Google vs. Australia still remains a tangled web

As the world’s most popular search engine threatens to pull out of Australia, the players left behind are probably feeling pretty ecstatic. Those remaining include Microsoft’s Bing, Yahoo and the privacy-focused Duck Duck Go, and the market is wide open for each to comfortably occupy the nearly 90-95% market share that is currently under Google’s dominant fist. The ongoing Google vs. Australia slugfest over the ‘World First’ media code is followed by reaction and ripples from the search engine’s rivals to tech industry leaders, and regulators to other governments chiming over the protracted negotiations.

What does Google’s exit from Australia mean? How does Google vs. Australian government debacle affect the 25 million Australian citizens who use the web on a regular basis? What are industry leaders and analysts saying on all sides?

Scott Morrison tells Google: “We don’t respond to threats,” Australian Prime Minister Scott Morrison hits back.

Over the past few weeks, Industry Leaders Magazine documented what it means, how the people involved are reacting, and what changes could Australia expect in the coming months.

Google vs. Australia: US prods for scrapping of proposed laws

A statement from the United States government suggests Australia should suspend plans to go ahead with the controversial bill which had Google threatening to shut the search engine in Australia. U.S. Trade Representatives Daniel Bahar and Karl Ehlers suggested Australia instead “further study the markets, and if appropriate, develop a voluntary code.”

The world first legislation could “raise concerns with respect to Australia’s international trade obligations,” the U.S. Government warns.

“The US Government is concerned that an attempt, through legislation, to regulate the competitive positions of specific players … to the clear detriment of two US firms, may result in harmful outcomes,” said the document, under the letterhead of the Executive Office of the President.

The world-first legislation could additionally “raise concerns with respect to Australia’s international trade obligations,” it said.

The search giant is reeling over world first media code

In Google’s statement, the search giant said it may disable search in Australia if the government’s proposed World First Media Code becomes law. The search engine’s managing director Mel Silva opposed the law in front of a senate committee in Canberra with a strongly-worded warning: “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,” Silva told the senate committee.

What does Google’s exit from Australia mean for its users? Well, for starters Microsoft’s Bing could replace Google in Australia, a local government minister suggested.

It’s unclear if Google’s threat – which industry analysts believe is not frivolous – would affect its services such as Gmail, Google Maps, and YouTube, among others. Less popular alternatives to Google apps do exist. There is no match for the current scenario, however, Google has exited from a country before due to local laws.

“We just want the rules in the digital world to be the same that exist in the real world, in the physical world,” Australian Prime Minister Scott Morrison hits back.

In 2010, Google shut down its services in mainland China over alleged Chinese hacking. There’s also a similar row happening in Europe. Under the controversial Article 13 which has been voted in by the European Parliament, search engines and news aggregators should pay news sites for links.

In France, Google has agreed to reach agreements to pay notable newspapers for use of their content in Google News. Surprisingly, Google isn’t too keen to sign a similar deal in Australia which has hit the nerve of reputed media organizations like Murdoch’s News Corp and Nine Entertainment, among others.

Google acquiesces to media companies in France, pushes back against Australia: In France, Google has agreed to reach agreements to pay notable newspapers for use of their content in Google News. (Image: Unsplash)

There’s also the possibility of Google redirecting Australian users to the U.S. country’s version of Google. While we’re throwing possibilities in the air, there’s one that needn’t be dismissed. Google may block Australian users based on their geographic location that is determined by one’s IP address.

Google’s loss is Microsoft’s gain

According to communications minister Paul Fletcher, Microsoft is “significantly interested” in the market opportunity a Google exit from Australia would provide.

“The Microsoft CEO reached out to the prime minister and proposed a meeting, accompanied by senior executives, I was able to join that meeting, and we had a very informative discussion about Microsoft’s interest in the Australian market,” he said.

“At the moment they have a small market share in search, but they’re interested in expanding that, they’re interested in developing the presence of Bing here.”

Last week, Microsoft chief Satya Nadella had a lengthy discussion with Australia’s Prime Minister Scott Morrison over making Bing replacing Google.

“I can tell you, Microsoft’s pretty confident, when I spoke to Satya,” Morrison told reporters in Canberra, without giving away too much.

“We just want the rules in the digital world to be the same that exist in the real world, in the physical world,” Morrison added.

Google’s potential exodus from Australia is Microsoft’s gain: Last week, Microsoft CEO Satya Nadella met Australian Prime Minister Scott Morrison over discussions to make Bing replace Google. (Image: Bing)

The Seattle-based company’s president Brad Smith said in a statement that Microsoft “fully supports” proposed world first code and is ready to improve its Bing search engine.

“Microsoft would “invest further to ensure Bing is comparable to our competitors and we remind people that they can help, with every search, Bing gets better at finding what you are looking for,” Smith said.

How ready is the Australian population to embrace Bing? According to web analytics company StatCounter, Microsoft’s Bing search engine holds a 3.6 percent market share in Australia, while Google has a 95% share. Moneywise, Australia is a much smaller potential market but it’s worth the grab.

In 2019, Google Australia made $3.7 billion (A$4.8 billion) in revenue. Advertising revenue in the nation made up most of that, at $3.27 million (A$4.3 billion). When you factor in all the expenses, Google Australia raked $102 million (A$ 134 million) in profit last year. On the other hand, Google’s parent company Alphabet Inc. has an estimated $100 billion of cash on hand to cover revenue gaps.

It’s more than just money. The wider concern is whether how much stronghold companies like Google have over a nation’s legislation.

Important things to note in the Google vs. Australia issue

• The push to make companies pay for news comes as Google, Facebook and other powerful Silicon Valley companies face intense scrutiny over their market dominance. According to Australian Senator Rex Patrick, the movement is “going to go worldwide. Are you going to pull out of every market, are you?”
• Industry analysts worldwide have strongly condemned Google’s plan to exit from Australia over the proposed news media bargaining code. Ouch.
• Google and Facebook, based up by the U.S. government, have said the code would undermine their business models and the very foundation of the internet.

The ripples are starting to spread.

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