Google threatens to leave Australia – but its poker face is slipping

The biggest companies in technology love an ultimatum but rarely do they spell out their threats. This week, however, Google has done exactly that, telling an Australian parliamentary hearing that a proposed law forcing the company to pay news publishers for the right to link to their content “would give us no real choice but to stop making Google Search available in Australia”.

The threat, from the company’s Australian managing director, Mel Silva, is the latest escalation in a war of words over the proposal, which seeks to undo some of the damage online business models have dealt to the country’s publishing industry.

The Australian prime minister, Scott Morrison, told a press conference “we don’t respond to threats”. But Google’s warning is hardly unusual in an industry that is loathe to encourage countries to go it alone when it comes to sweeping regulation.

Last September, for example, Facebook told an Irish court that it may have to pull out of the European market entirely if a court judgment banning data flows between the US and UK was upheld. “In the event that [Facebook] were subject to a complete suspension of the transfer of users’ data to the US,” the company’s associate general counsel argued, “it is not clear … how, in those circumstances, it could continue to provide the Facebook and Instagram services in the EU.”

Similarly, tech companies have been warning for years that a UK attempt to regulate end-to-end encryption could lead to their messaging services being unfeasible to offer in Britain.

But rarely do governments hold their nerve for long enough for the threats to be uttered loudly and clearly. Facebook, for instance, rowed back its warning to the Irish court in press statements, saying it was merely “setting out the simple reality”; and those messaging services are happy to mutter warnings in private, but have not yet seen the need to stick their head above the parapet for a knock-down battle.

Australia, though, has a knack for picking fights. It already had one such standoff with Amazon after sales tax changes in 2018 meant the company refused to ship imports to Australia in order to avoid collecting tax on those purchases.

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But that felt like a win-win for some Australians, closing a tax loophole and boosting local retailers at the same time. The loss of Google’s search engine may be felt more keenly.

Google has followed through on similar threats in the past. Spanish users cannot access Google News to this day, after a law in the country intended to force Google to pay newspapers for excerpting links and headlines instead resulted in the company simply removing its news product.

The Australian law, by contrast, seeks to avoid Google taking the easy way out. By requiring payments for any links to news, even on the main search engine – and by covering Facebook as well – the country hopes to succeed in extracting revenue from Google, regardless of its threats.

Unfortunately for Google, the company has a bad poker face. Even as it was warning Australian senators that it would have to pull out of the country rather than pay the newly levied fee, on the other side of the world in France, Google had agreed to do just that. In an agreement signed between Google France and the industrial body representing the country’s news industry, Google will pay licensing fees to individual news publishers to reuse their material online. Backed by France’s strong copyright protections for the news industry, Google had already negotiated with a few publishers, including Le Monde, but the new agreement sets a blanket precedent.

“Withdrawing our services from Australia is the last thing that Google want to have happen, especially when there is another way forward,” Silva told Australian senators on Friday. It might pretend it has not, but in France the company has already discovered that other way forward. And thanks to Google Translate, you don’t even need to speak French to read it for yourself.

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