Google has a secret plan to cut Australia off from updates to its search engine if it does not agree with proposed laws to force it to pay for news.
In a world first, the Australian Competition and Consumer Commission released a draft code in July directing Google and Facebook to negotiate fair payment deals.
The competition regulator is proposing laws that would allow commercial news media companies to broker an appropriate payment for their content to address ‘imbalances in bargaining power’ against the tech giants.
But the search engine company, which has publicly pushed back against the proposal along with Facebook, has been testing its systems to see how they would work locally without regular improvements, sources told the AFR.
Google is working on a secret plan to limit search engine updates if it does not like the Morrison government’s proposed laws to force it to pay for news content
The move would mean services such as search and news would be less efficient compared to the rest of the global market, and allow Google to avoid aspects of regulation within the code of conduct legislation.
Other insiders said the multinational company was working to gauge how the Morrison Government’s proposal may impact its products.
Revisions to the code of conduct draft are expected to be taken to the Liberal Party on Tuesday.
It remains unclear what changes the ACCC and government have made and all companies involved have been forced to sign non-disclosure agreements.
‘We haven’t seen the final version of the code, but will continue to engage constructively through this process,’ Google Australia managing director Melanie Silva said in a statement.
‘As we’ve said, our goal is achieving a workable code, that’s fair for publishers and platforms, and allows Australians to continue to have full and fair access to Google services.’
The code will most likely be introduced into parliament on Wednesday.
Both tech giants have been striving to have the government prune back the draft, with Ms Silva warning in an open letter to Australia in August the proposal would have effects on the use of Google’s services.
The move would mean services such as search, news and discover would be less efficient compared to the rest of the global market
The letter and another from YouTube, a subsidiary of google, were published on both platforms calling on users to complain about the laws.
‘We need to let you know about new government regulation that will hurt how Australians use Google search and YouTube,’ Ms Silva wrote.
‘A proposed law, the news media bargaining code, would force us to provide you with a dramatically worse Google Search and YouTube, could lead to your data being handed over to big news businesses, and would put the free services you use at risk in Australia.’
YouTube is not listed as one of Google’s services included in the draft code and it remains unclear whether updates would be limited on the video sharing site.
The draft code is aimed to resolve revenue sharing between news businesses and digital platforms through a binding ‘final offer’ arbitration process.
The competition regulator is proposing laws that would allow commercial news media companies to broker an appropriate payment for their content to address ‘imbalances in bargaining power’ against the tech giants
If a deal cannot be struck through a formal three month negotiation and mediation process, then an independent arbitrator would choose which of the two parties’ final offer is the most reasonable within 45 business days.
The ruling would be based on the direct value of news content, how much money is directly made from ads around news content, the indirect value, and the value to the platforms of having the content.
The cost of producing news and whether the payment amount would place an excessive burden on Facebook or Google would also be taken into consideration.
If passed, the regulation could create a benchmark, prompting other countries to pursue the tech giants to pay their local news publishers.
In September, Facebook threatened to ban Australians from sharing news to their social media if the initial draft was passed.