Australian lawmakers have drafted a new law that threatens to fundamentally change the business model used by Google and other Big Tech companies. It is not yet known whether the proposed bill will become law, but if so, it will have momentous consequences.
In response, however, Google has threatened to simply withdraw its website from use in Australia.
What’s in This New Law?
The law, known as the News Media Bargaining Code, would, if passed, require Google, Facebook and other large websites that share and spread enormous amounts of data to pay news publishers for their content. Big Tech firms and Australian news outlets would have to agree to a fair price, which would be paid in exchange for news content. If no agreement can be reached, an independent arbitration body would then step in to unilaterally set the price.
Will Google Pull Out of Australia?
In response to this, Google’s Australian Managing Director Mel Silva said at an Australian Senate hearing that, “If this version of the Code were to become law, it would give us no real choice but to stop making Google Search available in Australia. That would be a bad outcome not just for us, but for the Australian people, media diversity and small businesses who use Google Search.”
Having to pay publishers for news content would effectively upend Google’s entire business model in Australia and make it difficult, if not impossible, for the company to operate there. Google would almost certainly shift the cost of these payments onto their own users, and when users discover that they have to pay Google just to be able to find news links, they will likely stop using Google.
“The free service we offer Australian users, and our business model, has been built on the ability to link freely between websites,” explained Silva.
It remains to be seen whether the Australian bill will become law and what Google will ultimately do if it does.
Australia’s Response and the Consequences
Scott Morrison, Australia’s Prime Minister, took Google’s response as a threat and said of his country, “We don’t respond to threats.”
However, Google’s declaration that it may have to pull out of Australia may not really be a threat meant to spite the Australian government. It could just as well be an acknowledgment that the proposed law would make it financially impossible for Google to continue operating in Australia, even if it wanted to.
One of the concerns inspiring the law is that Google’s free business model makes users careless about surrendering their private data to the tech behemoth. Once users are required to pay to use Google, it is hoped they will be much warier about what they are willing to place into its hands.
Though some who support the legislation see it as a way to put a check on Google’s enormous financial power and lessen its control of the search market, the same restrictions would apply to other search engines in Australia. Google, with its greater resources, would be more easily able to bear this financial burden than smaller competitors. Thus, the legislation, if passed, may well backfire and only end up further strengthening Google’s dominance of the search engine market in Australia.