Google threat to pull search from Australia if forced to pay for news

Google’s Australian boss Mel Silva told a Senate committee hearing in Canberra the proposed code of conduct would leave the tech major with ‘no choice’.

Google threatened to block Australian users from accessing its search service unless the government changed proposed legislation to make the internet giant pay news outlets for their content. Picture: AFP

Google has threatened to pull its flagship search business from Australia if it has to sign up to a landmark agreement that will force the technology giants to the bargaining table to pay for news.

The comments by Google’s Australian boss Mel Silva were made at a Senate committee hearing in Canberra earlier Friday, claiming the current proposed code of conduct – which will be backed by law – would represent operational risk for the Silicon Valley tech major.

“The principle of unrestricted linking between websites is fundamental to search, and coupled with the unmanageable financial and operational risk, 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 hearing.

However Prime Minister Scott Morrison on Friday quickly slapped down the comments saying the government does not respond to threats.

“Australia makes our rules for things you can do in Australia,” he said.

“And people who want to work with that in Australia you’re very welcome. But we don’t respond to threats”.

With the federal government’s news media bargaining code — which is designed to support a diverse and financially sustainable Australian news media sector — due to be voted on in the Senate next month, representatives from Google, Facebook and senior media executives have fronted the hearing to make their final pitches to the panel of cross-party senators.

News Corp senior executive Campbell Reid told the hearing that the need for Australian news companies to be adequately compensated by the digital platforms for their use of the publishers’ content was “an urgent problem.”

“The code you are considering can play a vital role in securing the future of real news for all Australians,” he said. News Corp is publisher of The Australian and state-based titles including the Herald Sun, The Daily Telegraph, The Courier Mail and The Advertiser.

Making reference to attempts by Google and Facebook to water down elements of the proposed law, Mr Reid said while media companies are “genuinely open-minded” if there are clear opportunities to enhance the code “we are staunchly opposed to attempts to undermine it either in spirit or its effectiveness.”

Google’s Ms Silva says the tech giant is not opposed in theory to a mandatory media bargaining code, but key sticking points include the proposed so-called “baseball arbitration” process, and that Google should not be paying for news that appears in its search results.

“We have a workable solution…I think we can get there. We’re not opposed to a code, we’re not opposed to paying publishers, the details matter,” she said.

Mel Silva from Google answered questions during the Senate inquiry into the news media bargaining code via video link. Picture: NCA NewsWire/Gary Ramage

“We’re working on obviously a number of scenarios … And the hardest financial risk for us is the inability to calculate the outcome from open ended, and one sided arbitrations. The criteria that sits underneath the prescribed arbitration format are very vague and one sided, so for example the costs of publishers’ production is included, not the costs for Google. “It is nigh impossible for us to calculate the risk and exposure that we would be exposed to if the code were to pass in its current form.”

Meanwhile social media giant Facebook – which also fronted the committee - renewed threats to block the sharing of news in Australia.

Facebook vice-president of policy for Asia Pacific Simon Milner said that under the current version of the code local users would no longer be able to post any news stories, videos or other news-related content to the platform.

“[Users] would be able to have very full use of Facebook but if [they] tried to share something like that because of this law, which creates burdens, financial burdens, which are unknowable and uncapped, then that’s the small part of Facebook which involves news will no longer be possible,” Mr Milner said.

Mr Milner said the tech company derives “no commercial value” from news in Australia, and that Australian news accounts for less than 5 per cent of an average user’s news feed.

Meanwhile, Google’s Ms Silva told the hearing the search giant accounts for 95 per cent of web searches in Australia, and paid $59m in tax last year, on $4.3bn in advertising revenue.

“We comply with the tax laws of the land,” she said. “We’re a reseller, that’s the way that the tax laws have been written, and we comply with the laws of the land when it comes to tax.”

Ms Silva also told the Senate committee that a recent trial of its news search function in which it buried news links was conducted because Google was preparing for a “worst case scenario” in which it would withdraw services from the Australian market.

“We’ve also been planning for how we would operationalise and comply with a workable code, because that is a significant shift in our operations, getting deals done and complying with regulations. All of these we have planned for”

“There is an area of course where we have in our proposed workable code, the need to understand the value between Google and these publishers, and the experiments were designed to help fill out that scenario”.

The hearing continues.