Microsoft is set to step in with its Bing search engine should Google make good on its promise to cut service to Australia, the country’s prime minister revealed Monday.
Speaking at the National Press Club of Australia, PM Scott Morrison said he has spoken to Microsoft CEO Satya Nadella, who is confident Bing could meet the needs of Australians should Google exit, the Associated Press reported.
Google pledged to cut off service to Australia at a public hearing last month over a proposed law to make technology firms pay for news content produced by the country’s media companies.
Morrison maintained that it is important for Australia to set rules that are right for its people. Having a news environment in Australia that is sustainable and supported commercially is vital to the functioning of democracy, he added.
Google did not respond to a request for comment for this story, but Microsoft, in a statement provided to TechNewsWorld said, “We recognize the importance of a vibrant media sector and public interest journalism in a democracy, and we recognize the challenges the media sector has faced over many years through changing business models and consumer preferences.”
“With respect to the current controversy over a potential code of conduct governing Google and Facebook,” it continued, “Microsoft is not directly involved and we wouldn’t want to comment on that ongoing process involving the ACCC and those companies.” The ACCC, or Australian Competition and Consumer Commission, is the Australian regulator that drafted the controversial law.
How serious is Google’s threat to cut service to Australia?
“Google has to be serious,” said Greg Sterling, vice president of market insights at Uberall, maker of location marketing solutions based in Berlin.
“If Australia doesn’t budge and Google blinks, other countries won’t take Google’s hard bargaining seriously,” he told TechNewsWorld.
All things considered, it’s unlikely Google will act, countered Karsten Weide, program vice president for digital media and entertainment at IDC.
“On the one hand, because Australia is such a small market, with little revenue at stake, they might act on their threat to state an example,” he told TechNewsWorld. “It would also make them look weak if they didn’t after issuing the threat.”
“On the other hand,” he continued, “it would them make look like a bully at a time when there is significant techlash taking place, and for what?”
If this problem goes on too long both sides will lose, maintained Jack E. Gold, founder and principal analyst at J. Gold Associates, an IT advisory company in Northborough, Mass.
“Businesses all over the world are looking at this, and they see Google making money off them and they’re not getting anything,” he told TechNewsWorld.
“But Google does offer a service,” he explained. “It gets people to websites they wouldn’t get to otherwise.”
“The question is who’s going to back down first,” Gold continued. “If Google doesn’t back down, they’ll lose revenues from Australia. In the worldwide scheme of things, that’s pretty small.”
“Losing Australia isn’t going to put Google out of business,” he said.
According to the New York Times, Google Australia collected roughly US$3.3 billion from Australian advertisers in 2019, and paid about $77 million in taxes, with a reported profit of about $637 million.
Gold maintained the conflict is a lose-lose proposition.
“If Google pays news businesses, it sets up Google to have to do the same thing everywhere else because everyone else is going to demand it,” he explained.
Meanwhile, Australian businesses will miss the referral machine that is Google. “It’s the first place people go to find information,” Gold said. “If you’re a news agency, you pick up a lot of subscribers from referrals from Google.”
As for Bing replacing Google, he observed: “Bing is second string. Maybe even third string. It’s not going to cut it.”
“Google has most of the leverage here,” he added, “but in politics, anything can happen.”
Public Relations Win
While Microsoft is anxious to pick up the slack should Google desert Australia, it remains to be seen how much it will benefit from a Google exit.
The market is too small for Microsoft to make big gains, noted Weide. “But it would be a PR victory,” he added.
“If Australia won’t let Google publish any of its stuff, some percentage of people would go to Bing, but it would be a small percentage of users,” Gold maintained. “Most people would stay on Google and not get the Australian stuff anymore.”
“Google and Microsoft have been battling this out for years, and Microsoft has always come up a distant second,” he observed. “Why would that change?”
During the same hearing where Google delivered its ultimatum, Facebook, too, threatened to block links to Australian media if the payment bill became law.
“Today Google and Facebook proved in dramatic fashion that they pose existential threats to the world’s democracies,” Barry Lynn, director of the Open Markets Institute, a Washington, D.C. advocacy group against corporate concentration and monopoly power, said in a statement.
“The two corporations are exploiting their monopoly control over essential communications to extort, bully, and cow a free people,” he added.
Path to Compromise
Despite the rhetoric, there may be a path to compromise, since Google has already cut a deal in France to pay publishers there based on criteria set by Google, such as contribution to general discussion, publication volume and audience size.
If a French publisher disputes a payment, the dispute would likely have to be settled in court. A publisher, especially a small publisher, would likely take what Google’s willing to give them, rather than wait for a payment until the end of expensive litigation that could last years.
In the Australian model, disputes are settled by an independent arbitration panel. “If Australia prevails, its arbitration model is likely to be adopted by other countries,” Sterling explained. “This is what concerns Google.”
Weide, though, contends the arbitration scheme is something that might work in a small country like Australia, but wouldn’t work in larger countries, like the United States, England, France or Germany.
If Australia sticks to its guns, it could have another global consequence for Google. “By losing Australia, it could stiffen people’s spines in other parts of the world,” Gold said. “Regulators see Australia fighting back so they will too.”