Update on the News Media Bargaining Code and Google in Australia
We need to give you an important update about a proposed new law—currently in Senate Committee Inquiry and soon to be voted on by the Government—which would break Google Search as you know it.
We want to explain why we believe the law—the News Media Bargaining Code—would undermine the benefits of the internet for millions of Australians, what would happen if the law passes in its current form, and why there’s a better option for supporting Australian journalism which doesn’t involve breaking the free and open web for everyone.
Why the law would break the way Google works
The Code was originally designed to support the financial future of publishers—an important goal which we’ve committed to support. But the way it tries to achieve this would break the way Google Search works.
Search engines (and the internet as a whole) are built on the ability to link someone to a website for free. You know how it goes. You search for a topic, and the results show up as a series of links and brief snippets of text, giving you an idea of your options before you decide whether to click through and spend your time (and potentially money) with that website or business.
Most businesses welcome the fact that people can find them in search results—and if they don’t, they can choose not to be found. It takes a few clicks to opt out. That’s the way search engines have operated for over two decades. But the Code would throw this system out overnight, forcing Google to pay selected publishers for those links. Not for the article itself: just for the link that pops up in your results, and the brief description underneath it.
The Code would force Google to pay for links to certain publishers, despite the value they already receive in free user traffic from Google.
Right now, no website or search engine pays to connect people to other sites through links. This law would change that, making Google pay to provide links for the first time in our history. If the law requires Google to pay to link people to websites, it’s a slippery slope. After all, if one type of business gets paid for appearing in Search, why shouldn’t others? Going down that route would destroy the business model of any search engine, Google included. And if a search engine has to pay to show links, what’s to stop links elsewhere coming with a price tag, too?
It’s not just Google that has concerns about the Code. Among the groups who made submissions to a recent Senate inquiry expressing concern are the Business Council of Australia, Bundaberg Regional Council, the US Trade Representative, and the inventor of the world wide web. Others have voiced concerns previously.
There are other serious problems remaining with the law—but at the heart of it, it comes down to this: the Code’s rules would dismantle a free and open service that’s been built to serve everyone, and replace it with one where links come at a price, and where the Government would give a handful of news businesses an advantage over everybody else. That puts Google’s business in Australia—and the services we provide more than 19 million Australians—at enormous risk.
What’s the way forward?
It doesn’t have to be this way.
Our objections aren’t about complying with a code or the principle of paying to support journalists—but how we do that matters. We need to find a way of supporting journalism without breaking Google Search—and we’ve come to the table with a solution.
We’re proposing to reach deals to pay publishers through Google News Showcase, a program we’ll invest AU$1.3 billion in globally over the next three years to help news businesses publish and promote their stories online—paying for their editorial expertise and beyond-the-paywall access to their journalism, rather than for links. Since News Showcase launched last year, we’ve doubled the number of publications that are part of the program globally to nearly 450—and we know Australian publishers want to be involved. We think News Showcase is the right solution for negotiating payments to publishers under the Code. It offers a fair, practical way forward, meets the original goals of the law, and helps secure a strong future for Australian news.
What happens if the law is passed?
The ability to link freely between websites is fundamental to Search. This code creates an unreasonable and unmanageable financial and operational risk to our business. If the Code were to become law in its current form, we would have no real choice but to stop making Google Search available in Australia. That is the last thing I or Google want to have happen—especially when there is a way forward that allows us to support Australian journalism without breaking Search. We think that would be a bad outcome not just for us, but for the millions of people and businesses across Australia who use Google Search every day.
The good news is: there’s still time to get the Code right. We participated in a recent Senate hearing, and we’re going to keep making our case as clearly and constructively as we can. We look forward to working with the policymakers and publishers to achieve an outcome that’s fair for everyone.
Managing Director, Google Australia
Why does the revised Code not work for Google?
While the Government has made some changes, there are still serious problems:
Payments for snippets and links: The Code forces Google to pay to link, fundamentally breaking how search engines work. This in turn sets the groundwork to unravel the key principles of the open internet people use every day — something neither a search engine nor anyone who enjoys the benefits of the free and open web should accept.
14 days algorithm notification: It requires us to give news publishers special treatment—14 days’ notice of certain algorithms changes and ‘internal practices’. Even if we could comply, that would delay important updates for our users and give special treatment to news publishers in a way that would disadvantage everyone else.
Unfair and unprecedented arbitration process: It imposes an unfair and unprecedented baseball arbitration model that considers only publishers’ costs, not Google’s and incentivises publishers to make enormous and unreasonable demands.
What would a workable Code look like?
We are fine to comply with a Code and to pay to help support a strong future for the news industry—we just need to find a way of supporting journalism without breaking how Google Search works. So instead of paying for links, we have proposed a model where Google would pay Australian news businesses through Google News Showcase: our AU$1.38 billion (US$1 billion) commitment to partner with publishers around the world on a new way of presenting and promoting news online.
With News Showcase, we would pay for publishers’ editorial expertise and for beyond-the-paywall access to news content for users—not for links to news content. Over 400 publications around the world are already on board, and we know that this is a model that is welcome by Australian publishers, too, as they were among the first to sign up globally.
You can read more about News Showcase in this blog, and more about the solutions we’re proposing for the other remaining issues here.
Why do you think this might break how the open web works?
Right now, no website or search engine in Australia pays to connect people to other sites through links. This law would change that, making Google pay to provide links for the first time in our history.
If the law requires Google to pay to link people to websites, it’s a slippery slope. If one type of business gets paid for appearing in Search, why shouldn’t others? Going down that route would destroy the business model of any search engine, Google included. And if a search engine has to pay to show links, what’s to stop links elsewhere coming with a price tag, too? As such, the Code would set the groundwork to unravel the key principles of the open internet people use every day — something neither a search engine nor anyone who enjoys the benefits of the free and open web should accept.
What’s the impact of the revised law on YouTube?
The Australian Government has indicated that YouTube will not be included as a designated service in the current version of the Code. They’ve indicated that the only Google service within scope is Google Search. However, the Code allows the Treasurer to designate other services at any time once this has become law. Additional services could also be added in the Senate inquiry phase. In fact, shortly before the revised law was released, several media companies asked for all Google and Facebook services to be included (“The Code must apply to the full suite of products offered by Google and Facebook”), and the Australian Financial Review reported on 8 December: “Local media organisations do not like the exclusion – at least for now – of Facebook’s Instagram and Google’s YouTube from the code.” (AFR: Treasurer's big stick turns into a nudge).
Is Google going to start charging for its services?
How does Google ‘use’ news content?
Google doesn’t “use” news content—we link you to it, just like we link you to every other page on the web—think Wikipedia entries, personal blogs or business websites. We sort through hundreds of billions of webpages to find the most relevant, useful results in a fraction of a second, and present them in a way that helps you find what you’re looking for—and then we take you to the source of that information.
Some large publishers have inaccurately accused us of “stealing” news content, but how we connect people with news content, such as articles from the Herald Sun or the Sydney Morning Herald, is no different than the way Search connects you to your footy team’s home page, a website with your favourite recipes, or official Government websites. We sent more than 3 billion clicks and visits to Australian news publishers in 2018—for no charge—allowing these publishers to make money by showing their own ads, showing other articles or converting people into new paying subscribers—driving an estimated $218 million worth of value.
Does Google value news content?
Yes. We recognise its role in educating and informing Australians, and in strengthening democracy. But it represents a very small proportion of the websites that people choose to visit from our search results. And it is not financially lucrative for us.
Google makes money from ads, and we don't run ads on Google News or the News Tab in Search. In 2019, only a very small percentage of Google Search queries were news-related and Google generated approximately AU$10 million in revenue—not profit—from clicks on ads against news-related queries in Australia. Most of our revenue comes from search queries for highly commercial topics, like when someone searches for ‘running shoes’ and then clicks on an ad. Businesses want their ads to appear against queries when a user is looking to buy a product or find a good deal. It’s these types of queries that lie at the heart of our Search ads business.
Do websites have a choice about whether they appear on Google Search?
Hasn’t Google taken news publishers’ revenue?
Actually, an analysis recently conducted for Google by the economists at AlphaBeta, shows that the loss of newspaper revenue resulted primarily from the loss of classified ads to online classifieds businesses such as Domain, Realestate.com.au, Carsales and Seek. Between 2002 and 2018, newspaper revenue fell from $4.4 billion to $3.0 billion. Of that decline, 92% was from the loss of classified ads, and most of these classified revenues went to specialist online providers that target niches such as job advertisements, second-hand goods, or real estate listings. Almost none went to Google.
Does Google financially support the news industry?
For many years we’ve helped publishers make money by providing tools and technology that helps them sell advertising on their sites. Businesses which advertise with Google can choose to have their ads appear on news publishers’ sites with a few clicks. This removes a lot of the hard work for Australian publishers and gives them access to a huge range of new advertisers - often overseas - who work with Google. Of course we pass on the vast majority of money these advertisers pay us directly to Australian publishers.
More recently we’ve created technology to help publishers drive revenue through subscriptions. In addition, we have developed the Google News Initiative, designed to help journalism adapt to the digital age. In Australia, we have partnered with the Walkley Foundation to deliver free training for up to 5,000 journalists and students in Australia and New Zealand. Nine Australian media organisations have received our Innovation Challenge and YouTube innovation funding. We also provide emergency funding to publishers impacted by COVID-19.
And importantly, in July last year, we announced our biggest ever commitment to the news industry, with AU$1.3 billion globally for partnerships with publishers over the next three years.
Why can’t you just remove news from Google Search?
In this proposed law, “news” is defined vaguely and broadly—way beyond what most of us would consider “news”. There seems to be no clear or obvious distinction between news and non-news content, and the way that Google works, there is no algorithm that could navigate such a vague and broad definition.
How does Google contribute to Australia?
In addition to the $1 billion we invest in Google’s Australian operations every year, our search advertising and other platforms generate more than $35 billion in business benefits for more than one million Australian businesses. During COVID-19 we’ve helped more than 1.3 million Australian businesses stay connected with their customers. We also contribute through taxes. In the 2019 calendar year, Google Australia paid AU$59 million of corporate income taxes on a pre-tax profit of AU$134 million. And we support 117,000 jobs in Australia, including 1,800 jobs within Google and 116,200 across the wider economy.