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What you need to know about the News Media Bargaining Code and Google’s threat to leave Australia

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If you’ve used Google in the past two weeks you would no doubt have noticed a yellow box with an important announcement from Google concerning the proposed News Media Bargaining Code.

And if you’ve at least skimmed the news headlines you would know that Google is threatening to withdraw from Australia if the new News Media Bargaining Code is passed into law.

The tension between the Australian Government and Google has gained global attention for good reason. The proposed Code will have an extensive impact on the way the Australian media works, our collective web experiences and the way we do business.

For those of us operating in the digital space and for hundreds of thousands of businesses that rely on Google products to reach customers and do businesses, the prospect of losing Google is beyond daunting.

So what’s it all about?

In 2017 the ACCC set up a Digital Platforms Branch to conduct an inquiry into the impact search engines, social media platforms and other tech giants have on competition in online marketing and media services.

Specifically, the inquiry was looking into digital platforms and their impact on how news and journalistic content is supplied and the flow-on effect for content creators, media consumers and publishers.

In response to the ACCC’s final report in July 2019, the News Media Bargaining Code was established as first a voluntary code, and then as a proposed law between tech companies and publishers as a way to balance the negotiating power.

How would the Media Code work?

Essentially the News Media Bargaining Code will enforce tech companies like Google and Facebook to pay certain media companies to link to their content.

The initial purpose of the proposed New Media Bargaining Code was to support the financial future of publishers by forcing Google, Facebook and other major platforms to pay selected news outlets to show links to their articles.

The important definition to understand is this: the cost is not for the article itself – it’s for linking to the article.

This is where Google and Facebook have come out swinging. In early public discussions in 2020 major media companies including Nine and NewsCorp set huge price tags for access to their content – $600 million and $1billion respectively.

While there is no doubt ensuring a free and open marketplace and media diversity is essential, critics of the proposed Code are concerned that its impact will in fact reduce media diversity.

Small publishers that rely on digital traffic and readerships would lose their primary channel to market if Google and Facebook withdraw, giving the major media conglomerates even more influence over the market and politics.

Why is Google threatening to withdraw?

Not only are there major concerns over the impact of the Code on the media and political landscape, there are also significant concerns about the impact on search engine business models and our collective web experience.

Google’s argument is the Media code will restrict a free and open web. They aren’t publishing the articles, simply linking to them, so shouldn’t have to pay to show links in Google search.

In an open letter Mel Silva, Managing Director for Google Australia explained: “When you put a price on linking to certain information, you break the way that search engines work, and you no longer have a free and open web.”

Google’s solution: Google News Showcase

Google says they agree that creating a fair marketplace for journalism and media content is important. They are committed to finding a workable code, and have proposed an initiative called Google News Showcase in which news businesses will be paid for their editorial expertise and journalism rather than their links to help publish and promote their stories online.

Google has pledged to invest AU$1.3billion into the initiative over the next three years. Google News Showcase launched in 2020 and has already gained a membership base of over 450 publications.

What happens if Google withdraws?

Google currently controls 94% of the market share for search engines in Australia and provides services to over 19 million Australians. For most people in Australia, the term ‘Google’ is synonymous with the internet.

It is yet to be seen what products and services Google will remove from the Australian marketplace if it withdraws. However, if the search engine is withdrawn from Australia it would be reasonable to assume that all forms of Google advertising will be severely impacted if not completely removed. This will cause a major economic shift and challenge for many businesses especially e-commerce that relies on digital marketing to operate.

What happens next?

Withdrawing from Australia would not be setting a precedent for Google, as they have previously withdrawn from China. And much as the search engine Bing is now China’s equivalent to Google, it would likely be the replacement market shareholder here in Australia.

Microsoft, the owner of Bing, has publicly agreed to support the Government’s News Media Bargaining Code and has said it can replace Google if they follow through on threats to withdraw.

On the morning of 4th of February, Australian Prime Minister Scott Morrison met with Sundar Pitchai the CEO of Alphabet, the company that runs Google. It is yet to be seen what the outcome will be but you can bet it will impact you, your business and your internet experience.

To stay informed and find out exactly how the developments will impact digital marketing sign up to our newsletter or get in touch with our team.

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