We know many of you still have questions about the News Media Bargaining Code and its impact on the Google services you use after Mel Silva, Managing Director for Google Australia, appeared at a public hearing of the Senate Economics Legislation Committee last week. We want to address some key questions to help clarify our position. 

Question 1: What is Google’s position on this new law?

We are not against being regulated by a Code and we are willing to pay to support journalism—we are doing that around the world through News Showcase. But several aspects of the current version of this law are just unworkable for the services you use and our business in Australia. The Code, as it’s written, would break the way Google Search works and the fundamental principle of the internet, by forcing us to pay to provide links to news businesses’ sites. 

There aretwo other serious problemsremaining with the law, but at the heart of it, it comes down to this: the Code’s rules would undermine a free and open service that’s been built to serve everyone, and replace it with one where a law would give a handful of news businesses an advantage over everybody else.

Question 2: What have others said about this new law? 

It’s not just Google that is concerned about key aspects of this Code. Twice since the first draft was released in July 2020, regulators and the Government asked the public to make submissions to provide feedback. Here’s an overview of these submissions:

• On 23 December 2020, the Australian Competition and Consumer Commission released the submissions people made to the first draft of the News Media Bargaining Code. We found that more than 80% of these submissions flagged significant concerns––and they have come from various groups including businesses of all sizes, industry groups, small news publishers, YouTube creators, and hundreds of individual Australians.  More information in this blog. 

• The Senate Committee that is currently reviewing the law also asked for feedback. Our analysis shows that 34 of the 55 submissions they received voiced concerns about the law––including about the provision that makes digital platforms pay just to link (see question 4). This includes Google’s own submission. The remaining 21 submissions were either supportive or neutral towards most aspects of the Code. You can read through all submissions here.  

Question 3: What’s so bad about paying for links?  

Question 4: What have others said about paying for links?

•  “[The law] risks breaching a fundamental principle of the web by requiring payment for linking between certain content online.” - Tim Berners-Lee, the inventor of the world wide web.

• ”...the requirement for digital platforms to pay for providing a link to another website runs counter to one of the fundamental tenets of the internet: the ability to link freely between content. The ability to freely make these connections has underpinned the creativity and sharing of knowledge enabled by the internet. This legislation undercuts this fundamental principle that has, for decades, enabled the internet to deliver real benefits to all Australians.” - The Business Council of Australia. 

• “The precedent of charging for links and snippets is a fundamental threat to the open internet, not just Google.” - Scott Farquhar, co-founder of Australian tech company Atlassian, as told to The Australian on January 15.

• “In its current state [the bill] represents a fundamental challenge to the free and open Internet, to the functioning of the country’s digital economy, and to Australia’s economic future…” - Vint Cerf, chief internet evangelist at Google, also regarded as one of the ‘fathers of the internet’. 

Question 5: You say you're not against paying to support journalism, but the Code isn't workable. So what do you propose?

We are willing to pay to support journalism, but how we do that matters. Instead of requiring payment for linking to websites, we have proposed a model where Google could pay Australian news businesses under this new Code through Google News Showcase: our AU$1.38 billion (US$1 billion) commitment over three years to support the news industry worldwide. There are nearly 450 publications signed up already, including seven publishers with 25 titles here in Australia, and publications like Reuters, Germany’s Der Spiegel, France’s Le Monde, or piauí, in Brazil. 

Google News Showcase would be subject to this new law. That means if a publisher is discussing a News Showcase deal with Google, and they’re not happy with the negotiation, they could go to an arbitrator to resolve any disagreements. 

Question 6: How does Google propose to change the law? 

We’re proposing reasonable amendments in three areas: 

1. Instead of paying for links, we’re proposing to pay publishers through Google News Showcase, our AU$1.3 billion global investment in news partnerships over the next three years. We know that News Showcase works, because we’ve already signed News Showcase agreements with 450 publications, large and small, across a dozen countries, and they’re now getting paid. News Showcase would operate under this Code, with the option to go to an arbitrator if there are any disagreements. 

2. To ensure that both publishers and platforms can negotiate fairly, we’ve proposed a standard commercial arbitration model for deals on News Showcase, one that would let arbitrators look at the comparable value of similar transactions, rather than an unpredictable process which  looks at only one side’s costs and discounts the value Google provides publishers. 

3. Giving notice to certain news businesses about changes to our algorithm should be limited to significant actionable changes only, noting we make thousands of updates to Google Search every year.

Question 7: If this law passes as it stands, will Google Search still be available in Australia?

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. As Mel Silva said during the Senate hearing last week, 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. 

After Mel said that, many media outlets reported that we have ‘threatened’ to leave Australia. Stopping to make Search available is the last thing we want to have happen, and it’s a worst case scenario if the Code remains unworkable. As we told Senators, we’re willing to pay publishers for value. We don’t object to a mandatory News Media Bargaining Code, and we believe there’s a clear path to make this Code work for everyone—publishers, digital platforms and Australian businesses and consumers. 

Question 8: Why is making Search unavailable in Australia the worst case scenario, why can't you just remove news from Search results?

This is not possible due to the extremely broad and vague definition of “news” in the Code—which includes any “content that reports, investigates or explains current issues or events of interest to Australians." This goes far beyond what most of us would consider “news.” And the content we’d need to remove could be on any website at any time, not just the websites of the news businesses registered under the Code.  

Question 9: What’s happening in France? I read that you’re paying publishers there...

We have offered (and signed ) deals for News Showcase in France and a dozen other countries, the same as what we’re proposing in Australia. We believe that these new agreements demonstrate that News Showcase can work as a solution to pay publishers within a framework set by regulators, without breaking Google Search or the open web. 

Question 10: How does news content show up in Google?

Google does not show full news articles, we link you to news content, just like we link you to every other page on the web such as Wikipedia entries, personal blogs or business websites. You can read more about how news shows up in Google Search, and how we’re supporting the news industry in this blog. 

Question 11: What does Google contribute to the Australian economy?

Each year, Google provides $53 billion in benefits to businesses and consumers. In 2002, Google Australia started with just one person in a lounge room, today, our team has grown to be 1,800 strong. Today, we support an additional 116,000 jobs across the country, and provide $39 billion in benefits to Australian businesses and $14 billion in benefits to consumers. In the 2019 calendar year, Google Australia paid AU$59 million of corporate income taxes, and Google’s presence in Australia contributed over AU$700 million in taxes to the Australian Government’s revenue base. 

Question 12: What’s the impact of the revised law on YouTube?

On 8 December 2020, the Government confirmed that YouTube will not be included as a designated service in the Code at this time, and we agree that this is the right approach. However, the way that the Code is written leaves the door open for additional digital platforms to be added at any time, and several businesses have advocated for YouTube’s inclusion in their Senate submissions. We will continue to make our case to the Australian Government on why YouTube should remain excluded from the Code.

Editor’s Note: Today Google Australia’s Managing Director, Mel Silva, appeared at a public hearing of the Senate Economics Legislation Committee that is reviewing a proposed new law, the News Media Bargaining Code. Read her opening statement below, and find more information about Google and the News Media Bargaining Code in this blog.

Thank you, Senators, for your time. 

I am Mel Silva, Managing Director of Google Australia and New Zealand. I’m joined by Lucinda Longcroft, the Head of Government Affairs and Public Policy for Australia and New Zealand. 

Senators, I would like to start by saying that Google is committed to achieving a workable News Media Bargaining Code.

In its current form, the Code remains unworkable and if it became law would hurt not just Google, but small publishers, small businesses, and the millions of Australians that use our services every day. 

There is a way forward that allows Google to pay publishers for value, without breaking Google Search and our business in Australia. 

There are three areas of concern which I will touch on shortly, but the most critical of these is the requirement to pay for links and snippets in Search. This provision in the Code would set an untenable precedent for our business, and the digital economy. It’s not compatible with how search engines work, or how the internet works, and this is not just Google’s view - it has been cited in many of the submissions received by this Inquiry.  

The principle of unrestricted linking between websites is fundamental to Search. Coupled with the unmanageable financial and operational risk 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.

Google is known for answering queries and helping people find what they are looking for on the web, one of the misconceptions at the heart of this debate is that our users only come to Google because they can find news, or that news is a disproportionate driver of our popularity. 

News and Journalism are a critical part of any democracy and we don’t disagree with that view. But in the context of Search - the ability to show results from a diverse range of news sources is equally as important as the ability to show results to a diverse range of childcare centers in your suburb.

Each year we help more than 19 million Australians find information online. The fact that we offer a useful search engine provides the platform for 1.3 million businesses, large and small, in Australia to be discovered by users here and around the world The fact that you can Search for everything from recipes, the weather, or news, means you also search for your local cafe, or great plumber near me

Relevant results for all kinds of queries is what brings users to our Search Engine and this is what enables those 1.3 million Aussie businesses to get discovered and also creates hundreds of millions of connections with their potential customers.

This has benefits for the entire Australian economy - and something that has been incredibly important for businesses as they navigate COVID and find new ways to connect with customers in the digital world.

This lies at the heart of our concerns with a Code that would require payments simply for links and snippets just to news results in Search.

The free service we offer Australian users, and our business model has been built on the ability to link freely between websites - this is a key building block of the internet.

Withdrawing our services from Australia is the last thing that I or Google want to have happen - especially when there is another way forward.

We propose technical amendments in three areas to address the key problems we’ve outlined. These allow Google to pay publishers for value, without breaking Google Search. 

First, rather than payment for links and snippets, the Code could designate News Showcase, and allow Google to reach commercial agreements to pay Australian news publishers for value in addition to the valuable traffic we already provide through Search.

News Showcase launched in 2020, and has global budget of $1.3 billion over three years, it pays news publishers for their editorial judgment in curating panels of news that appear daily on Google services, and it pays to grant users access to selected stories behind-the-paywall - not for links in Search. News Showcase enables Google to pay a diverse range of news publishers, including smaller and regional publishers. 

We have already reached News Showcase agreements with 450 publications globally, including 7 publishers in Australia. 

Secondly, the Code’s final offer arbitration model, with biased criteria presents unmanageable financial and operational risk for Google. If this is replaced with standard commercial arbitration based on comparable deals, this would incentivise good faith negotiations and ensure we’re held accountable by robust dispute resolution. 

Finally, the algorithm notification provision could be adjusted to require only reasonable notice about significant actionable changes to Google’s algorithm, to make sure publishers are able to respond to changes that affect them. 

In closing, Senators, there is a clear pathway to a fair and workable Code. With only slight amendments, the Code can support Australia as a world-leader in news innovation, media diversity, and consumer choice without sacrificing the benefits that Google provides to large and small businesses in Australia.

We look forward to responding to your questions. Thank you.

Today we appeared at a public hearing of the Senate Committee that is reviewing a proposed new law, the News Media Bargaining Code. You can read Mel Silva’s opening statement here.

As we said at the hearing, we are committed to reaching a workable Code and see a clear path to getting there, but serious concerns with the current draft remain.

Here are some important facts we shared with the Committee at the hearing and in our recent submission:

Fact 1: Google supports a fair Code 

We’ve been clear that we don’t oppose a Code, nor are we opposed to supporting journalism––but how we do that matters. The current version of this law remains unworkable for Google, but we believe that the concerns we and others have raised can be addressed with reasonable changes. We have proposed a solution that would see Google pay publishers for value under this new law––without breaking Google Search.  

Fact 2: The draft Code is unworkable for Google in three key areas

1. Paying news sites for snippets and links:By designating Search together with an overly broad and vague definition of news, the Code effectively forces Google to pay to show links in an unprecedented intervention that would fundamentally break how search engines work. And the links we have to pay for are so broadly defined in the Code that we don’t know what is in or out. Right now, no website or search engine in Australia pays to connect people to other sites through links. The Code undermines one of the key principles ofthe 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. 

2. An unfair and unprecedented arbitration process:The Code’s one-sided arbitration model, which only takes into consideration publishers’ costs and attempts to discount the benefit publishers receive from Google, together with baseball arbitration — incentivises publishers to make enormous and unreasonable demands. It’s a model that discourages good faith negotiations and encourages the use of arbitration which is intended as a last resort. This system exposes Google to unreasonable and unmanageable financial and operational risk. You can read more on our concerns about the arbitration process here and here. 

3. Giving 14 days algorithm notification:The Code 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 every other website owner.

Fact 3: The Code as it stands breaks Google Search and puts our business in Australia at risk 

Paying for links and snippets undermines the basic principle of the internet––the ability to freely link between websites. Just like you don’t pay to include a hyperlink in an email, websites and search engines do not pay to provide links to third party websites. It would be like requiring the telephone directory to pay businesses to be able to include them—it simply makes no sense.

As we’ve been saying, we are committed to working with the Government to achieve a workable Code. However, the principle of unrestricted linking between websites is fundamental to the web and to Search. Coupled with the unmanageable financial and operational risk 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’s a worst-case scenario and the last thing we want to have happen—especially when there is a way forward to a workable Code that allows us to support Australian journalism without breaking Search.

We believe there’s still time to get this right: with reasonable amendments there is a path to a workable Code that provides a framework in which Google can pay publishers for value under the Code without undermining Google search and the fundamental importance of linking freely. 

Fact 4: It’s not just Google who says paying for links and snippets damages the web

Many others have raised concerns that paying for links and snippets would undermine the fundamentals of the free and open web. This includes: 

• The Business Council of Australia said “...the requirement for digital platforms to pay for providing a link to another website runs counter to one of the fundamental tenets of the internet: the ability to link freely between content. The ability to freely make these connections has underpinned the creativity and sharing of knowledge enabled by the internet. This legislation undercuts this fundamental principle that has, for decades, enabled the internet to deliver real benefits to all Australians.”

• Tim Berners-Lee, the inventor of the World Wide Web, said the law “risks breaching a fundamental principle of the web by requiring payment for linking between certain content online”. 

• Scott Farquhar, co-founder of Australian tech company Atlassian, told The Australian on January 15: “The precedent of charging for links and snippets is a fundamental threat to the open internet, not just Google.”

Vint Cerf, chief internet evangelist at Google, who’s also regarded as one of the ‘fathers of the internet’ said: “In its current state [the bill] represents a fundamental challenge to the free and open Internet, to the functioning of the country’s digital economy, and to Australia’s economic future…”

Many more submissions made to the Senate Committee and previously to the Australian Consumer and Competition Commission raise similar concerns. Read more about the submissions to the ACCC here.

Fact 5: Google has a proposal for amendments to the law that support journalism––without breaking Google Search. 

We’re proposing to pay publishers through Google News Showcase, not for links and snippets in Search. News Showcase is a licensing program we’re investing AU$1.3 billion (US$1 billion) in globally over the next three years to help news businesses publish and promote their stories online. Publishers would get paid for journalist’s editorial expertise and beyond-the-paywall access to their journalism. Nearly 450 publications in a dozen countries globally have already signed up, including sixpublishers in Australia.

Google News Showcase would operate within this new law, with binding arbitration on News Showcase as a backstop to resolve any disputes. While remuneration would happen through News Showcase, the other minimum requirements in the Code could continue to apply to Google Search. 

We’ve also proposed reasonable amendments to the arbitration model that will bring it in line with widely accepted models and lead to fair commercial outcomes, and algorithm notification requirements that are workable for Google and useful for news publishers.

Fact 6: Google links people to news––we don’t show full articles.

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.

Fact 7: Google is not the reason for the decline in newspaper revenue over time 

An analysis 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 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. Google's revenue growth was primarily from new money being spent by businesses that would previously not have spent money on advertising.

Fact 8: Google contributes $53 billion in benefits to Australia each year

We are committed to Australia, and through our work here, have grown the digital economy and provided $53 billion in benefits to businesses and consumers each year. In 2002, Google Australia started with just one person in a lounge room, today, our team has grown to be 1,800 strong. Today, we support an additional 116,000 jobs across the country, and provide $39 billion in benefits to Australian businesses and $14 billion in benefits to consumers. 

Today, I’m pleased to launch Google’s 2020 Economic Impact Report - a look at our role in Australia which shows we’re providing businesses and our users with a combined $53 billion in benefits every year. 

Key findings: 

• 1.3 million businesses receive $39 billion in benefits through increased revenues, millions of connections with customers and greater efficiencies, saving time and money

• Consumers receive $14 billion in benefits via productivity, convenience and access to information

• Search saves users almost 5 days a year, drivers save 5.6 hours per year using Google Maps

• Australian app developers earned $639 million through Google Play reaching 1 billion users globally

• 60% go to small to medium businesses; 90% of benefits go to non-technology industries

Google’s economic impact in Australia

Google  started our first Australian office in a Sydney lounge room almost twenty years ago and in that time there’s been incredible change. Our team in 2002 - just one person at the time - has now grown to be 1,800 strong and by enabling business expansion, our digital services like Google Ads and Google Play support an additional 116,200 jobs across the country. And many of our products, which were simply ideas back then, have grown to become an important part of the everyday lives of millions of Australians.

In all of that time, there’s never been a year with so much change as we’ve just seen in 2020. The impacts of the pandemic and its effects on businesses has been overwhelming. 

But at the same time, it’s been inspiring to watch the way businesses across Australia have managed those challenges to cope. Our Economic Impact Report shows how businesses have increasingly moved online in this difficult year to provide vital services and succeed.

As our report demonstrates, there are now more than 1.3 million businesses in Australia using Google’s free tools and services-to reach new customers, advertise effectively where they couldn’t before and make use of new digital skills.

Helping businesses stay connected during the coronavirus pandemic

One of those companies using Google’s tools is Bliss Gifts and Homewares, based on the South Coast of New South Wales. Early in 2020, the business was impacted by the devastating bushfire crisis before the coronavirus pandemic compounded the situation. 

For a small business like Bliss located in a tourist town, the effects of the bushfires and COVID should have been devastating. But due to the fact they were already online and with the help of tools like Google Ads, owner Melissa Stone was remarkably able to not only grow the business but saw their revenue jump by 70% during COVID. Bliss’ online presence is now 90 per cent of the business with the help of Google’s tools. 

All over Australia, businesses like Melissa’s shared a total of $39 billion in benefits through increased revenues, millions of connections with customers and greater efficiencies, saving time and money

90 per cent of those benefits went to industries outside of technology - like retail, construction and professional services. And 60 per cent were shared among small to medium businesses.

The report shows Australian app developers earned around $639 million through Google Play, reaching more than one billion users worldwide.

Helping our users save time and access important information 

Google’s products also provided  $14 billion in annual benefits to consumers through increased productivity, convenience and improved access to information.

On average, Australians using Google Search save almost five days a year thanks to access to instantaneous information, while Australian drivers using Google Maps saved 5.6 hours on roads each year by optimising trips through our technology. 

We’re humbled by these findings and have been inspired by the resilience and spirit of the people in businesses across the country. Australia has ambitions to be a leading digital economy and we look forward to continuing to support that ambition. 

You can read more about these benefits here. 

Last week, we gave you an update on the News Media Bargaining Code, a new law that would significantly impact the Google services Australians use every day. We’ve also shared a concrete proposal for practical changes to the law to help secure a strong future for Australian news—without breaking Google Search. 

What people have said about the first draft of the law

In going through these submissions, it's evident that Google is far from alone in its concerns about the Code. In fact, an overwhelming majority have concerns about key aspects of the Code, or are downright opposed to it. Even a number of news publishers have voiced concerns about key aspects of the draft law, such as the arbitration process and minimum standards provisions, and its impact on media diversity. 

Although these submissions to the ACCC were made in response to an earlier draft of the law, many of these issues remain and are unaddressed by the version of the Code that was introduced to Parliament in early December. 

• Industry organisations such as the Business Council of Australia, Ai group, digital rights advocate Electronic Frontiers Australia, the American Bar Association and the US Chamber of Commerce
• Businesses of all sizes, from Australia’s most successful technology company Atlassian to video production house Momentum Studios 
• News publishers such as Star News Group and John Mellor of GoAuto Media 
• YouTube creators such as Sheet Music Boss
• Academics such as Prof. David Powers from Flinders University, and 
• Hundreds of individual Australians who have taken the time to make a submission.

In addition to the submissions released on the ACCC’s website, there were over 1,000 pro forma submissions through a Change.org petition opposing the Code. 

You'll find some important points that have been raised in these submissions summarised below.

On requiring digital platforms to pay select news companies for links and snippets

Digital platforms—in fact, the open internet as a whole—is built on the premise of being able to link freely between websites. The new law changes that by requiring digital platforms to pay to link to content of and provide special advantages to certain news companies. Here's what a few submissions have said about this:

• Atlassian: “There is ... no corresponding rationale or economic analysis for compelling payment from the digital platforms to the NMBs (News Media Businesses) for the privilege of displaying links to news stories -- impressions to online users that the NMBs themselves highly value ... No other types of web sites on the Internet are paid in this way, for merely appearing in search results or on social media platforms. Legislation creating ‘government-favoured’ categories of web sites will only disrupt neutrality on the Internet, create a slippery slope for other types of potentially-favored content, and is simply not required to accomplish the policy goals of the ACCC ...’’(Atlassian submission, page 2)
• Sheet Music Boss(YouTube creator): “We do not feel it is fair for news companies to be given special treatment under the law. Why should additional money be paid to news media for their content on Google's platforms when no other type of creator is given such a privilege?” (Sheet Music Boss, page 1)

On providing special treatment to news businesses over other websites (algorithm notifications)

The new law also forces Google to provide certain news companies with advance notice of any changes we make to the algorithms that help us provide Search results. While the notification period for algorithm changes has been amended in the December version of the Code, shortening the period from 28 to 14 days, these submissions underscore the problematic nature of providing advance notice to any single group of websites: 

• Business Council of Australia: “Further, if this model – requiring substantial notification of changes to algorithms – was applied more broadly, it would create a major disincentive to investment across a range of sectors that use similar systems to rank or display content. The Business Council supports regulations that can be realistically implemented. As currently drafted, the requirement to provide 28 days’ advance notice of changes to algorithms ignores  the iterative way these types of products are developed or delivered. It would be a handbrake  on innovation and improvements to the consumer experience, and it would cut cross existing  legislated requirements.” (BCA submission, page 5) 
• Momentum Studios: “As you are the Australian Competition and Consumer Commission, I believe you have a responsibility to all content creators to not give news organisations, an incredibly small portion of the content creators on digital platforms, an unfair advantage and a competitive edge.”(Momentum Studios submission, page 2)

On unfair rules to determine payments

A range of submissions, called out the unusual payments and arbitration system (known as baseball arbitration) that’s proposed under the Code:

• Australian Industry (Ai) Group: “The arbitration process appears to encourage ambit claims rather than negotiation. It also appears that the range of factors that arbitrators must consider is very much weighted towards the interests of news organisations.”(Ai Group submission, page 4)
• American Bar Association Antitrust Law and International Law Sections: “The ACCC expects ‘final offer arbitration’ to be ‘used rarely’ but does not provide evidence to support the expectation.  If, in fact, such arbitration becomes commonplace, the Code risks transforming the platform-news media relationship from a market-based one into a fully regulated one with little oversight or safeguard. The ACCC should therefore include a mechanism to address issues like this should the practical impact not match the  ACCC’s expectations.”(ABAALILS submission, page 5).

On hurting the usefulness of online services for millions of people 

Many raised concerns that the new law would harm online services used by millions of people, like Google Search. Quotes on that topic:

• Australian Industry (Ai) Group: “The Exposure Draft of the Treasury Laws Amendment (New Media and Digital Platforms Mandatory Bargaining Code) Bill 2020 if adopted would amount to an unprecedented intervention in arrangements between private businesses. It is an intervention that appears one-sided. It certainly has the potential to substantially add to business compliance costs and could well undermine the quality of services provided by the leading digital platforms to the detriment of users of these services.” (Ai Group submission, page 3).
• Business Council of Australia: “This creates a dangerous precedent and risks global organisations not opening their digital  platforms up to Australian consumers and businesses, which will place Australian SMEs at a significant disadvantage to their global competitors. It will also disincentivise domestic innovation and reduce the likelihood that new market entrants will emerge across all sectors,  by creating the perception that innovation and success are punished.”(BCA submission, page 6).

On negatively impacting media diversity in Australia

Others, including some news publishers (e.g. Star News Group and John Mellor of GoAuto Media), believe the Code will negatively impact media diversity by favouring larger media companies. Quotes on that topic:

• Star News Group: “Star News Group supports a bargaining code, but is concerned that the draft bill significantly  benefits larger media organisations and will reduce the number of newsmedia voices and diversity. This is evident in the proposed arbitration process which will be difficult, costly and  intimidating and would seem unnecessary. Small organisations will likely not participate or give up quickly.” (Star News Group submission, page 1).
• Electronic Frontiers Australia: “Australia is already one of the most highly concentrated media markets in the world. The Bill, as drafted, seems to reinforce this level of concentration by excluding (or at least hindering) smaller players and publicly owned entities from financial compensation ...”(EFA submission, page 1 and 2).

On harming investment in Australia and the digital economy

The one-sided arbitration rules and the fact this industry Code only applies to two companies (Google and Facebook), have resulted in concerns from businesses and industry groups that the Code might deter future investment in Australia’s digital economy. 

• Business Council of Australia: “Legislation should avoid unnecessarily deterring foreign technology companies from establishing and growing their presence in Australia or discouraging local entrepreneurs from taking the leap and  investing their time, capital, and creative energies in challenging incumbent business models. Onerous regulatory settings may encourage foreign governments to create barriers to Australian technology exports via tit-for-tat responses.”(BCA submission, page 4).
• Atlassian: “Given its targeted nature and drastic form, the Code may read on the global stage like protectionism for established Australian media at best and open hostility to the tech sector at worst. Businesses considering Australia for further investment may note not only the heavy-handed nature of this law, but will fear the uncertainty of future regulations yet to come.” (Atlassian submission, page 4).

What happens next?

There’s still time to get this right. As the Code is now with a Senate Committee for review before it goes back to Parliament, people who are concerned about the latest version of the law can share their views on the Code with that Senate Committee until 18 January. 

Over the next few weeks, we will continue to engage with the Senate Committee, policymakers, and publishers, making our case constructively to achieve a Code that’s fair for everyone, in the interest of all Australians.

The Australian Government has introduced its News Media Bargaining Code into Parliament.  

Unfortunately, while the Government has made some changes, the legislation still falls far short of a workable Code. As the legislation goes to a Senate committee for inquiry, it has serious problems that need to be worked through. 

The Code has changed—but still isn’t workable

Since the plan for a mandatory code was first announced in April 2020, we’ve engaged closely with the Government and the Australian Competition and Consumer Commission. We’ve explained consistently why earlier versions of the Code weren’t workable for Google or the people who use our services. And we’ve set out options to fix the most significant issues. We’ve said we’re willing to invest in a strong future for the news industry and made concrete progress on a new approach to doing that globally, through Google News Showcase. We’ve agreed that commercial negotiations are the best option for securing this investment, and that a form of binding arbitration within the Code could be a reasonable backstop — so long as that arbitration model is fair.   

However, after months of consultation, the latest version of the Code is still unworkable:

• It forces Google to pay to show links in an unprecedented intervention that would fundamentally break how search engines work. No website and no search engine pays to connect people to other websites, yet the Code would force Google to include and pay for links to news websites in the search results you see. This sets the groundwork to unravel the key principles ofthe 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.  
• It requires us to give news publishers special treatment—14 days’ notice of certain changes to algorithms and ‘internal practices’. Even if we could comply, that would delay important updates, drive up operating costs, and mandate special treatment to news publishers in a way that would disadvantage everyone else.
• It imposes an unfair and unprecedented baseball arbitration model that considers only publishers’ costs, not Google’s; incentivises publishers to make ambit claims and resort to arbitration rather than good-faith negotiations; assumes that the internet has never required payments for links because of ‘bargaining imbalance’; and requires the decision-maker to choose a single ‘final offer’.  

We’ve identified these issues repeatedly during the consultation process because they would do serious damage to the fundamentals of our services — the reasons Australians choose to use Google in the first place. They would replace a search engine model that’s built to serve everyone with one skewed to the interests of one type of business only. 

There is still a path to a workable Code, with reasonable changes

We’re still fully committed to getting to a version of the law that’s workable—a Code that meets the Government’s key objectives, regulates digital platforms smartly and strengthens Australia’s news industry, while preserving the Google services Australians use every day. And we see a clear pathway to getting there.  

Investing in journalism through Google News Showcase

Our objections aren’t about the principle of paying to support journalists—but how we do that matters. Instead of requiring payment for linking to websites—changing the  basic principle that makes Google Search and the internet work—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.  

This program, designed to drive traffic, lift subscriptions, and generate revenue for publishers, remains on hold in Australia until we can be sure that the final Code is workable.

Making it available here would enable normal commercial bargaining between publishers and platforms based on comparable market rates. We would be paying for publishers’ editorial expertise and for beyond-the-paywall access to news content for users—not for links to news content. Of course, News Showcase would still be subject to a Code, and backstopped by a standard commercial arbitration model.

Changing the arbitration model to one that’s standard and fair

To ensure that both publishers and platforms can negotiate fairly, we propose a standard commercial arbitration model for deals on News Showcase, one that would let arbitrators look at comparable transactions, rather than just looking at only one side’s costs. 

The changes made to the Code’s arbitration model don’t resolve its inherent problems or meet the Government’s stated objective of setting up a bargaining system that “allows both parties to bargain in good faith and reach binding agreements”. The current model still isn’t based in commercial reality. Ultimately, by imposing final-offer arbitration with biased criteria, it encourages publishers to go to arbitration rather than reaching an agreement. Arbitration has been touted as a “last resort”—but the Government’s own explanatory materials seem to contradict this, suggesting 75 percent of negotiations under the Code will end up in arbitration (and according to the Government this is a conservative estimate). 

And while the Code professes to recognise the value Google Search provides to publishers, in fact it encourages publishers to argue that arbitrators should disregard that value. It does this by allowing the arbitrator to consider a hypothetical scenario in which there is no Google Search and yet publishers receive the same amount of traffic, just from other sources. This scenario—laid out in the explanatory materials— invites unfair outcomes based on speculation rather than evidence.

Amending the algorithm notification provision so it’s feasible

As we’ve said, this provision could be amended to require only reasonable notice about significant actionable changes.

While we recognise that the Government has made tweaks to this provision, it’s still not feasible for Google or consistent with our ability to offer quality services. We make thousands of algorithm updates every year, so providing 14 days’ notice of any significant changes to algorithms or “internal practices” in the way the Code prescribes just isn’t workable. This provision also continues to put every other business that relies on Google Search at a disadvantage, all to benefit one group of businesses—news publishers. 

Limiting this to only actionable algorithmic changes would mean providing notice there is something for news publishers to do to respond to the change, like making sure their websites are mobile-friendly or paying attention to how fast they load for users.

Getting this Code right matters. 

It doesn’t just affect Google as a business—it affects the free services and tools we provide to 20 million Australians and more than a million Australian businesses, the 117,000 jobs we support across the country, and the $35 billion in business benefits we create annually for the Australian economy.  

Those high stakes are why we’ll continue to stand firm where the Code threatens the fundamentals of our services. But we strongly believe that with the practical changes we’ve outlined, there is a path forward. As we enter this new stage of the process, we’ll keep engaging constructively with the Government, Members of the Parliament, the news industry and the ACCC, so we can get to a final Code that works for everyone: publishers, platforms, and all Australians. 

Facts about the Code and Google

Fact 1: Paying for links breaks how search engines work.

Search engines are based on a simple principle: anyone can create information online and choose whether it can be found through search engines—and anyone can search for that information freely. The results show up as a series of links and brief snippets of information, giving you an idea of your options before you decide whether to click through. If you do click through, you leave Google to spend your time and money with that website, whether it’s an airline, a bank, a news publisher or any other kind of business. 

The Code threatens to unravel these very principles by requiring Google to pay to link. This is an unprecedented intervention that misunderstands how the web works and has huge implications not just for search engines but the internet as a whole. You don’t have to pay when you share a link to something with a friend, and no website or search engine pays to connect people to other sites through links. 

While advertisers can pay to be displayed in clearly marked sections of the search results page, no one gets paid for appearing in Google Search. People choose to allow their webpages to be included in Google Search because it benefits them. Introducing forced payments on any type of website undermines how search engines operate, and undercuts the principle of the open web, which was built on the freedom for websites to link to each other without advance permission. That's what enables us to offer the search results you use every day. Breaking this principle is something we can't accept. 

Fact 2: Google links to news, we don’t ‘use’ it or ‘publish’ it. 

Google doesn’t “use” news content—we link you to it, just like we link you to every other page on the web, from Wikipedia entries to personal blogs or business websites. We sort through hundreds of billions of webpages to find the most relevant, useful results, and present them in a way that helps you find what you’re looking for—and then we give you the option of going to the source of that information.

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, having readers click through to other articles, or converting people into new paying subscribers.

Fact 3: News websites have a choice whether and how to appear in search results

Most websites want people to find their content in Google Search results. But if a news site (or any other website) doesn’t want to show up in those results, or wants to control what people see on Google, they can choose to do so— regardless of whether their site is paywalled or free to view.

Fact 4: Google hasn’t ‘taken’ ad revenue from newspapers

Newspaper revenues have fallen primarily because of the loss of revenue to online classifieds businesses such as Domain, Realestate.com.au, Carsales and Seek–some of which are owned by news businesses themselves. An AlphaBeta analysis found that 92 percent of the decline in newspaper revenue between 2002 and 2018 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 of that revenue went to Google. Meanwhile, AlphaBeta's analysis also showed that the growth of Google's revenues was primarily from new money being spent by businesses that would previously not have spent money on advertising.

Fact 5: Google News Showcase enables productive commercial relationships between Google and Publishers— including in Australia.  

We announced News Showcase in October this year, as part of a AU$1.38 billion (US$1 billion) global commitment—our biggest to date—to partner with publishers in support of the future of news. Some large Australian publishers have said it’s not possible to have any fair negotiations with Google, but the initial response to Google News Showcase shows that’s not true. So far, more than 400 publications around the world have signed commercial deals with Google. Through these partnerships, publications globally are already receiving payments to curate high-quality content. We know that many Australian publishers also see this model as an attractive option, because they were among the first in the world to sign agreements before the draft Code was published. 

Fact 6: ‘Baseball arbitration’ is an extreme way of resolving disputes.

Final-offer or ‘baseball’ arbitration is usually put in place when there isn’t much scope for dispute over the price of the product or service being discussed. Under the News Media Bargaining Code, the two sides would clearly have very different ideas of what the price should be. Asking an arbitrator to pick a ‘final offer’ is an extreme way of resolving that, opening up the possibility of massive ambit claims that don’t reflect commercial reality.  

In practice, baseball arbitration often fails. Independent economists have raised questions about its effectiveness in this context. It is also likely to incentivise the majority of publishers to take their chances in arbitration rather than coming to a commercial agreement. As the Government’s explanatory materials state on page 58 (2.12), “75 per cent of bargaining processes will ultimately proceed to arbitration. This is a conservative estimate.”

If baseball arbitration was put in place here, particularly in combination with the Code’s other unfair arbitration factors, it could create huge uncertainty and risk for our business — risk that no rational business would accept.   

Standard arbitration is recognised by regulators and businesses as an established and effective standard. It’s a common model used by businesses across Australia because it reflects commercial reality. It’s a better, fairer way forward than baseball arbitration.

Fact 7: A two-way value exchange model was initially proposed by the ACCC.

The ACCC said two-way value exchange should be included in the Code on page 12 of its initial Concepts Paper, released in May 2020. We estimated the value Google provided to publishers by sending Australian users to their sites at around $218 million in 2018. 

As we’ve outlined, the changes to the Code’s arbitration model do not solve its inherent problems or make it fair. It still only considers news businesses' costs and ignores Google’s costs, including the more than 1,000 person-years that have gone into developing the Google Search algorithm or the approximately AU$1 billion we invest every year in our Australian operations. 

Fact 8: Google is a major contributor to Australia’s economy.

In addition to the $1 billion we invest in Google’s Australian operations annually, our search advertising and other platforms generate more than AU$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. 

The Australian Government has introduced its News Media Bargaining Code into Parliament.  

Unfortunately, while the Government has made some changes, the legislation still falls far short of a workable Code. As the legislation goes to a Senate committee for inquiry, it has serious problems that need to be worked through. 

The Code has changed—but still isn’t workable

Since the plan for a mandatory code was first announced in April 2020, we’ve engaged closely with the Government and the Australian Competition and Consumer Commission. We’ve explained consistently why earlier versions of the Code weren’t workable for Google or the people who use our services. And we’ve set out options to fix the most significant issues. We’ve said we’re willing to invest in a strong future for the news industry and made concrete progress on a new approach to doing that globally, through Google News Showcase. We’ve agreed that commercial negotiations are the best option for securing this investment, and that a form of binding arbitration within the Code could be a reasonable backstop — so long as that arbitration model is fair.   

However, after months of consultation, the latest version of the Code is still unworkable:

• It forces Google to pay to show links in an unprecedented intervention that would fundamentally break how search engines work. No website and no search engine pays to connect people to other websites, yet the Code would force Google to include and pay for links to news websites in the search results you see. This sets the groundwork to unravel the key principles ofthe 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.  
• It requires us to give news publishers special treatment—14 days’ notice of certain changes to algorithms and ‘internal practices’. Even if we could comply, that would delay important updates, drive up operating costs, and mandate special treatment to news publishers in a way that would disadvantage everyone else.
• It imposes an unfair and unprecedented baseball arbitration model that considers only publishers’ costs, not Google’s; incentivises publishers to make ambit claims and resort to arbitration rather than good-faith negotiations; assumes that the internet has never required payments for links because of ‘bargaining imbalance’; and requires the decision-maker to choose a single ‘final offer’.  

We’ve identified these issues repeatedly during the consultation process because they would do serious damage to the fundamentals of our services — the reasons Australians choose to use Google in the first place. They would replace a search engine model that’s built to serve everyone with one skewed to the interests of one type of business only. 

There is still a path to a workable Code, with reasonable changes

We’re still fully committed to getting to a version of the law that’s workable—a Code that meets the Government’s key objectives, regulates digital platforms smartly and strengthens Australia’s news industry, while preserving the Google services Australians use every day. And we see a clear pathway to getting there.  

Investing in journalism through Google News Showcase

Our objections aren’t about the principle of paying to support journalists—but how we do that matters. Instead of requiring payment for linking to websites—changing the  basic principle that makes Google Search and the internet work—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.  

This program, designed to drive traffic, lift subscriptions, and generate revenue for publishers, remains on hold in Australia until we can be sure that the final Code is workable.

Making it available here would enable normal commercial bargaining between publishers and platforms based on comparable market rates. We would be paying for publishers’ editorial expertise and for beyond-the-paywall access to news content for users—not for links to news content. Of course, News Showcase would still be subject to a Code, and backstopped by a standard commercial arbitration model.

Changing the arbitration model to one that’s standard and fair

To ensure that both publishers and platforms can negotiate fairly, we propose a standard commercial arbitration model for deals on News Showcase, one that would let arbitrators look at comparable transactions, rather than just looking at only one side’s costs. 

The changes made to the Code’s arbitration model don’t resolve its inherent problems or meet the Government’s stated objective of setting up a bargaining system that “allows both parties to bargain in good faith and reach binding agreements”. The current model still isn’t based in commercial reality. Ultimately, by imposing final-offer arbitration with biased criteria, it encourages publishers to go to arbitration rather than reaching an agreement. Arbitration has been touted as a “last resort”—but the Government’s own explanatory materials seem to contradict this, suggesting 75 percent of negotiations under the Code will end up in arbitration (and according to the Government this is a conservative estimate). 

And while the Code professes to recognise the value Google Search provides to publishers, in fact it encourages publishers to argue that arbitrators should disregard that value. It does this by allowing the arbitrator to consider a hypothetical scenario in which there is no Google Search and yet publishers receive the same amount of traffic, just from other sources. This scenario—laid out in the explanatory materials— invites unfair outcomes based on speculation rather than evidence.

Amending the algorithm notification provision so it’s feasible

As we’ve said, this provision could be amended to require only reasonable notice about significant actionable changes.

While we recognise that the Government has made tweaks to this provision, it’s still not feasible for Google or consistent with our ability to offer quality services. We make thousands of algorithm updates every year, so providing 14 days’ notice of any significant changes to algorithms or “internal practices” in the way the Code prescribes just isn’t workable. This provision also continues to put every other business that relies on Google Search at a disadvantage, all to benefit one group of businesses—news publishers. 

Limiting this to only actionable algorithmic changes would mean providing notice there is something for news publishers to do to respond to the change, like making sure their websites are mobile-friendly or paying attention to how fast they load for users.

Getting this Code right matters. 

It doesn’t just affect Google as a business—it affects the free services and tools we provide to 20 million Australians and more than a million Australian businesses, the 117,000 jobs we support across the country, and the $35 billion in business benefits we create annually for the Australian economy.  

Those high stakes are why we’ll continue to stand firm where the Code threatens the fundamentals of our services. But we strongly believe that with the practical changes we’ve outlined, there is a path forward. As we enter this new stage of the process, we’ll keep engaging constructively with the Government, Members of the Parliament, the news industry and the ACCC, so we can get to a final Code that works for everyone: publishers, platforms, and all Australians. 

Facts about the Code and Google

Fact 1: Paying for links breaks how search engines work.

Search engines are based on a simple principle: anyone can create information online and choose whether it can be found through search engines—and anyone can search for that information freely. The results show up as a series of links and brief snippets of information, giving you an idea of your options before you decide whether to click through. If you do click through, you leave Google to spend your time and money with that website, whether it’s an airline, a bank, a news publisher or any other kind of business. 

The Code threatens to unravel these very principles by requiring Google to pay to link. This is an unprecedented intervention that misunderstands how the web works and has huge implications not just for search engines but the internet as a whole. You don’t have to pay when you share a link to something with a friend, and no website or search engine pays to connect people to other sites through links. 

While advertisers can pay to be displayed in clearly marked sections of the search results page, no one gets paid for appearing in Google Search. People choose to allow their webpages to be included in Google Search because it benefits them. Introducing forced payments on any type of website undermines how search engines operate, and undercuts the principle of the open web, which was built on the freedom for websites to link to each other without advance permission. That's what enables us to offer the search results you use every day. Breaking this principle is something we can't accept. 

Fact 2: Google links to news, we don’t ‘use’ it or ‘publish’ it. 

Google doesn’t “use” news content—we link you to it, just like we link you to every other page on the web, from Wikipedia entries to personal blogs or business websites. We sort through hundreds of billions of webpages to find the most relevant, useful results, and present them in a way that helps you find what you’re looking for—and then we give you the option of going to the source of that information.

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, having readers click through to other articles, or converting people into new paying subscribers.

Fact 3: News websites have a choice whether and how to appear in search results

Most websites want people to find their content in Google Search results. But if a news site (or any other website) doesn’t want to show up in those results, or wants to control what people see on Google, they can choose to do so— regardless of whether their site is paywalled or free to view.

Fact 4: Google hasn’t ‘taken’ ad revenue from newspapers

Newspaper revenues have fallen primarily because of the loss of revenue to online classifieds businesses such as Domain, Realestate.com.au, Carsales and Seek–some of which are owned by news businesses themselves. An AlphaBeta analysis found that 92 percent of the decline in newspaper revenue between 2002 and 2018 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 of that revenue went to Google. Meanwhile, AlphaBeta's analysis also showed that the growth of Google's revenues was primarily from new money being spent by businesses that would previously not have spent money on advertising.

Fact 5: Google News Showcase enables productive commercial relationships between Google and Publishers— including in Australia.  

We announced News Showcase in October this year, as part of a AU$1.38 billion (US$1 billion) global commitment—our biggest to date—to partner with publishers in support of the future of news. Some large Australian publishers have said it’s not possible to have any fair negotiations with Google, but the initial response to Google News Showcase shows that’s not true. So far, more than 400 publications around the world have signed commercial deals with Google. Through these partnerships, publications globally are already receiving payments to curate high-quality content. We know that many Australian publishers also see this model as an attractive option, because they were among the first in the world to sign agreements before the draft Code was published. 

Fact 6: ‘Baseball arbitration’ is an extreme way of resolving disputes.

Final-offer or ‘baseball’ arbitration is usually put in place when there isn’t much scope for dispute over the price of the product or service being discussed. Under the News Media Bargaining Code, the two sides would clearly have very different ideas of what the price should be. Asking an arbitrator to pick a ‘final offer’ is an extreme way of resolving that, opening up the possibility of massive ambit claims that don’t reflect commercial reality.  

In practice, baseball arbitration often fails. Independent economists have raised questions about its effectiveness in this context. It is also likely to incentivise the majority of publishers to take their chances in arbitration rather than coming to a commercial agreement. As the Government’s explanatory materials state on page 58 (2.12), “75 per cent of bargaining processes will ultimately proceed to arbitration. This is a conservative estimate.”

If baseball arbitration was put in place here, particularly in combination with the Code’s other unfair arbitration factors, it could create huge uncertainty and risk for our business — risk that no rational business would accept.   

Standard arbitration is recognised by regulators and businesses as an established and effective standard. It’s a common model used by businesses across Australia because it reflects commercial reality. It’s a better, fairer way forward than baseball arbitration.

Fact 7: A two-way value exchange model was initially proposed by the ACCC.

The ACCC said two-way value exchange should be included in the Code on page 12 of its initial Concepts Paper, released in May 2020. We estimated the value Google provided to publishers by sending Australian users to their sites at around $218 million in 2018. 

As we’ve outlined, the changes to the Code’s arbitration model do not solve its inherent problems or make it fair. It still only considers news businesses' costs and ignores Google’s costs, including the more than 1,000 person-years that have gone into developing the Google Search algorithm or the approximately AU$1 billion we invest every year in our Australian operations. 

Fact 8: Google is a major contributor to Australia’s economy.

In addition to the $1 billion we invest in Google’s Australian operations annually, our search advertising and other platforms generate more than AU$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. 

We’re approaching the end of the year, and the finalisation of Australia’s draft News Media Bargaining Code: a proposed law that would govern the relationship between news businesses and digital platforms.

How the final Code is designed and enforced matters to millions of Australians who rely on digital tools like Google Search, and may well have broader, global ramifications—so this is a critical stage. 

Over the past few months, we’ve made it clear that while we have serious concerns about the way the draft legislation is framed, we’re committed to working with the Government and the Australian Competition and Consumer Commission (ACCC) to get to a version of the Code that’s workable and fair for platforms, publishers and all Australians. We’ve also reinforced our willingness to help support the news industry, including the recent announcement of an AU$1.38 billion global investment in partnerships with news publishers and the future of news, for a new product called News Showcase.

While we have come to the table with new commitments, we’ve seen major news businesses doubling down on their argument that the Code should be built on an uncommercial and one-sided negotiation model, unprecedented in Australia, that misconstrues the “value transfer” news businesses claim to provide to Google— and ignores the more than $200 million in annual value that Google provides to publishers. In other words, major news businesses would simply be entitled to discuss the amount of revenue they’d like to be transferred from Google’s accounts to theirs. 

Fundamentals for a workable code

Now, as we move towards the last parliamentary sitting weeks of 2020, we want to reiterate the fundamentals that we believe must underpin any final, workable Code, so Australians can continue to have full and fair access to Google services.  

It must be fair

The draft Code’s arbitration model looks only at one side of the exchange (notwithstanding what the ACCC itself has said about the value that Google provides to news businesses). This leaves news businesses free to make extreme claims without digital platforms being able to respond effectively, making an unfair outcome inevitable. No business, in Australia or around the world, could accept this kind of extreme and unreasonable set-up. 

It must be principled

The Code should preserve a system where publishers are free to decide whether their content can be found in Google Search or Google News (and how much preview information they include), rather than imposing a system that forces Google to include snippets and links to news content, and to pay for that information to appear in search results.  

No other Code of Conduct in Australia forces one company to provide services to another company and pay them for the services they benefit from.

But not only would this be unprecedented, it would also undermine the principle of a free and open internet, built on the availability of links, snippets in search results and the ability to link between websites without advance permission. This long-established principle is the bedrock of the digital economy and the enormous benefits it creates for people and businesses in Australia and everywhere else.

It must be technically feasible

The Code’s algorithm notification requirements have to reflect the way we operate Google Search, which includes thousands of updates every year. Requiring that Google gives publishers advance notice of every algorithm change is technically impossible—and even if it was achievable, it would give news businesses an unfair advantage over every other website owner, further undermining the open internet, and leaving users worse off. This requirement of the draft law should be amended to require only reasonable notice about significant actionable changes. 

The path forward

To put it plainly: we support a Code, but we cannot agree to one that doesn’t incorporate these fundamental elements. No responsible business would cross these red lines. But there is a way forward that we believe achieves the goals of both publishers and the regulators, and which is realistic and fair for all parties. 

This approach would have two complementary elements. 

First, a final version of the Code that includes standard arbitration (not the extreme and unusual ‘baseball arbitration’ model) and is based on comparable transactions.

Second, commercial agreements between Google and news businesses to help fund the future of media in Australia. We have supported the news industry in multiple ways for many years, from helping train journalists to helping publishers find new revenue streams. And we’ve shown that we’re willing to pay to licence content through products like News Showcase. 

We’ve already signed agreements for News Showcase with 200 publishers globally and are making progress with many more around the world, including in France. Australian publishers were some of thefirst in the world to sign these deals. We’re eager to build on this initial commitment in the years ahead, but we can’t do that without a resolution on the Code and the uncertainty and risk that come with it. 

As work on finalising the Code continues, we’ll keep making the case for an approach built not on unprecedented arrangements, but on a fair, workable Code and mutually beneficial, commercial discussions between publishers and digital platforms. Australia’s future as a strong digital economy depends on it. 

Two weeks ago, we detailed our concerns with the arbitration system proposed in Australia’s draft News Media Bargaining Code. We also announced a US$1 billion global investment to license content for a new product, News Showcase, which is rolling out first in Germany and Brazil. We signed several agreements with Australian publishers for this product in June, and were hoping to launch it here soon. We have had to put these plans on pause for now as we don’t know yet if a product like News Showcase would be viable under the code. 

The agreements we have signed in Australia and around the world show that not only are we willing to pay to license news content for a new product, but that we are able to strike deals with publishers without the draft code’s onerous and prescriptive bargaining framework and one-sided arbitration model.

We don’t oppose a code, and a system for resolving disputes between parties. But the arbitration system outlined in the draft is unworkable. In addition to the issues we raised on September 27, we have concerns about its unfair payment conditions and unclear definitions and obligations.

We believe these conditions could be amended to make it a fair and workable code: a code that can work together with commercial deals and programs like News Showcase.

An unreasonable ‘must include, must pay’ system

The draft code proposes, in effect, a ‘must include, must pay’ system, something that’s extreme and unprecedented. It essentially forces Google to provide a benefit to Australian news businesses and to pay them to receive that benefit. 

A ‘must include’ regime is rare. And when this type of system is used, parties have a right to be included, but not a right to be included for free — let alone be able to demand payment to be included.   

Under the draft code, if we ‘make available’ news content (by providing links to news websites when you search online, we assume, though this isn’t defined in the code) we have to negotiate payments to that company—even though analysis shows they benefit more from the links than we do. In 2018, the value we provided publishers was estimated to be more than $200 million a year (while news on Google generated just $10 million in revenue—not profit). As we have said, none of the value we bring to the negotiating table would be considered by the arbitrator.

What’s particularly concerning is that it’s not just one unequal negotiation. We would be forced into these one-sided negotiations with all registered news businesses in Australia that earn more than $150,000 per year.

That means we could face extreme and uncommercial claims for payment—which is not financially sustainable for any company. The draft code would set a dangerous precedent in Australia, as a similar one-sided, forced-dealing regime could be imposed in other industries, impacting other companies.

Unclear obligations which carry enormous fines

The code is extremely broad and lacks vital definitions. This makes it difficult to know how to comply with its many provisions, and it carries potentially enormous financial penalties. We could be fined up to 10 percent of our Australian revenue for a single breach. No business in Australia should have to manage the huge risk that comes with such severe penalties for such uncertain provisions.

In fact, no other code in Australia carries such huge penalties. Penalties for breaches of other codes that carry penalties (and many of them don't) are a maximum of $66,000.