Google has threatened to remove its search engine from Australia over the nation’s attempt to make the tech giant share royalties with news publishers.
Australia is introducing a world-first law to make Google, Facebook and potentially other tech companies pay media outlets for their news content.
But the US firms have fought back, warning the law would make them withdraw some of their services.
Australian PM Scott Morrison said lawmakers would not yield to “threats”.
Though Australia is far from Google’s largest market, the proposed news code is seen as a possible global test case for how governments could seek to regulate big tech firms.
Australia’s code would tie Google and Facebook to mediated negotiations with publishers over the value of news content, if no agreement could be reached first.
Google Australia managing director Mel Silva told a Senate hearing on Friday that the laws were “unworkable”.
But lawmakers challenged this, accusing Google of “blackmail” and bullying Australia for raising the reform.
“It’s going to go worldwide. Are you going to pull out of every market, are you? Is this about stopping the precedence?” asked Senator Rex Patrick.
Ms Silva replied that the code was “an untenable risk for our Australian operations”.
Mr Morrison said his government remained committed to progressing the laws through parliament this year.
“Let me be clear: Australia makes our rules for things you can do in Australia. That’s done in our parliament,” he told reporters on Friday.
Google is the dominant search engine in Australia and has been described by the government as a near-essential utility with little market competition.
The government has argued that because the tech platforms gain customers from people who want to read the news, the tech giants should pay newsrooms a “fair” amount for their journalism.
In addition, it has argued that the financial support is needed for its embattled news industry because a strong media is vital to democracy.
Australian print media has seen a 75% decline in advertising revenue since 2005, according to the government.
Google’s threat to remove its entire search product is its most severe yet. News accounts for just 12.5% of Google searches in Australia, according to lawmakers.
This is a highly unusual threat.
Google dominates the search engine market with a nearly 90% market share. Almost all its revenue is from ads.
For Google to threaten to pull out of an entire country suggests the company is worried.
Australia is nowhere near its biggest market. But Google execs are fearful about the precedent these new laws could have.
Google has had a very profitable pandemic so far, whilst many local newspapers have struggled. That doesn’t look good, and Australian politicians aren’t the first, and won’t be the last, to point that out.
Google says it wants to help fund original, local journalism.
But clearly it believes that what is being proposed in Australia could fundamentally hurt its business model if replicated elsewhere.