For Google, it started as a niggle in a small, remote market: a public inquiry by the Australian Competition Commission into Big Tech and the media.
But four years later, Australia is at the forefront of a global judicial backlash that threatens to restore trade conditions between technology platforms and the news media, and more importantly for Google, to erode fundamental pillars of the Internet that help it thrive.
The Australian Parliament includes a legal code that sets many precedents. This is the first law that forces Google and Facebook to pay publishers they link to for content, and the first time they have been forced to notify them of significant changes to their algorithms.
The stakes are so high that Google has threatened to pull its search engine out of the country, in a strong test with a medium-sized government trying to put a rig on its commercial freedom.
Despite fierce lobbying in Canberra to delay or amend the code, a key parliamentary committee on Friday recommended that MPs pass it in law to ‘help protect public interest journalism’.
“It feels like what we are seeing in Australia is the end of a discretionary phase of news funding by Google, and the beginning of a new regulated phase,” said Matt Rogerson, director of public policy at the Guardian Media Group. said. “They’re going to be more accountable for the value they derive from using publisher content.”
Australia’s proposed bargaining code will drastically change the balance of power between Big Tech and the media, giving even major publishing groups such as News Corp the potential to conduct global content transactions.
Under a so-called final bidding system – best known for agreeing on baseball salaries in the US – it will force each party to submit their proposal to an arbitrator, who will then choose what comes into force.
News organizations will also be able to negotiate jointly and increase their muscles.
Other countries are watching. Canada said it was preparing similar legislation. The EU and the UK are looking at introducing some elements of Australian measures into their forthcoming laws.
And this week, Microsoft encouraged the US to follow Australia’s lead. Microsoft’s own Bing search engine would be hit by such a move, but that did not stop it from having the chance to undermine Google.
“We are prepared to run our search business at lower margins than Google,” said Brad Smith, Microsoft’s president. “We are willing to share more revenue with publishers.”
Google recently became silent about the threat to leave Australia, but reiterated that the code was ‘unworkable’. The company said the code would set a precedent for paying for links from its search engine to outside content, which is at the heart of its business.
Kent Walker, chief executive officer, said the plan would expose the company to ‘unknown payments’ and that it would face some beneficiaries early on from changes to the algorithms – things he says ‘will fundamentally change the internet’.
Some claim that Google has exaggerated the point. The Australian code does not stop a pay-per-link system, and Smith, Microsoft, said arbitration is likely to lead to transactions where media companies are paid a portion of the revenue or a fixed fee.
One news publisher CEO compared it to the way content is licensed to the Factiva media database, which pays publishers a fee regardless of whether the content is read or searched.
This could set a dangerous precedent for Google when it comes to other forms of online content – although any other industry that wants to follow in the news publishers’ footsteps must convince governments that they too deserve special treatment before they could hope for similar bargaining power against the technical giants.
The momentum in Australia has cheered many news industry executives, after years of awkward reliance on Big Tech for online traffic.
NewsCorp CEO Robert Thomson told investors last week that it was finally starting to see a more fertile future for content creators, after a long campaign against Google. “It is fair to say that regulators worldwide have joined the digital dots.”
Publishers have long argued that Google unfairly benefits from displaying headlines and snippets of stories in its search engine. But they did not have the bargaining power to return some of the profits to themselves, and a lack of data made it difficult to determine who would benefit most from the symbiosis between the search company and publishers.
Late last year, he said he would pay $ 1 billion to publishers around the world over the next three years, and agreed with about 450 ‘news partners’ in more than a dozen countries, including the United Kingdom, Japan and Brazil. .
The only major agreement in the EU, for example, was signed in France last month, but Google agreed to pay only € 22 million a year to a group of publishers.
Negotiations with Google are usually handled on a mysterious basis with individual publishers, country by country – an approach that one news editor describes as ‘divide and govern’. The deals are usually multimillion-dollar payments spread over several years, in exchange for a promise not to file antitrust charges against Google.
But it is not clear how much news organizations will earn or who will benefit most from it. Critics warn that the Australian code will particularly benefit a handful of powerful companies, starting with Rupert Murdoch’s news empire.
‘My concern is that the big players get all the money. It’s an asset exploitation by politicians and big media organizations, ‘said Aron Pilhofer, a former chief digital officer at the Guardian and now an associate professor at Temple University.
If Google leaves Australia, publishers could suffer as well. One academic study led by Stanford University economist Susan Athey on what happened when Google News withdrew from Spain in 2014 concluded that traffic to news sites dropped by about 10 percent.
But it also pointed to a more insidious impact on the news industry. Collectors like Google News direct readers to individual stories rather than publishers’ homepages, which undermines the ‘bundled’ business model that many rely on and weakens their individual brands. Search engines also favor smaller publishers at the expense of large ones.
The difficulty in determining the value of news for Google may eventually discourage publishers from going to the arbitration in Australia, for fear that the final decision could be overwhelming.
Whatever the outcome of Australia, news executives do not expect Google and Facebook’s license revenue to transform a struggling business model for publishers.
Around the time Google was founded in 1998, newspapers and magazines worldwide accounted for nearly one in two dollars of advertising. According to GroupM, by 2020 publishers had a dizzyingly modest share of the $ 578 billion advertising market: 8.3 percent.