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Google threatens to cancel Aussie service over media code

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Prime Minister Scott Morrison has told Google his government doesn’t respond to threats after the tech giant said it would leave Australia and remove access to its search engine if the media code becomes law.

 

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“Australia makes our rules for things you can do in Australia,” the prime minister told reporters in Brisbane

“That’s done in our parliament. It’s done by our government. We don’t respond to threats.

He was speaking after Google Australia’s managing director Mel Silva played the tech giant’s trump card this morning at a Senate inquiry into the bill underpinning the code.

Shortly after her appearance, Google launched a slick campaign against the code, aiming to get Australians to sympathise with the multi-billion dollar company.

The planned media code forces tech giants to pay for news content or face fines of up to $10 million.

It aims to deal with the power imbalance brought about by online advertisers flocking to Facebook and Google, who have a combined 81 per cent share of the online advertising market.

News media have typically relied on advertising for funding, with the loss of revenue resulting in huge job losses.

Facebook believes the draft code is unworkable as it would force the company to strike deals with all news publishers.

Google is experimenting with hiding Australian news content for local searches, a change Silva said affected one per cent of users.

A little more than that – 1.25 per cent – of the platform’s search results are news.

Silva said the code was unworkable and provided an untenable financial risk to the company.

Leaving the Australian market was the only choice if the code wasn’t tweaked, she said.

“It is the only rational choice if this law were to pass for us.

The company’s solution is to offer up its “news showcase” feature to the code, instead of the search engine.

Google Australia’s gross revenue last financial year was $4.8 billion, with the majority – $4.3 billion – from advertising.

Google owns video sharing website YouTube, which has been left out of the code after the government gave in.

Facebook’s Simon Milner said the “sheer volume” of deals it would have to strike was unworkable.

He said Australian publishers benefited by $394 million between January to November last year from referral traffic from Facebook.

Treasurer Josh Frydenberg introduced the underpinning bill to parliament in December.

The government would prefer Facebook and Google negotiate commercial deals first, with the code kicking in if talks fail.

News Corporation, Nine and Guardian Australia told the inquiry the code would help money flow to media companies, allowing more journalists to be hired.

Australian Associated Press chief Emma Cowdroy said the proposed laws excluded the national newswire.

She called for more recurrent funding for AAP, saying national newswires overseas receive much more support from their respective governments.

AAP was saved from closure last year by a group of philanthropists, after News Corp and Nine pulled the pin on the joint venture to fund their own breaking news services.

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