For Google, it started as a minus in a small, distant market: a public inquiry by the Australian competition committee into Big Tech and the media.
But four years later, Australia is at the forefront of a global fight against regulation that threatens to alter trading conditions between technology platforms and the news media, and more importantly for Google, to erode the fundamental pillars of the internet that helped it thrive.
The Australian Parliament is approaching a legal code that sets many precedents. It’s the first law to force Google and Facebook to pay publishers they link to for content, and the first time they would be forced to notify them of significant changes to their algorithms.
The stakes are so high that Google has threatened to pull its search engine out of the country in a showdown with a mid-sized government trying to exploit its commercial freedom.
Despite fierce lobbying in Canberra to delay or change the code, a major parliamentary committee on Friday recommended that MPs enact the code to “help protect public interest journalism.”
“It feels like what we are seeing in Australia is the end of a discretionary phase of funding for news by Google and the beginning of a new regulated phase,” said Matt Rogerson, director of public policy for the Guardian Media Group. “They will become more responsible for the value they derive from using publisher content.”
Australia’s proposed bargaining code would drastically shift the balance of power between Big Tech and the media, potentially giving major publishing groups like News Corp. the power to negotiate global content deals.
Under a so-called final bid system – best known for matching baseball salaries in the US – it would force each side to submit their proposal to an arbitrator, who would then choose which proposal to take effect.
News organizations could also negotiate collectively, increasing their muscle strength.
Other countries are watching. Canada has said it is preparing similar legislation. The EU and the UK are considering including some elements of the Australian measures in their forthcoming laws.
And this week, Microsoft urged the US to follow Australia’s lead. Microsoft’s own Bing search engine would be hit by such a move, but that didn’t stop it from taking the opportunity to undermine Google.
“We are willing to run our search business at lower margins than Google,” said Brad Smith, Microsoft president. “We are prepared to share more income with publishers.”
Google recently said nothing about its threat to leave Australia, but reiterated that the code was “unworkable”. The company said the code would set a precedent for paying for links from the search engine to external content, which goes to the heart of its business.
Kent Walker, general counsel, said the plan would expose the company to “unknown payments,” and that it would give a “favorite couple” early insight into changes to its algorithms – things that he said would “fundamentally change the Internet.”
Some argue that Google has exaggerated the point. The Australian code does not impose a pay-per-link system, and Microsoft’s Smith said arbitration would rather lead to deals where media companies get a share of the revenue or a fixed amount.
A chief executive of a news publisher compared it to the way content is licensed to the Factiva media database, which pays publishers a fee regardless of whether the content is read or searched.
That could set a dangerous precedent for Google when it comes to linking to other forms of online content – although any other industry that wants to follow in the footsteps of the news outlets would have to convince governments that they too deserved special treatment before they could. to hope. for a similar bargaining power against the tech giants.
The momentum in Australia has encouraged many news industry executives, after years of uneasy reliance on Big Tech for online traffic.
Robert Thomson, NewsCorp’s chief executive, told investors last week that it was finally beginning to see a “more fertile future for content creators” after a long campaign against Google. “It’s fair to say that regulators worldwide have joined the digital dots.”
Publishers have long argued that Google is taking unfair advantage of displaying headlines and snippets of stories in its search engine. But they lacked the bargaining power to reclaim some of those profits for themselves, and a lack of data makes it difficult to say who benefits the most from the symbiosis between the search company and the publishers.
Late last year, it said it would pay $ 1 billion to publishers around the world over the next three years, and has made deals with about 450 “news partners” in more than a dozen countries, including the UK, Japan and Brazil.
For example, the only major deal in the EU was signed in France last month, but Google made sure to pay just $ 22 million a year to a group of publishers.
Negotiations with Google are usually conducted on a secret basis with individual publishers, by country, an approach described by news leaders as “divide and conquer.” The offers are usually payments of millions of dollars over several years in exchange for a promise not to file antitrust charges against Google.
But it is not clear how much news organizations can earn, or who will benefit the most. Critics warn that the Australian code will favor a handful of powerful companies in particular, starting with Rupert Murdoch’s news empire.
“My concern is that the big players will get all the money. It’s an asset extraction by politicians and major media organizations, ”said Aron Pilhofer, a former Chief Digital Officer at The Guardian and now an associate professor at Temple University.
If Google leaves Australia, publishers could suffer too. An academic study led by Stanford University economist Susan Athey, looking at what happened when Google News withdrew from Spain in 2014, found that traffic to news sites dropped by about 10 percent.
But it also pointed to a more insidious impact on the news industry. Aggregators like Google News direct readers directly to individual stories rather than publisher homepages, undermining the ‘bundled’ business model many rely on and weakening their individual brands. Search engines also prefer smaller publishers at the expense of large ones.
The difficulties in pricing the value of news to Google may ultimately deter publishers from going all the way to arbitration in Australia for fear that the final decision would be disappointing.
Whatever the outcome from Australia, news executives don’t expect Google and Facebook’s licensing revenues to transform a struggling publisher business model.
Around the time Google was founded in 1998, newspapers and magazines accounted for nearly one in two dollars in advertising worldwide. According to GroupM, publishers accounted for a staggeringly modest share of the ad market of $ 578 billion in 2020: 8.3 percent.