Google says it may have to cut off Australians from its Search function if legislation forcing it and Facebook to pay for news content passes into law.
Facing a senate committee on Friday, managing director of Google Australia, Mel Silva, said the legislation provided “untenable risk” to the tech giant and it may see Google Search leave Australia.
“It's not a threat, it's a reality,” she told the committee.
“After looking at the legislation in detail, we do not see a way – with the financial and operational risk – that we could continue to offer a service to Australia.”
Silva said the removal of Google Search was “the worst-case scenario” considered by the tech giant.
During an hour-long grilling by the senate committee, Silva said Google grossed $4.8 billion in revenue from its Australian operations last year yet paid only $59 million in corporate tax.
Introduced to parliament late last year, the News Media Bargaining Code would require Facebook and Google to establish agreements with Australian news organisations to pay for news snippets appearing on their platforms.
It would also force them to share certain user data and provide early knowledge about algorithmic changes that would affect news rankings.
The code will see parties engage in compulsory arbitration if they cannot come to an agreement.
Google wasn’t the only one offering veiled threats to Australian internet users at the senate committee.
Representatives for Facebook reiterated its suggestion last year that the social media giant would simply stop allowing Australians – including Australian publishers – from sharing news articles if the bargaining code becomes law.
Facebook’s APAC VP of Public Policy, Simon Milner, also said the total removal of Australian news was a “worst-case scenario”.
“[This is] what we may need to do in order to protect our business,” Milner told the committee.
“That would mean that news would not be available in Australia in whatever way it is shared.”
Both Facebook and Google would prefer to pay for news on their own terms by designing dedicated products rather than coming to agreements that see Australian publishers paid for the amount of news that appears on Google Search and Facebook’s news feed.
Google has its News Showcase product and Facebook has Facebook News which sees the companies partner with international outlets to highlight specific, relevant news stories – effectively making them both second-order news publications.
Later in the day, representatives of major Australian news outlets – News Corp, AAP, Nine and The Guardian Australia – appeared in front of a sympathetic committee and made their case for why the code needs to become law.
Managing Director of the Guardian Australia, Dan Stinton, argued that tech giants have long reaped benefits from news content on their platforms without having to pay the creators.
"If you look at just how news is displayed on Google Search and Facebook News feed, it is far more than just links and snippets," he said.
"In fact many consumers simply consume their news within these environments without coming to news publishers at all.
"There are other benefits [Google and Facebook get] as well, such as the data that they collect from consumer engagement with that content both on their products, but also critically, on publisher websites."
Treasurer Josh Frydenberg said on Sunday he thought Facebook and Google “did themselves a big disservice” by threatening to pull their services.
“My view is that it is inevitable that the digital giants will be paying for original content,” he said.
“The choice for Australia, is: are we world leaders or can we follow others further down the track when they do it?”