Google might pull its search tools from Australia over new fees

Disinclined to make what could be precedent-setting concessions, the search and advertising giant is pushing back hard.

Blindfold businessman sitting at desk in office

Australia's proposed media bargaining code has enraged Google since it was first proposed. Now the search and advertising behemoth is threatening to pull one of its key products, search, from the Australian market entirely if the code becomes law.

Google Australia's managing director Melanie Silva informed the Australian Senate that the code poses risks to the company's operations and could set a precedent, the Sydney Morning Herald reports. The purpose of the media bargaining code is to bring Google's power into check and have digital platforms, including Facebook, give financial compensation to media publishers for their content.

It also requires that Google and Facebook submit reports of their online ad operations to a competition watchdog, and give media publishers 14 days notice about any changes to algorithms that could affect them. Google isn't alone in making threats — Facebook's Australian managing director Will Easton made a similar statement last September, saying the social media platform would take down published articles if the code went into effect.

Threats don't fly in Australia — If Silva and her Google colleagues thought threatening to remove Google from Australia would work, they were sorely mistaken. In response to the threat, the country's prime minister Scott Morrison stated:

Australia makes our rules for things you can do in Australia. That’s done in our Parliament. It’s done by our government, and that’s how things work here in Australia. People who want to work with that, in Australia, you’re very welcome. But we don’t respond to threats.

Can Google afford to lose Australia? — The threat sounds fairly legitimate, according to insiders who spoke with the media. But observers might be wondering why Google sounds so comfortable with the possibility that it could lose Australia. It could be the fact the country has a mere 25 million inhabitants. As a share of Google's global user base, that's a blip.

If Google does pull out of Australia, it would send a strong message to other markets that if they want to try levying fees of their own, it might well pull the plug on them, too. That said, Google's been far more willing to make concessions in France where it recently reached an agreement with a group of French publishers over compensation for reusing their content.

Some within the Australian Senate worry that Google's exit would disrupt how Australians use the internet. But media houses argue that the company's business model should not take priority over local journalism, no matter how aggressive its ultimatums are.