Microsoft calls Google’s bluff, saying it would never threaten Australian services, supports laws

As Google threatens to pull its Australian search services, another tech giant has pledged to step up and fill the void.

Microsoft has called Google’s bluff in Australia, revealing plans to “invest further” in its local search engine in response to Google’s threats to withdraw services from the country.

In a cutting statement aimed at its trillion-dollar rival, Microsoft also revealed its “full” support of Australia’s proposed news media bargaining laws, conceding it would be prepared to pay for news.

It added that “while other tech companies may sometimes threaten to leave Australia, Microsoft will never make such a threat”.

The software giant’s bold stance came after Microsoft chief executive Satya Nadella spoke with Prime Minister Scott Morrison and Communications Minister Paul Fletcher last week, and followed a threat from Google to withdraw its search engine from Australia to evade laws that would make it pay local media outlets for the news it used on its platform.

Google Australia managing director Mel Silva spoke at a Senate inquiry into proposed news media bargaining laws. Picture: NCA NewsWire / Gary Ramage

The News Media and Digital Platforms Mandatory Bargaining Code would see Google and Facebook forced to negotiate with registered media outlets in Australia to share revenue gained from their use of news content, and is currently being considered by a Senate Committee.

But Google Australia managing director Mel Silva said the company objected to elements of the proposed laws, including the terms for negotiation, and the company would prevent Australians from using the company’s search engine if the laws were passed.

“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,” Ms Silva told the inquiry.

Google currently controls 94 per cent of the search engine market in Australia, according to Statcounter, while Microsoft’s Bing attracts 3.62 per cent, and DuckDuckGo attracts less than one per cent.

But Microsoft is keen to fill any void left by Google, with its US president Brad Smith issuing a statement in strong support of “the media sector and public interest journalism” and what he called the Australian Competition and Consumer Commission’s proposal for “world-first solutions”.

Mr Smith said Microsoft “fully supports” Australia’s proposed news code, and was willing to share revenue under these laws if called to do so.

Microsoft president Brad Smith said the software giant supported Australia's news bargaining code and would invest in Bing's local results.

“The code reasonably attempts to address the bargaining power imbalance between digital platforms and Australian news businesses,” Mr Smith said.

“It also recognises the important role search plays, not only to consumers but to the thousands of Australian small businesses that rely on search and advertising technology to fund and support their organisations.

“While Microsoft is not subject to the legislation currently pending, we’d be willing to live by these rules if the government designates us.”

Mr Smith said Microsoft would also “invest further to ensure Bing is comparable to our competitors” and would ensure small businesses could transfer digital advertising to the network without cost.

“One thing is clear: while other tech companies may sometimes threaten to leave Australia, Microsoft will never make such a threat,” he said.

“We appreciate what Australia has long meant for Microsoft’s growth as a company, and we are committed to supporting the country’s national security and economic success.”

Australia Institute Centre for Responsible Technology director Peter Lewis welcomed Microsoft’s bold announcement, saying it “should send a message to both Google and Facebook”.

“Regardless of Google’s next step, Microsoft’s commitment opens the way for greater competition in Australian search, which will be of benefit to Australian media, businesses and citizens,” he said.

“This shows that the media code is workable, it will not break the internet, and that it will create opportunities for technology companies prepared to respect Australia’s democratic processes.”

Microsoft’s pledge to invest in its Australian operations comes after an aggressive marketing campaign against the proposed news code from Google Australia, including pop-up advertisements at the top of all search results last Friday, a video from Ms Silva advertised on social media, and a blog post on the Google Australia landing page.

Google also revealed it had conducted an “experiment” in Australia by removing local news stories from the search results of some users, though Ms Silva said this had only affected one per cent of users.

The Senate Committee investigating the news code is due to issue its final report on February 12.