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Australian treasurer Josh Frydenberg said it is “inevitable” that Google and other tech giants will eventually have to pay for the use of media content, in response to the internet giant’s threat to shut down its search engine in the country if forced pay local publishers for news.
Google said Friday that a bill designed to compensate publishers for the value their stories bring to the business is “unworkable,” in contrast to the requirement that media companies have to pay for showing excerpts of articles in search results.
As Google escalates a months-long standoff with the government, Frydenberg said Australia could either be a “world leader” in the pursuit of the code, or wait to follow others in passing similar legislation.
“It appears digital giants did themselves a great disservice last week when they very openly and publicly threatened the Australian public to effectively withdraw from Australia with a search if the legislation goes through as it stands,” said Frydenberg .
The threat is Google’s most powerful so far as the digital giant tries to stop a flood of regulatory action worldwide, but such a radical move would hand over an entire developed market to rivals. At least 94% of online searches in Australia go through the Alphabet Inc., according to the local competition regulator.
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Still, Google’s market share allows the company to increase the revenues of other companies to offset higher costs.
“The company’s product leader in looking for rivals such as Yahoo, Microsoft’s Bing and DuckDuckGo makes it unlikely that advertisers and publishers could switch to competing platforms in the short to medium term to drive referral traffic,” said Bloomberg Intelligence analysts Mandeep Singh. and Matthew Martino. “The company could offset this by raising ad prices and lowering the cost of acquiring traffic to mobile network operators.”
Alphabet may pass on publisher content costs to advertisers: Reply
Facebook Inc., the only other company to which the law applies, also opposes the law in Australia. The social media platform reiterated during Friday’s hearing that it is considering blocking Australians from sharing news on Facebook if the law is passed.
Frydenberg also accused the tech giants of shifting the goalposts when it came to voicing their opposition to the code, having first rejected a final arbitration model, to now opposing the idea of paying for all the clicks appear below the search results.
“If the clicks for media content make up such a small fraction of their total clicks on their search query, then the independent arbitrators will eventually find that it should reflect that payment for content – reflecting the advantage for Google and Facebook to get across those media to have content on their sites, ”he said.
The legislation aims to support a local media industry, including Rupert Murdoch’s News Corp., which is struggling to adapt to the digital economy. Google’s tougher stance led to lawmakers being reprimanded at the hearing, with Prime Minister Scott Morrison saying on Friday that “we do not respond to threats.”
“It’s about control and power,” said Johan Lidberg, associate professor at Monash University in Melbourne, specializing in media and journalism. “They signal to other regulators that they will have an argument if they do this.”
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– With help from Angus Whitley
(Adds analyst comments in seventh paragraph.)