• Google Australia boss Melanie Silva has told a Senate Committee that the company could pull its search engine out of Australia.
• The threat comes as the tech giant demands the Australian government change proposed legislation that would compel it to pay local news companies.
• It comes just 24 hours after Google signed a deal to pay French publishers.
• Visit Business Insider Australia’s homepage for more stories.

Google Australia’ boss has warned the company’s eponymous search engine is willing to shut out Australian users unless it gets its way.

Fronting a Senate Committee, Melanie Silva repeated warnings that Google would reluctantly pull out if the existing media bargaining code became law.

“It would give us no real choice but to stop making Google search available in Australia,” Silva said on Friday. “That would be a bad outcome for us but also for the Australian people, media diversity and the small businesses who use our products every day.”

Specifically, Google says that the requirement to pay publishers for links and snippets in its search engine would produce too much risk for the business to continue operating it in Australia.

While Silva explained that this was the “worst case situation”, she said “we like any rational business need to assess the impact of any legislative change on our business.”

“This provision in the code would set an untenable precedent for our businesses and the digital economy. It’s not compatible with how search engines work or how the internet works.”

New PR push

Shortly after Silva appeared in front of the Committee, Google published a video of her explaining in plain language the tenants of the company’s arguments.

The video is Google’s clearest explanation yet as to why it disagrees with parts of the code.

“You search, we show you links, and you decide which site to go to. The new law means Google would have to pay certain news companies to show you links to their sites. Now remember we don’t show full news articles, we just show you where you can go and help you to get there.” she says in the video.

“Paying for links breaks the way search engines work and it undermines how the web works too.”

Instead Silva proposes that Google News Showcase product is a solution that “would support Australian journalism” and already operates in other countries.

Back in the Senate, Bragg pointed out that lawmakers haven’t been given a chance to see how such a product would work here as an alternative to the code.

Opposition mounts to part of the code

The threat to pull out comes as Google and Facebook continue to up the ante against attempts to further regulate them, and their relationship with the local news media.

Facebook Australia managing director Will Easton has slammed the code as “unworkable” and repeated threats to pull news from its platform.

“We would no longer be able to provide news as part of the Facebook product,” Simon Milner, Facebook Asia Pacific vice president of public policy, said.

“That is not what we want to do but we have explained it is something we have to seriously consider.”

Facebook and Google are not alone in their criticisms. Tim Berners-Lee, the inventor of the World Wide Web, weighed in this week, saying the code’s provision for payment for links would “undermine the fundamental principle of the ability to link freely on the web”.

While Berners-Lee didn’t oppose the code outright, he unequivocally urged that the committee “remove this mechanism from the code.”

Google’s tax bill in the spotlight

At the heart of the legislation lies the question of profit, with the code intended to compensate publishers for a deteriorating revenue model.

Unsurprisingly, Google was promptly questioned over its tax obligations in Australia.

Liberal Senator Andrew Bragg emphasised the fact that Australia puts a relatively “light” regulatory burden on Google currently, with the tech company paying just $59 million on $4 billion worth of revenue, or less than 1.5%.

Greens senator Sarah Hanson young followed up.

“You don’t really pay that much tax in Australia given the massive market share you’ve got,” she told Silva. “Would Google commit to paying more tax?”

Silva said that hadn’t been proposed before as an alternative but that Google does pay a digital services tax elsewhere, albeit not in Australia.

Last year, Google came to a $481 million settlement with the Australian Taxation Office (ATO) to finalise a decade-long dispute over its tax affairs.

French deal minted with Google

Despite Google’s protestations however, this whole saga has largely already played out overseas.

On Thursday, Google signed a deal with French publishers agreeing to pay them for news content under new European Union copyright rules.

While the French deal is distinct to Australia’s bargaining code, there are some similarities.

It too is an effort to reimburse publishers for lost revenue which has increasingly flowed to large multinational tech companies.

So too was it a regulatory effort spearheaded by a national government, and again Google’s defence was the same, that news companies benefited from the audiences the search engine brought them.

While it eventually went to the appeals court, a ruling in favour of the deal has now forced Google to relent, without pulling out of France.

In essence, the problem was the same, albeit with a slightly different solution.

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