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Google threatens to cut off its search engine in Australia if forced to pay for news content

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Google has made the extraordinary threat of removing access to its popular search engine to Australians if it is forced to pay for the news stories it links to under a proposed media bargaining code.

Prime Minister Scott Morrison has also waded into the debate saying “we don’t respond to threats”.

Mr Morrison’s response comes after a fiery Australian parliamentary inquiry in which Google Australia’s managing director Mel Silva said enforcement of the News Media Bargaining Code could result in Google shutting up shop in Australia.

“If this 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.

Prime Minister Scott Morrison responded strongly to Google Australia’s threat.

“Let me be clear, Australia makes our rules for things that Australians can do in Australia,” he said at press conference.

“It’s done by our government and that’s how things work here in Australia and people who want to work with that in Australia, you’re very welcome.

“But we don’t respond to threats.”

The New Media Bargaining Code was proposed by the Australian Government so companies  like Google and Facebook can provide payment to news outlets whose stories are used by these tech giants to generate profits and ad revenue.

In Google’s case, they make money through search and utilising user data to target them with advertising.

Linking the latest news stories helps Google make money and makes them more attractive to advertisers who spend their money with Google and Facebook instead of directly with the news outlets.

Today Google and Facebook now have more than 70 per cent of the digital advertising market.

Google’s open letter in 2020

Ms Silva went on to tell the inquiry that shutting off Google search in Australia would be “our worst case scenario. We do not want to be in this situation. We would love to get an outcome where there is a workable outcome for all parties.”

Ms Silva said Google had previously made deals with content publishers around the world and was hoping they could strike a deal with publishers to steer users to their content.

From the media’s side, there is a cost to producing high-quality journalism and maintaining that quality.

Advertising revenue for these news organisations have dwindled greatly over the years and newsrooms are shrinking as a result.

Meanwhile trillion dollar company Google generated $160 billion in revenue globally in 2019 and $5 billion in Australia alone.

Earlier this year Google published an open letter and implied the news media code would affect search and put data at risk.

Facebook also issued a threat in 2020 to ban users sharing news content on the social media platform if it had to pay for news content under the code.

The ACCC says 32 per cent of Australian readers visited news sites through Google and 18 per cent via Facebook in 2018.

In the first five months of 2020, Facebook says it sent more than 2.3 billion clicks from Facebook’s newsfeed to Australian news websites for free – a volume the social media company values at more than $200m.

The other issue for Google and Facebook if the News Media Bargaining Code is ratified in its present form is not only cost of paying for news content (if they decide to abide by the ruling) but also to the precedent it would set for other markets around the world that are a lot bigger than Australia.

Places like the US and Europe also have huge media companies that may look on the ruling in Australia as a way of safeguarding their revenue.