Google pop-up over media code is a bit rich considering their tax payments

An annoying pop-up has turned up on Google but the tech giant’s whinge that it is your friend seems a bit rich.

Are you guys seeing this?

Google has placed this pop-up above search results.

Whenever I google something now I get this little pop-up box. I clicked it and it played a video of the Google Australia managing director telling me that when you search on Google the results are just like a friend who recommends you a good local coffee shop.

Well, I thought to myself, that’s seems … not true? Google is not your friend giving you recommendations because it likes you, it’s trying to make money for its shareholders. What is encouraging the Google boss to say these things?

I looked deeper into the issue, and it turns out the Australian government is trying to get some money out of Google. Google, which paid just $59 million in tax in Australia in 2019, despite taking in a sweet $4.8 billion in revenues in Australia. Yep, the same Google that made $46 billion in global revenue last three months.

The government wants them to pay some money to news media businesses for the content news companies are making and, mostly, giving away for free. (nb. I’m not a staff member of any news company, I’m independent).

“Paying for links breaks the way search engines work,” said the Google Australia boss.

RELATED: Annoying pop-up on Google explained

Google’s managing director in Australia, Mel Silva, explains that Google is like a friend that recommends a coffee shop … but it really isn’t. Picture: YouTube

Pay close attention here. She means if Google pays, then search is broken. She doesn’t mean if Google gets paid. Because that’s Google’s business. Google makes other people pay for clicks on links. The minute someone suggests Google itself might pay, they lose their minds.

EVERYTHING IS ABOUT POWER

What Google is doing would probably be totally fine if there were, like, six different excellent search engines working in Australia. But there’s not. Google has a huge majority of searches. News organisations basically have to work with Google. It has market power.

Market power is something companies generally use to screw over customers. Governments like to use the law to stop us getting screwed over. That’s why we have the ACCC – the Australian Competition and Consumer Commission. The name says it all really: it looks after consumers – regular people – by worrying about competition. When there’s not enough competition, it steps in.

And at the moment the ACCC seems to be going after Google all over the place. It has a draft law on payments to the media, an enquiry into a lack of competition in advertising technology, and an enquiry on digital platforms. It also raised complaints about Google buying Fitbit!

RELATED: Google’s ‘dominant’ grip on Australia

Google paid just $59 million in tax in Australia in 2019, despite taking in $4.8 billion in revenues. Picture: Michael M. Santiago/Getty Images/AFP

Google is getting huge and hoovering up a truly stupendous share of advertising dollars in Australia. They own search and YouTube. It makes sense the government is after them.

THE BIG PICTURE

Moments like this you remember that the internet is still young. We are still figuring out what it means. The fight between Google and the government is part of a long battle that will stretch on for decades as the media landscape adjusts to the new reality of digital.

I’ve long believed Google and Facebook would end up funding content. The people who collect the ad money usually end up being the people who need content.

The internet has led to two big trends: fewer media companies, and more user-generated content. Tech companies love user-generated content because it is free and there is so much of it. User-generated content is everywhere when you think about it. Facebook posts and tweets are user-generated. YouTube videos are user-generated. Instagram content is not paid for by Instagram. They just host it. It’s made by Instagram users.

Naturally that erodes the number of jobs for professionals. If people are watching YouTube, that means less jobs in Hollywood. If they are reading blogs, that means less jobs in the traditional media.

One problem is user-generated content is rarely a carefully-researched news piece, it’s more often an angry opinion piece. Journalism is vital to make democracy work. You need professionals.

The rise of Google has led to less carefully-researched news articles. Picture: Kenzo TRIBOUILLARD / AFP.

In the old system, content was almost always made by professionals. Think about movies. They were not made by YouTubers, they were made by actors and directors and cinematographers.

Conflict always crops up where the old media system and this new universe collide. The internet usually just tries to distribute the professionally-made content for free, and then there’s an ugly fight.

It is possible to sort out a truce between the old system and the world of digital. Movies and TV got it sorted first. Movies and TV shows were being pirated left and right. Now they are mostly controlled and released on big platforms like Netflix. What is the Netflix solution? Just a paywall really. What makes it good is it is not terribly expensive and there is a LOT of good content behind it. Same with Spotify and music.

Jason Murphy is an economist | @jasemurphy. He is the author of the book Incentivology.

Originally published as Google pop-up over media code is a bit rich considering their tax payments