For those not following the news – there is a big battle going down right now between the Australian Government and Google. The argument between the country and the tech giant involves paying a “fair” price for journalism – since the majority of Australians use Google and Facebook to read the news (the news does not come directly from Google or Facebook, they just provide and profit off of it).
The move by the Australian Government – to require Google, Facebook, and other tech companies to pay for the news has Google threatening to stop making their search engine available in the country. Google and Facebook are both fighting the law – but Google is the only company making threats to exit the market if it passes.
What Happens in This Saga has Many Possible Ramifications
One of the most significant outcomes from this argument is the potential for other companies to fight over the market share if Google exits. Similar to the legalization of sports betting in New Jersey, companies view this as an opportunity to move into the lucrative market and make some money.
While the betting companies operating in New Jersey did not leave when the state legalized sports betting – the companies operating increased – which is generally a positive for consumers as it forces markets to become more efficient and competitive. Microsoft has openly stated they are able and willing to fill the void if Google does indeed block their search engine. Microsoft is also openly backing the proposed law – which could help them gain some favour with Australian consumers.
Another possible outcome is if the law passes and Google does not block their search engine in Australia. If Google does not leave – the door opens for other countries passing similar laws. This is what Google is most afraid of happening – as Google does not want to lose ad revenue in even more locations.
Google Ad Revenue in Australia
Since we do not know exact numbers yet on what Google would have to pay – it is difficult to construct an accurate cost-benefit analysis for the search engine staying versus leaving – but we can take a stab at it.
The data available states that 1/8 of Google searches in Australia are news related. It also tells us that Google and Facebook combine to make 81% of all ad revenue in Australia – $4 billion of that 81% belonging to Google. Google paid $45 million in taxes on that $4 billion. If a “fair price” is 10% – Google would pay $400 million to journalism. Since we do not know their marginals or profit goals, we cannot know for sure they should stay or leave at that rate.
What About Other Google Services?
From what we know from Google – their current plans, if the Government passes laws requiring they pay for the news they provide, involves removing their search engine only. Google has not stated anything about their cloud services, email services, and other products/services they provide in Australia. It is unlikely Google stops any of these services.
What does the Public Think?
Consumer opinions in Australia on this issue are mixed. Many believe tech companies should pay for content they are profiting from – as well as more taxes on their profits. However, 95% of all searches in Australia are through Google, and many consumers do not want to lose the search engine.
The Continuing Showdowns Between Government and Tech Companies
This story is just one of many over the last few months involving the tech giants and governments around the world.
Much of the issues stem from the lack of laws around the internet. The internet has been – for lack of a better word – lawless for the last 20 years. The times are catching up – as Governments demand more accountability and force them out of their monopolies.
The battle between Google and the Australian Government is likely a long and drawn out one. Google will likely sue the Government over any law they pass before they back out of the market.
These stories will dominate parts of the news over the next few years – and how they play out will impact how we use the internet over the next five, ten, maybe even twenty years.