Google's threat to quit Australia follows years of wrangling with news moguls like Rupert Murdoch and lawmakers worried by its power
- Australia is set to introduce tough new regulation on Big Tech platforms.
- Google threatened to leave the country over proposals that would force it to pay for news.
- Insider broke down everything you need to know ahead of the bill coming into law.
- Visit the Business section of Insider for more stories.
In 2017, Australian Prime Minister Scott Morrison took a trip to Google’s Silicon Valley headquarters.
Morrison was finance minister at the time and — according to the Sydney Morning Herald — offered the tech giant’s executives some stern words of advice: “You created this world and we would prefer you to fix the issues, otherwise government will be forced to step in and you won’t like it.”
Four years later, the Aussie leader looks set to make good on his promise, with legislators now hashing out the details of proposed new laws that would force Google and Facebook to pay for the news articles they display.
How did this get started?
Last April, the Australian government asked its competition authority — the ACCC (Australian Competition and Consumer Commission) — to draft a new law addressing “bargaining power imbalances” between news media businesses and digital platforms, focusing specifically on Google and Facebook.
The imbalance in Google’s case, the argument went, was that its search engine is enhanced by its news tab, which displays the day’s headlines and snippets of articles from major publishers for free. In turn, Google’s search engine generates billions of dollars in revenue — and news publishers would like to see a cut of that.
Adding salt to publishers’ wounds is that clicking through on top news stories on mobile will take the reader not directly through to the news publisher’s website, but a version running on Google-created AMP (Accelerated Mobile Pages) tech. This can speed up page loading times, but news publishers and developers have griped that it cedes yet more control to Google.
All of this led to the perception that there is an imbalance of power between Google, and the news publishers whose content it sometimes relies on.
The draft code published by the Australian government would “allow news media businesses to bargain individually or collectively” with Facebook and Google.
Under the law, publishers could notify the tech companies they want a new arrangement, from which point they have three months to hash out a price for the firms to display their content.
If a deal isn’t struck after three months, both sides would enter “compulsory arbitration” overseen by government officials.
The proposals emerged as leaders around the world began ratcheting up the pressure on Big Tech: the EU fined Google $5 billion for abusing the dominance of Android, Facebook CEO Mark Zuckerberg testified before the US Congress, and YouTube faced renewed pressure to crack down on viral misinformation.
“There has been an emerging pattern of action against Google and other big tech globally over the last few years,” Hannah Marshall, a partner specializing in antitrust at Australian legal firm Marque Lawyers, told Insider. “For example, there have been movements in the EU towards making Google pay for news content for some time, framed around copyright laws.”
When the bill was introduced for debate in the Australian parliament in December, things really kicked off: Google threatened to shut down its search engine locally altogether, Bing offered to take its spot, and CEO Sundar Pichai held a one-on-one meeting with PM Morrison himself.
Doesn’t Google already pay for news?
Only since last June. Under mounting global pressure, Google agreed to pay a small number of news outlets for “high-quality” stories in Brazil, Germany, and — yes – Australia.
Under the agreements, Google users can access paywalled content for free, with the tech giant covering the costs. The firm has since inked similar deals with publishers in France and, according to the Telegraph, more than 120 outlets in the UK.
But this marks a relatively small concession on Google’s part, and isn’t anything like the system Australian legislators are currently envisioning. Rather than Google stumping up cash every time a user wants an article behind the paywall, lawmakers want it to pay news publishers just for displaying news stories – paywalled or not – in its search results.
That presents a fundamental challenge to Google’s business model.
“Google frames it as: ‘Our search engine drives traffic to your website, we’re doing you a favour, why should we pay you?’ But their search engine is only so valuable because it’s been allowed to gain a monopoly,” Jason Kint, director of publisher trade association Digital Content Next and occasional Google critic, told Insider.
Google is the far and away the dominant search engine in Australia and globally, with nearly 95% market share in the country, according to StatCounter. Bing is the second most popular search engine in the country with around 4%, while DuckDuckGo and Ecosia boast market share of less than 1%. (Despite this, rivals have offered to step in should Google abandon Australia.)
Kint added: “If Google did leave Australia, consumers would just find another way to search for their news or whatever else they wanted to look up.”
Is this just the latest in Murdoch vs. Google?
Rupert Murdoch, the Australian media mogul and billionaire behind Fox News other major news outlets around the world, has made no secret of his problems with Google.
In 2018, his News Corp organization submitted a report to the ACCC calling for the tech giant to be broken up, claiming the firm “leverages its market power in both general search services and ad tech services to the detriment of consumers, advertisers and news publishers.” But is the Australian government really just doing Murdoch’s dirty work for him?
“Australia’s news media code goes further than others in its requirement to make Google and Facebook pay to link to news content,” says legal expert Marshall. “This is likely buoyed by fierce lobbying from the major media players in Australia, targeting a broader policy position which would have Google and Facebook subsidize the ailing news industry.”
But not everyone sees it that way.
Prof Rasmus Kleis Nielsen, Director of the Reuters Institute for the Study of Journalism at Oxford University, told Insider: “I don’t think this can be reduced to the ongoing antagonism between Rupert Murdoch and Google. A number of other large publishers are broadly in line with the position he has advanced, and I believe there has been broad support for reforms across the political spectrum.”
He added: “Many politicians have different reservations about the power of a small number of extremely powerful technology companies, and they will invariably have different ideas about which remedies will be most effective.”
Nonetheless, Nielsen highlighted the words of his Oxford colleague and creator of the World Wide Web, Sir Tim Berners Lee, who warned last month that the precedent set by Australia’s proposals could make the web unworkable.
“This issue has become so politicized and polarized, it’s hard to have a reasoned debate. Of course, the tech companies are going to be driven by commercial self-interest, but I think it’s worth considering the long-term consequences,” he added.
What happens next?
Australia’s communications minister Paul Fletcher said the government’s controversial proposals can be expected to come into law “fairly soon.”
“We have seen from time to time over the last few years, big tech companies — typically US tech companies — make threats about leaving Australia if they weren’t happy with our regulatory settings,” he told CNBC.
Meanwhile, the EU looks set to follow Australia’s lead, with MEPs set to make similar demands of the tech giants, according to the Financial Times, as legislators seek to build on the framework outlined in the recently proposed EU Digital Services and Digital Markets acts.
Could we see a whack-a-mole approach, with major tech companies threatening to pull out from different nations as local legislation changes?
Kint said: “It’s possible.”
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