Google has threatened to pull its search engine from Australia over the federal government’s media code that would force the tech giant to pay for news content.
The company’s managing director Mel Silva played Google’s trump card on Friday at a Senate inquiry into the bill underpinning the proposed code.
Ms Silva says it’s unworkable and provides an untenable risk to the company as they’re unable to even calculate the financial risk.
Leaving the Australian market is the only choice if the code isn’t tweaked.
“Any rational business needs to assess the impacts of any legislative change on our business, our product and our operations,” Ms Silva said.
“It is the only rational choice if this law were to pass for us.
“We have a workable solution. We’re not opposed to a code, we’re not opposed to paying publishers for value but the details matter.”
She said Google Australia’s gross revenue last financial year was $4.8 billion, with the majority – $4.3 billion – from advertising.
That’s the crux of the issue, with the code aimed at levelling bargaining power between tech giants and news companies.
The tech giants face $10 million fines if they don’t follow the rules of the proposed code, designed to ensure they pay for news.
Treasurer Josh Frydenberg introduced the underpinning bill to parliament in December, praising the “world-leading” code.
One of Google’s main concerns is that it would have to pay all registered news businesses for having results through the platform’s search engine.
The company doesn’t want this and is instead offering to have its “news showcase” feature included, which allows users to read some stories that are otherwise behind paywalls.
Google says it has closed seven deals in Australia – including with Australian Community Media – for the “news showcase” feature, which has been put on pause because of the proposed media code.
The government says it would prefer Facebook and Google to negotiate commercial deals with news media companies.
But if such talks fail the parties would be forced into talks under the “bargaining code” to decide how much the digital platforms should pay.
The mandatory code aims to combat the bargaining power imbalance between news businesses and digital platforms, brought on by advertisers flocking to the latter.
Facebook is also unhappy with the plan, arguing in its submission to the inquiry that the proposal has already deterred its planned investments in Australian news.
Representatives from News Corporation, Australian Associated Press, Nine, Guardian Australia, the ABC and SBS will also appear at Friday’s hearing.
Representatives from Twitter won’t be appearing on Friday, but in its submission the company has expressed concern the code won’t protect consumer welfare and choice and instead entrench dominant players.