Author Archives: Mel Silva

Google’s $53 billion impact in Australia

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


Submissions to the draft News Media Bargaining Code show significant concern

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. 


Just before Christmas, the Australian Competition and Consumer Commission (ACCC) released submissions that hundreds of businesses, organisations, and individual Australians made in response to the first draft of the Code last year. This includes Google’s own submission.

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. 


We found that more than 80% of the 426 submissions released on the ACCC's website flag significant concerns—and they have come from various groups, including:

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 News Media Bargaining Code remains unworkable—but there is a path forward

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 News Media Bargaining Code remains unworkable—but there is a path forward

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. 

Australia’s News Media Bargaining Code: an update

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. 

Supporting Australia’s economic recovery

There’s no doubt 2020 has been a really tough year, testing the resolve of all Australian businesses and communities. Despite the challenges, though, we’ve seen some of the best of Aussie entrepreneurship and resilience. Lost in Books—a multilingual bookstore that temporarily moved online—is just one example of the many inspirational businesses that have adapted how they do things to continue serving their customers. 

I’m sharing an update here on how Google Australia has been working to help business owners across the country with our tools and services, training and support—so they can get back up and running. 

Supporting small businesses 

There are millions of small businesses in Australia; they're the lifeblood of local communities and critical to our economy. And as new Google Search insights show, Australians want to back their local businesses. In fact, searches for supporting local and small business are the highest they have been in a decade.


More than 1.3 million Aussie businesses are already using our tools and services to connect with customers and grow their businesses. But we know there are thousands more who could benefit from this support. It’s why our latest campaign focuses on some inspirational businesses that have adapted what they do to stay open and accessible for their customers—and where Google’s free services and tools are helping them, including Google My Business profiles on Search and Maps.

Throughout this year, we’ve announced additional support for businesses (like here and here)—and we’ve recently added new and updated product features to help businesses continue to adapt, including:

  • Google My Business profile features which allow businesses to show any COVID-19 arrangements in place for customers. For example, food businesses are able to show if  takeaway, delivery, or kerbside pick up is available (as highlighted in our awareness campaign business examples).
  • We’ve made it free for merchants in Australia to list their products on the Google Shopping tab. And to help retail businesses better understand and respond to fast changing consumer preferences through COVID-19, we launched the Rising Retail shopper insights tool.
  • After making Google Meet free for all Google Workspace customers earlier during COVID-19, we extended this to everyone so that people and communities could continue to stay in touch—and we’ve continued to add new features.

Growing digital skills 


Research by Ipsos has found that while COVID-19 has dealt a heavy blow to small businesses across the country, those that already had strong online engagement have been less affected. 


While 85 percent of small business owners claimed to have had revenue negatively impacted by the pandemic, those that did have digital tools and strategies in place (such as online profiles, mobile friendly websites and online ads) at least six months prior to the crisis fared better. These businesses were 13 per cent less likely to report a negative impact compared to businesses that implemented such measures only from the start of the pandemic.


To help Aussie business owners get the digital skills they need to keep their businesses operational in this new environment, we shifted to virtual online training through Grow with Google. Our online workshops alone have trained more than 20,000 Aussie SMBs since the start of the year—building on the more than 500,000 Australians we’ve trained in digital skills since 2014.

The next sessions will be held from 1-3 December and are free for everyone. They will cover topics like how to keep your customers updated through COVID-19, maintain an online business profile, and better understand what customers are looking for today. 

We’ve also funded community organisations to do critical work across Australia to boost digital skills and opportunities. This includes providing support to Many Rivers through a global response and recovery program being coordinated by Youth Business International and funded by Google’s philanthropic arm, Google.org, which will assist under-served small and medium businesses to respond to COVID-19. And it includes the partnership we’ve developed with Infoxchange, which is helping address Australia’s digital skills shortage and has provided face-to-face training for 10,000 people through the Digital Springboard program. 


We want to continue to be there for Aussie businesses and communities by providing access to helpful—and in many cases, critical—online tools and services, so they can focus fully on the road to recovery.

Australian code’s unreasonable payment rules

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.


Right now, these issues—and the others we’ve raised—mean the code is unworkable for us. We want to find a way through and we believe the solution should involve bringing News Showcase to Australia, which would help publishers grow their audiences and contribute to their ongoing sustainability. We’ve proposed changes to the ACCC and the Government, and we’re continuing to engage with them constructively so we can get to a fair code for everyone.

Australia’s media code won’t allow fair negotiations

Over the past month, we’ve outlined our concerns with Australia’s draft News Media Bargaining Code: a new proposed law that would impact the way Australians use Google Search and YouTube. We don’t oppose a code governing the relationship between news businesses and digital platforms—but right now the way the law is drafted isn’t fair or workable.  


Last week, we proposed changes to help move us forward. Today, we want to go into more detail about one of our biggest concerns—the highly unusual, largely untested, one-sided arbitration system that would determine commercial arrangements between Google and news companies.


Here are the issues.

Unprecedented in Australia

The system being proposed is called ‘binding final-offer arbitration’, referred to in the United States as ‘baseball arbitration’. It isn’t used in any of the eight other mandatory codes in Australia. In fact, without the two parties’ consent, it’s never been used in Australian law before.

In a standard negotiation, two parties negotiate a price for a product or service after assessing its market value and the value each side provides the other. If the parties can’t reach an agreement, they might ask a mediator or arbitrator to decide on what’s fair. 

In baseball arbitration, if the two sides can’t reach an agreement, each puts forward a single final offer and the arbitrator picks one, guided by set criteria. 

Unreasonable claims 

This system is usually put in place if there’s not much dispute over the value of the product or service being discussed and the parties are already close in price. But with the media code, some of the amounts being suggested by news businesses about how much we should pay to provide links to their stories defy commercial reality. 

One news business has already claimed digital platforms should pay $1 billion every year, despite the fact that only 1 percent of all searches by Australians last year were seeking news—equating to around $10 million dollars in revenue (not profit). 

Clearly, both sides have very different ideas of what the prices should be—and asking the arbitrator to pick a ‘final offer’ is an extreme way of resolving that. The reality is that baseball arbitration often fails and doesn’t produce quick outcomes. Independent economists have raised questions about its effectiveness here. 

The results are also unpredictable, and no business can operate with that level of uncertainty.

The playing field is not level

The fundamental idea of baseball arbitration is that both sides present their evidence— like the player’s contribution, the team’s recent performance and comparable salaries—and the arbitrator decides the appropriate offer. 

But the draft code doesn’t provide a level playing field.

As it stands, the arbitrator isn’t required to consider the value Google provides to news media businesses in the form of traffic to their websites, which in 2018 was estimated at more than $200 million per year. 

Not only is that unfair—it goes against what the Australian Competition and Consumer Commission (ACCC) itself said should happen when it was preparing the code: “Negotiations around compensation for the use of news should also take into account the value that Google and Facebook already provide to news media businesses for using their news content.”

News media businesses can also make enormous financial demands of Google based on the vague and flawed concept of the ‘indirect’ value that news content provides (our data shows that the direct value of news to Google is negligible). Even the ACCC itself hasn’t been able to put a number on the indirect value of news, after several years of inquiry.

When the playing field is set up to favor one side, then that side is encouraged to make ambit, or exaggerated, claims.

A question of costs

But that’s not the only one-sided rule here.


The draft code also says the arbitrator should consider news businesses’ production costs — but not Google’s. 


Again, that’s a significant amount of money, givenwe invest $1 billion each year in Australia to improve the services 22 million Australians use daily. This investment includes initiatives to directly support Australian news companies, like our digital skills training program for local newsrooms.


The only other factor the arbitrator must consider when deciding on a payment is that it must not place ‘an undue burden’ on Google. It’s a vague and undefined condition and an insufficient substitute for being able to talk about our actual value and costs.

A fair and workable solution


In all of the submissions to the ACCC, only one news business proposed binding final-offer arbitration be used in the code. Many requested that the code use standard arbitration—a method regularly used for resolving disputes in Australia and around the world. We are happy to negotiate fairly and, if needed, see a standard dispute resolution scheme in place. But given the inherent problems with baseball arbitration, and the unfair rules that underpin it here, the  model being proposed isn’t workable for Google. It wouldn’t be workable for many Australian businesses—no matter how large or small they are. 


As we’ve said, we are committed to finding viable solutions, and we will continue to engage with the ACCC and the Government to ensure the final version of the code is fair and workable for all.

Small business and Australia’s media bargaining code

In what has been an incredibly tough year, Australia’s small and medium businesses have kept our economic engine going—protecting jobs and providing vital services in their communities. 


Throughout this time, we’ve made sure business owners know Google’s tools and services are there to help. Small businesses are using our affordable ad services to advertise where they couldn’t before, and connecting with new customers via free listings on Search and Maps. We’ve also helped businesses operate online through national digital skills training.


As Australia starts to look towards economic recovery, we’re concerned that many of these businesses will be affected by a new law being proposed by the Australian Government—the News Media Bargaining Code—which would put the digital tools they rely on at risk. 


While we don’t oppose a code governing the relationship between digital platforms and news businesses, the current draft code has implications for everyone, not just digital platforms and media businesses. We wanted to explain our concerns and how we believe they can be addressed in a way that works for all businesses.  


How does the code impact small businesses? 


The draft code affects small businesses because it would weaken Google services like Search and YouTube. These services created more than 130 million connections between businesses and potential customers in 2019, and contributed to the $35 billion in benefits we generated for more than 1.3 million businesses across the country. But they rely on Search and YouTube working the same for everyone—so that people can trust that the results they see are useful and authoritative, and businesses know they’re on a level playing field.


Under the draft code, we’d be forced to give some news businesses privileged access to data and information—including about changes to our search algorithms—enabling them to feature more prominently in search results at the expense of other businesses, website owners and creators. 


News GIF

For example, a cafe owner might have made their way to the top spot in Search results for a particular query over time, thanks to popularity, search interest and other signals. But if the draft code became law—giving some publishers an advanced look at algorithm changes—they could potentially take advantage of this and make their web content appear more prominently in search results.


Likewise, if you ran an independent travel website that provides advice to people on how to plan local holidays, you might lose out to a newspaper travel section because they’ve had a sneak peek at changes to how Search works.


That’s an unfair advantage for news businesses. Businesses of all kinds would face an additional hurdle at a time when it’s more important than ever to connect with their customers.

A bad precedent

The draft code would also create a mandatory negotiation and arbitration model that only takes into account the costs and value created by one party—news businesses. The code’s provisions mean costs are uncapped and unquantifiable, and there is no detail on what formula is used to calculate payment.

Regulation framed in this way would set a bad precedent. Most businesses support sensible regulation—but not heavy-handed rules that favour one group of companies over all others.  

Australian entrepreneurs like Mike Cannon-Brooks, Matt Barrie and Daniel Petrie have made the point that a market intervention like this would deter international companies from operating in Australia, risking jobs and investment just as we need to be focusing on the recovery from COVID-19. 

And it’s not just business leaders who’ve spoken out. Over the last few weeks, we’ve heard from a cross-section of Australia’s business community, from local retailers and restaurants to YouTube creators, and we’re deeply grateful for their support.    

The way forward

The issues with the draft code are serious, but we believe they can be worked through in a way that protects full and fair access to Search and YouTube for every Australian business.  

We’ve made it clear that we want to contribute to a strong future for Australian news, and we’re engaging constructively with the Government and the ACCC to try to find a resolution — making proposals for changes that would support a workable code

Throughout 2020, we’ve worked with business owners across Australia to help them get through the challenges of the fires and the pandemic, whether by providing digital tools, direct assistance, skills training or advice, and we hope to continue providing that support long into the future.  

We know how tough this year has been, and we’re going to keep doing everything we can to make sure that the final version of the code supports Australia’s amazing businesses.

A workable publisher code for Australia

Editor's note: This is an opinion piece that was first published in the Australian Financial Review on September 13, 2020. 

The Australian Competition and Consumer Commission's media bargaining code, which is designed to govern the relationship between news media and digital platforms – including how news content should be paid for – will have a big impact on the future of the country's digital economy and millions of Australians who use platforms such as Google’s.


It’s vital we get it right before it becomes law, which is why Google has engaged in good faith with the ACCC inquiry and consultation process since it was launched in 2017.


Our position on the regulation is clear. We do not oppose a code that oversees the relationships between news publishers and digital platforms and we’ve been committed to playing a constructive role in the process from the start. In fact, all the parties involved here agree on two things: journalism is important to democracy, and the business models that fund journalism have changed.


What we oppose is a mandatory bargaining code that’s unworkable, both for Google as a business, and for Australians.


However, contrary to what some have claimed, Google hasn't ‘‘stolen’’ revenue from news publishers. AlphaBeta research conclusively shows that the fall in newspaper revenue between 2002 and 2018 was mainly the result of the loss of classified ads to online classifieds businesses such as Domain, Realestate.com.au, Carsales and Seek. Google’s advertising business grew because it made advertising available to businesses that had previously been priced out.


We don’t ‘‘use’’ or ‘‘steal’’ news content either – we simply help people find what they’re looking for on the internet, and link them to other websites, including news sites. You don’t see full articles on Google.


Just as we contribute to the Australian economy by working with more than a million Australian small and large businesses, supporting almost 120,000 jobs, and paying tens of millions of dollars in tax, we are willing to pay to help news businesses too. As part of our broader efforts to support a strong future for journalism, we are already paying several publishers to license content for a new product, as well as helping train thousands of journalists.


When it comes to new regulation, what we oppose is a mandatory bargaining code that’s unworkable, both for Google as a business, and ultimately for the Australians who depend on our services, from the search engine to YouTube. And right now, the proposed code has critical flaws that need to be addressed.


In its current form, the code would impose a one-sided negotiation and arbitration model that is unlike any other tried-and-tested model applied in Australia. It would consider only the value news businesses are assumed to provide to Google – and ignore the more than $200 million in value that Google sends to publishers each year via ‘‘clicks’’ from search results.


One-sided set-up


It wouldn’t consider our costs or the commercial agreements with publishers we already have in place – and we have no meaningful ability to appeal the arbitration. No business would or should accept this kind of one-sided set-up.


The code would also force us to tell news businesses how they can get access to data about Australians that they don’t already have, raising concerns over how this information would be used. It would require us to give a small group of news businesses 28 days’ notice of significant changes to search and YouTube algorithms and describe how to minimise their effects.


Even if this were technically possible (it isn’t), it would privilege certain Australian news publishers over every other Australian who has a blog, YouTube channel or a small business website, while slowing down improvements to the search function for everyone else.


These issues are serious. But we don’t believe they are insurmountable, and we’re working with the ACCC and the government to help find a way through them. With reasonable changes, we believe the code could be rebalanced in a way that meets its intended purpose and makes it fair to all parties.


The negotiation model could be amended to take account of the value both sides bring to the table, as the ACCC’s own concepts paper advocated in May, and the arbitration rules could be brought into line with commonly used methods in standard arbitration, comparable codes and negotiations.


The requirement to share algorithm changes could be limited to notifying news business about actionable changes, with reasonable notice, and without obliging Google to tell a select few publishers how they can take advantage of the system.


The data-sharing provisions could be tightened to make it clear that Google is not required to share any additional data, over and above what publishers are already entitled to see, protecting information about how people interact with our sites.


The scope of the code could be better defined to apply to designated services that Google provides, rather than being left open-ended.


These changes would help create a fair, workable code. They would mean Australian internet users continue to have full and fair access to Google Search, YouTube and other services. And they would mean that discussions about payments for licensing news content could continue on a normal, commercial basis – rather than being set up as an artificial, one-sided process that is certain to result in unreasonable and uneconomical outcomes.


As the ACCC prepares its final recommendations, we have to see the code in its bigger context.


Australia is a forward-looking country with an open, global economy that attracts investment and job opportunities from around the world. Our technology companies, digital entrepreneurs and engineers are among the best in the world at what they do – and fair access to tools such as Google Search and YouTube is part of that success. Google believes in sensible regulation, but everyone should distrust rules that give special treatment to some over others.


There is a window of opportunity to shape an effective media bargaining code that meets the needs of news businesses, of digital platforms and, above all, of Australians. We should take that opportunity – and then get back to the urgent work of building a strong digital economy that can help fuel Australia’s future.