Media companies, including News
Corp Australia, a unit of Rupert Murdoch's media empire, have lobbied hard for
the government to force tech firms to the negotiating table amid a long-term
decline in advertising revenue.
Meanwhile, Google's revenues have
increased markedly in the same period, amounting to more than $160bn (£117bn)
globally in 2019. In the same year, Google was reported to have made $3.7bn in
gross revenue in Australia.
Of that revenue, $7.7m was
generated from news content, Google said in a blog last year.
Google's threat to remove its
entire search product is its most severe yet. News accounts for just 12.5% of
Google searches in Australia, according to lawmakers.
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If the law is passed, the news
code would initially apply only to Facebook and Google, the government says.
If Google withdrew its search
engine, Australian internet users would be forced to use alternatives such as
Microsoft's Bing, DuckDuckGo and Yahoo!
This is a highly unusual threat.
Google dominates the search
engine market with a nearly 90% market share. Almost all its revenue is from
ads. For Google to threaten to pull out of an entire country suggests the
company is worried.
Australia is nowhere near its
biggest market. But Google execs are fearful about the precedent these new laws
could set.
Google has had a very profitable
pandemic so far, while many local newspapers have struggled. That doesn't look
good - Australian politicians aren't the first, and won't be the last, to point
that out.
Google says it wants to help fund
original, local journalism.
But clearly it believes that what
is being proposed in Australia could fundamentally hurt its business model if
replicated elsewhere.
Ms Silva said the laws would set
"an untenable precedent for our businesses and the digital economy"
if Google had to pay for link and search results.
This was not compatible with the
free-flowing share of information online or "how the internet works",
she argued.
"We do not see a way, with
the financial and operational risks, that we could continue to offer a service
in Australia," she said.
Last week, Google confirmed it
was blocking Australian news sites from its search results for about 1% of
local users. It said it was an experiment to test the value of Australian news
services.
Facebook last year also
threatened to stop Australian users from sharing news stories on the platform
if the law went ahead.
The social media giant repeated
that position on Friday, with executive Simon Milner telling the Senate hearing
it was "a potential worse-case consequence".
He said Facebook derived almost
no commercial benefit from having news content on its platform.
Both firms have argued that news
organisations already get the benefit of platforms driving readers to their
websites. Google has also cited its Google News partnership as evidence it
supports journalism.
What's been the reaction?
Australians have expressed
confusion and anger online at both sides. Some have debated whether they could
get by using other search engines.
Others have questioned if the
removal of the search engine would also remove Gmail, Google Maps and Google
Home services - something the company has not made clear.
Earlier this week, US trade
representatives urged Australia to drop the laws which they said attempted
regulation "to the clear detriment of two US firms".
Sir Tim Berners-Lee, the inventor
of the world wide web, said Australia's plan would make the web
"unworkable around the world".
Could Google really leave
Australia?
Why would Google pull out of
Australia?
The government is introducing a
law to address a long-bubbling row over whether tech giants should pay for news
that appears in search or is shared on their platforms.
The proposed law would mandate
that Google has commercial agreements with every news organisation - or enter
forced arbitration, something Google says is "unworkable".
"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," the regional director, Mel Silva, said.
Australian Prime Minister Scott
Morrison told Google: "We don't respond to threats".
What alternatives are there?
Google has about 90-95% of the
search engine market share in Australia - similar to the rest of the world.
But other options for search
exist - mainly Microsoft's Bing, and Yahoo, but also privacy-focused ones like
DuckDuckGo.
But while site analysis firm Alexa
ranks Google as the most-visited site on the internet, Yahoo lies at 11th, and
Bing at a distant 33rd.
Would Google disappearing really
affect people?
In 2018 a writer for Wired
magazine spent three months using Bing exclusively - and concluded that it
worked fine almost all the time.
But in very specific cases - such
as finding old articles - he struggled, because the techniques he learned for
search using Google didn't deliver the expected results.
And Google is not just a search
engine - its search technology also powers services such as Gmail, Google Maps
and YouTube, among others.
It's unclear at this stage if
Google's threat - if carried out - would affect those other apps.
Alternatives to these do exist,
but are little-used and the Google apps are seen as essential by many
consumers.
When Huawei phones lost access to
Google services amid a row with US regulators, they found it much more
difficult to sell phones in the West.
Could this set a global
precedent?
Australian Senator Rex Patrick
told Google: "It's going to go worldwide. Are you going to pull out of
every market, are you?"
But Google and other companies
affected - like Facebook - are based in the US.
And the US government - at least
the previous administration - has urged Australia not to "rush" the
new law, warning that it is "extraordinary" and may have
"long-lasting negative consequences".
While there is no exact match for
this scenario, Google has left a country before due to local laws.
Google has been largely
unavailable in mainland China since a row in 2010 over alleged Chinese hacking,
during which it stopped censoring search results for Chinese users.
There's also a different - but
similar - row happening in Europe.
How much money is Australia worth
to Google?
Compared to China, Australia is a
much smaller potential market.
Google Australia made A$4.8bn
($3.7bn; £2.7bn) in revenue in 2019. Advertising revenue made up most of that,
at A$4.3bn. But factor in all the expenses, and Google Australia made A$134m in
profit for the year.
To put that in context, Google's
parent Alphabet has an estimated US$100bn or more of cash on hand to cover any
revenue gaps.
But it's about more than money.
The wider concern is whether
Google wants a modern Western democracy to showcase how using its competitors
can be perfectly viable.
Can't Australians just use US
Google instead?
It's possible that Google could
redirect Australian Google users to the US (or another) country's version of
Google. That would likely strip out localised search results, but keep the
service accessible.
But it may also be that Google
would block Australian users based on their geographic location as determined
by an IP (internet) address.
One simple way around that is
using a Virtual Private Network, or VPN, which makes your computer look like
it's somewhere else - a trick often used by the tech-savvy to access streaming
services in other countries.
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But it is slower, and reputable
providers require a subscription - a hassle many people would rather avoid for
simple search results.
What does Australia want Google
to pay?
Exactly how much money is at
issue is undecided.
The proposed law involves
bargaining and arbitration, leaving the matter open - if Google can't reach
agreement with a news outlet, a judge would decide what is "fair".
But the government has said it
wants "fair" payments to news organisations, which have seen print
advertising revenue fall by three-quarters over the past 15 years.
In contrast, digital advertising
on major platforms like Google and Facebook has risen dramatically over the
same time.
Would it really help publishers?
Australia has a vibrant news
industry - media titan Rupert Murdoch, who owns News Corp, was born there.
His outlets would benefit, as
would public broadcasters such as ABC News in Australia.
ABC's funding has been cut by
hundreds of millions of dollars since 2014, resulting in cuts to services.
Local newspapers have also been
hurt in the demise of advertising - with more than 125 News Corp-owned regional
newspapers going online-only earlier this year, resulting in hundreds of job
losses.