Google is like a poster in the newsagent's window for publishers, tech giant says

Google search is the internet-age equivalent of a newspaper poster in a newsagent’s window, and publishers benefit by getting billions of visitors to their websites free of charge, Google Australia has said.

The local arm of Google was responding to the government’s assertion that Australian news content is “lucrative for the tech titans”, and Google and Facebook should be paying publishers millions of dollars annually for using it.

“In the offline print world, publishers have long paid retailers, newsstands and kiosks to distribute their newspapers and magazines – acknowledging the value of acquiring audiences to a publishers’ content and the advertising publishers sell alongside it,” Google Australia’s managing director, Mel Silva, said in a lengthy riposte to the government’s instruction to the competition watchdog to develop a mandatory code to force the digital platforms to pay for using news content.

“Publishers provide posters with headlines for newsagents to display in their windows to help draw customers to buy papers. In contrast, Google Search sends readers from Australia and all over the world to the publishers’ sites for free [Silva’s italics] – helping them to generate advertising revenues from those audiences and convert them into paying subscribers.”

Silva’s blog post is the company’s considered response to the intervention of the treasurer, Josh Frydenberg, two weeks ago when he instructed the Australian Competition and Consumer Commission to abandon attempts to develop a voluntary code by November because no progress had been made.

In its response to the landmark digital platforms inquiry in December, the federal government had originally asked the ACCC to develop a voluntary code between media companies and digital platforms including Google and Facebook.

But negotiations stalled, prompting Frydenberg to move to a mandatory code, to be ready by the end of July.

The code will ensure the digital giants share advertising revenue with Australian media companies, including News Corp, Seven West Media and Nine Entertainment.

But Silva said there were “misconceptions” about how the company had behaved in negotiations and it had “actively engaged” with more than 25 publishers and the ACCC before the government moved the goalposts.

She indicated Google was not prepared to entertain the notion that it should pay for the content displayed by its search engine, and argued that the traffic it sent had “substantial value”.

Google sent more than two billion visits to Australian news sites from Australian users, and a further billion visits from users outside Australia in 2018, and the relationship was a “substantial two-way value exchange”, she argued.

Guardian Australia revealed last week that negotiations for the voluntary code had stalled over three main factors: the media’s access to data and notice of ranking changes, and stonewalling by Google and Facebook on payment for content.

“We met with some publishers on multiple occasions to work through and understand complex issues,” Silva said of the negotiations.

“The ACCC asked Google to deliver a progress report by the end of April, which we were on track to deliver before the Government changed the deadlines and shifted focus to a mandatory code. We have sought to be constructive in our approach from the outset and have provided our update to the ACCC this week.”

The government has said the code will include a number of provisions, including those related to value exchange and revenue sharing; transparency of ranking algorithms; access to user data; presentation of news content; and the penalties and sanctions for non-compliance.