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

Google threatens to leave Australia due to proposed media law. This is a battle that the search giant will definitely face in other countries.

Last month, Google said it might not deliver more search results in Australia if the government passed a new bill, forcing it to pay the country’s publishers for the news links and increase its search engine space. By leaving Australia, she will deprive 25 million citizens of the world’s most used search engine, which handles almost 95% of the daily searches in the country.

“We are not responding to threats,” Australian Prime Minister Scott Morrison told reporters on January 21. The country makes its own rules about “things you can do in Australia,” he added.

Tempers has since cooled, and Morrison had a “constructive” conversation with Google CEO Sundar Pichai last week. But the seven-month battle over Australia’s proposed bill on News Media Bargaining Code, which also covers Facebook, is far from over. It moved to a new phase on Friday, when a two-member Senate committee released an inquiry report recommending that the House of Representatives pass the bill.

The clash between Google and Canberra will be far away from the pristine beaches in Australia. Countries around the world are counting on the devastation caused by Google, Facebook and other technology companies in their media landscape. A Canadian minister supports Australia’s proposed Media Code and calls for Google and Facebook to pay publishers in his country. Alex Saliba, a member of the European Parliament, told CNET that he wants to include similar measures in the forthcoming EU legislation. Participants are also watching. Microsoft, the biggest competitor of search engines, has called for similar regulations in the US.

“It will be a very powerful precedent,” said Frank Pasquale, a professor at Brooklyn Law School who is researching technology law and policy. “This is indicative of a global battle by Google over regulatory action at all levels.”

The News Media Bargaining Code bill, which entered the House of Representatives in December last year, was designed by the Australian Competition Watchdog, the ACCC, to force Google and Facebook to negotiate with publishers. This will require Google and local publishers to reach an agreement within three months of becoming law, or a panel appointed by the government to decide on the compensation. It also requires Google to notify publishers of the changes to the algorithm before it takes effect.

Google says paying for extracts that are being searched undermines the idea of ​​an open Internet. The company also argues that the arbitration process is likely to result in unfairly high fees. A Google spokesperson said in a statement that the search engine out of the country would be a ‘worst case scenario’. “We are still committed to finding a workable code solution, as we did throughout the process.”

Google’s Showcase 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 that forced it to pay publishers for headlines and news snippets. The removal of searches from Australia will have little financial impact on the company: it generated more than $ 160 billion in revenue in 2019, with about 2.5% of it from sales in Australia.

But cutting back on troublesome markets is not a long-term strategy. Google search has already been blocked from China, the world’s most populous country. The EU, which is also investigating the company, will be much harder to walk away from.

Google hopes to prepare legislation like Australia by expanding its News Showcase, a feature in the Google News app on Android and iOS that delivers composite news from participating publications. Following the launch of News Showcase in Germany and Brazil in October last year, Googled brought the initiative to Australia in early February when the Australian Senate discussed the News Media Code bill. Google has committed $ 1 billion to publishers through 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 subscribed since. But confidentiality agreements prevent them from disclosing how much Google pays them. The Australian Financial Review reported that the publications will be paid between AU $ 200,000 and AU $ 2 million (US $ 150,000 to US $ 1.5 million). According to the Sydney Morning Herald, 90 million euros (109 million dollars) will be divided between 120 publications over three years.

This satisfies some publishers like Reuters, who have signed an agreement to be part of News Showcase worldwide. The Der Der Spiegel and the Brazilian national Piaui stores also welcomed the initiative.

But Nine Entertainment, a major publisher owned by the Sydney Morning Herald and the Australian Financial Review, says Google and Facebook have to pay about $ 900 million (US $ 695 million) in publications annually. News Corp, which owns Fox News, is another big proponent of Australia’s proposed Media Code.

“This is what monopolies do, they make an offer in the form of Google Showcase, but do not offer to negotiate,” a Nine spokeswoman said. “It should all be on their terms, and it’s not an approach we’ll take part in. We support the legislation that the government is proposing as the best way to ensure a fair payment for our content.”

Good regulation?

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

Amanda Lotz, a professor of digital media at the University of Technology, Queensland, confirms this sentiment. She points to recent research done in the UK, which found that only 3% of the average person’s online time was spent reading news.

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

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

Smaller publications have expressed concern that the Code balances the power between Big Tech and Big Media, but few do. Last September, a group of ten publishers wrote a statement to the ACCC outlining concerns about the Code. If the legislation becomes law, many stores will be too small to be eligible for payment. Smaller publishers will also find it harder to compete with Nine of News Corp if they lose the traffic that Google and Facebook offer, they added.

“We believe it is important that measures are put in place to bring the Australian media industry on a more level playing field,” the statement said, “but we are concerned that the current proposal has the potential to further entrench the major traditional media companies and accidentally destroyed media diversity in the process. ‘

A ‘paradox’ of a threat

Yet the Australian government is trying to inspire legislators around the world.

The EU is preparing two pieces of legislation, the Digital Services Act and the Digital Markets Act, which are designed to target Big Tech businesses. The DSA will hold Google accountable for illegal content on its platform, such as articles that encourage terrorism, and the DMA will implement stricter anti-competitive practices. The media code proposed in Australia has already attracted the attention of Alex Saliba, a member of the European Parliament of Greece.

“Australia’s plans to make Facebook and Google pay for news content address the imbalances between acute bargaining power over media service providers,” he told CNET in a statement. “The only question is whether the DSA and the DMA are the appropriate legislation to introduce such a system.”

In the United States, Google’s search and advertising businesses are increasingly being attacked by lawmakers, as well as state and federal prosecutors. Google is facing three major antitrust lawsuits, including a major lawsuit by the Department of Justice and a lawsuit filed by a two-party coalition of states. In response to these cases, Google has argued that competition is “just a click away”.

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

Google’s threat to move out of Australia is a ‘paradox’, said Pasquale, a professor at Brooklyn Law School, because it undermines the company’s argument in the face of antitrust criticism. If competition is so plentiful, Google’s ultimatum will not be such a powerful bargaining chip.