Google has threatened to close its search engine services to Australia. This can sound like a scary idea to small businesses who rely on Google to promote their website and sell their products or services.
So what has Google actually threatened and what will it mean if it happens?
The senate inquiry
On 22 January 2021, Google fronted an Australian senate inquiry into the federal government’s proposed media reforms. These reforms would force Google other large tech companies to pay news outlets for when content appears on their platforms.
The reforms follow an 18-month review conducted by the Australian Competition and Consumer Commission. This review found democracy faced a potential threat from the market power of tech giants over the media industry.
Google has announced if the new legislation is passed, it will remove the search function from Australian users. Google has stated the legislation would make the search function unviable.
In December, Google rejected the federal government’s news mandatory bargaining code, however, they are committed to creating a functional code. Previously in August, Google had also said the quality of its products in Australia could suffer and may stop being free if the legislation passed.
The United States government has asked Australia to scrap the proposed legislation and suggested Australia should pursue a voluntary code rather than a mandatory code.
The legislation doesn’t just apply to Google. Back in September 2020, Facebook, who the new legislation would also apply to, announced they would block all news in Australia on the platform. This would prevent any news from being shared on Facebook as well as Instagram. However, Facebook has not said it will ban its services in Australia. The tech giant clarified preventing Australia’s from accessing news on its platform was not a threat, but rather it was helping to inform the policy process.
Has this happened elsewhere?
It is important to note this isn’t the first time this threat has been made. Back in 2014, Spain passed similar legislation, stating aggregators who used text snippets and picture thumbnails from the sites they link to must pay royalties to the publishers. In response, Google said it would shut down Google News.
Germany was also considering similar legislation to Spain. Meanwhile, just this month Google reached an agreement with French publishers over how it will pay for reuse of snippets of their content. In April last year, the French competition watchdog was able to prevent Google from avoiding payments. They deemed the withdrawal of snippets to be unfair and damaging to the press sector and an abuse of a dominant market position.
What impact will this have?
The Australian Competition and Consumer Commission has found Google accounts for 95 per cent of search traffic in Australia, with the legislation aiming to remove this monopoly.
Australian politicians have stated they are positive other search engines will fill the void left by Google.
If the legislation is passed and Google does follow through on their threat, it will force users to use alternative services, such as Bing, DuckDuckGo and Yahoo!
However, if Australian’s are banned from using the search engine, Google will risk losing billions of dollars in advertising revenue. In 2019, Google earned $4.3 billion in advertising revenue, which accounts for the vast majority of its revenue intake.
Australia will have to wait and see if the legislation is passed and Google and Facebook follow through with their threats.
In the meantime, Patch Agency will continue to offer Google Ads, Facebook Ads and SEO as part of our digital marketing services.
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