Media code sparks major threat from Google

Rebecca GredleyAAP
Google boss Mel Silva says the tech giant could deny Australians access to its search engine.
Camera IconGoogle boss Mel Silva says the tech giant could deny Australians access to its search engine.

Australia's proposed media code has escalated government tensions with Google, with the tech giant threatening to remove access to its search engine if the plan is stamped into law.

The Morrison government introduced the underpinning bill to parliament in December, with a Senate committee hearing from stakeholders before the draft laws progress.

Google says the proposed code, which forces tech companies to pay for news content or face fines of up to $10 million, is unworkable and poses a huge financial risk.

Competition watchdog boss Rod Sims says without it, the power imbalance between tech giants and media companies is so great Google could offer "take it or leave it" deals.

"The only way you could get a commercial deal is if you've got some muscle in the arm of the news media businesses," Mr Sims told the Senate inquiry on Friday.

"That muscle is the code. I'm not saying it equals things up but it certainly helps."

He emphasised Google's corporate size to senators: "Google is the Goliath and News Limited is the David."

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

Shortly after Google Australia's managing director Mel Silva played the tech giant's trump card, the company launched a slick campaign against the code.

Ms Silva said leaving the Australian market was the "only rational choice" for the company if the code wasn't changed.

Prime Minister Scott Morrison hit back, saying the Australian government made the rules for the nation.

"We don't respond to threats," he told reporters in Brisbane.

Google's solution is to include its "news showcase" feature - where users can read news behind paywalls - in the code, instead of the search engine.

Google Australia's gross revenue in 2019 was $4.8 billion, with the majority - $4.3 billion - from advertising.

It paid $59 million in corporate tax.

Google is already experimenting with hiding Australian news content from local searches.

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

It says it would remove news articles from Australian user newsfeeds if the code proceeds in its current form.

The company's Simon Milner said Australian publishers benefited by $394 million between January to November last year from referral traffic from Facebook.

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, using her appearance to call for more recurrent funding.

Another hearing is scheduled before the committee is due to report on the proposed bill by February 12.

Get the latest news from thewest.com.au in your inbox.

Sign up for our emails