Google is threatening to cancel their Google Search services in Australia in response to Canberra’s new law proposal. The proposed Treasury Laws Amendment (News Media and Digital Platforms Mandatory Bargaining Code) Bill 2020 is intended to help local news publishers by having media giants like Google and Facebook compensate news outlets through paying license fees for using their journalistic content on their platforms. The proposed laws are specifically in response to Google and Facebook displaying news articles without paying the news publishers. The consequences of this proposed law will be immense for all parties involved as Google has a 94.45% search engine market share in Australia. Their next competitor is Bing with only 3.63% as of January 2021. Meanwhile, 39% of Australians use Facebook as their general news source, according to the University of Canberra’s Digital News Report 2020.
If passed, the law would have news outlets privately or collectively come to an agreement with Google and Facebook on license fees. If an agreement on the amount of fees paid by these media giants is not made within three months of formal negotiations, an Australian judge will arbitrate an agreement.
For Google, this is a matter of billions of dollars. They generate revenue from displaying advertisements next to sites and from clicks. In recent years, the media industry in Australia, and around the world, has been struggling financially. With paper-print subscriptions largely extinct, the public is gravitating toward free websites for news consumption. Some news organizations like the New York Times have maintained a subscription model for their online website. However, smaller media outlets cannot gather enough users to have a financially sustainable online subscription model. The Australian Competition and Consumer Commission discovered that for every A$100 of online advertising spent, A$53 goes to Google, A$28 to Facebook, and A$19 to other media companies. It is the hope of the Australian government that the proposed law will allow them to share a percentage of Google’s billion-dollar revenue stream.
Some internet users, most of whom rely extensively on Google Search and other Google Services, are afraid that Australia is overstepping the line by proposing too stringent legislation. Google and Facebook’s home country, the United States, also directly asked the Australian parliament to abandon their proposal. United States Trade Representatives Daniel Bahar and Karl Ehlers wrote to the Australian Senate Committee on Economics, stating “Given the United States’ significant outstanding concerns, we urge Australia not to rush the passage of this legislative proposal.” Others are critical towards Google for playing a power move against Australia to prohibit the government from creating any meaningful legislation against Big Tech. Google’s public threats have been met with similar staunchness from Canberra. Prime Minister Scott Morrison said in response that “we don’t respond to threats.” He also said, “Australia makes our rules for things you can do in Australia. That’s done in our Parliament.”
Google’s threats are being considered seriously. The tech company has exercised this power once before in January 2021. In what Google called an “experiment,” Google blocked Australian users from seeing local news content from search results. Their monopolistic power was demonstrated by the Guardian’s investigation that showed major local news sources’ main websites, like the Herald Sun, being completely hidden from Google searches. Google said they are simply “running a few experiments that will each reach about 1% of Google Search users in Australia.” However, the timing of Google’s self-proclaimed experiment was seen as a direct response to Australia’s proposed legislation rather than an innocent experiment. In efforts to have public support, Google also put pop-up warnings on their homepage that said “The way Aussies use Google is at risk.” When users click on the warning, they are directed to Google Australia’s open letter against the proposed regulation. Google’s recent actions are chilling examples of their power to determine what is visible on the Internet.
This legislation is on global watch. Similar, albeit more limited, proposals are being debated in the European Union. The EU has a history of going against Big Tech’s free enterprise demands. Two new regulatory laws were introduced in December 2020: Digital Services Act (DSA) and Digital Markets Act (DMA). The DSA acts to protect users’ personal data by having platforms reveal their algorithms and content management to the public. The DMA is intended as antitrust law to encourage small companies and discourage monopolies like Google that can unilaterally control what users see through their search engine. Failure to comply with the DSA and DMA can respectively result in fines up to 6% and up to 10% of a firm’s global annual turnover. What occurs in Australia will have far-reaching implications for Google and other Big Tech companies in the EU and around the world in the near future.
Note: Facebook blocked news in Australia as of February 18, 2021.
Hyonjun Yun is from Seoul, South Korea and is studying Political Science and Environmental Sciences and Policy.