Alphabet Inc’s Google has rejected demands that it pay hundreds of millions of dollars per year in compensation to Australian news media under a government-imposed revenue-sharing deal.
The company’s top executive in Australia said Google made barely A$10 million (US$6.7 million) per year from news-linked advertising, a fraction of a government watchdog’s estimates for the sector.
In an effort being closely watched around the world, Australia is set to unveil plans to force major Internet firms to share advertising revenue they earn from news featured in their services.
The country’s competition regulator, the Australian Competition and Consumer Commission (ACCC), has estimated that Google and Facebook Inc together earn about A$6 billion per year from advertising in Australia.
Leading news publishers have demanded that the two companies pay at least 10 percent of that money each year to local news organizations, which they say have lost the vast majority of their advertising revenue to the global technology giants.
Google’s managing director for Australia Mel Silva dismissed such figures as wildly unrealistic.
“We all agree that high-quality news has great social value, but we need to understand the economics as well,” Silva said in a blog post on Sunday.
Google last year earned just A$10 million in revenue from clicks on ads placed next to news-related search queries, she said.
“The bulk of our revenue comes not from news queries, but from queries with commercial intent, as when someone searches for ‘running shoes’ and then clicks on an ad,” she said.
Silva also denied ACCC arguments that the tech firms gain significant “indirect benefits” from displaying news, as the content draws users to their platforms.
News “represents only a tiny number of queries” on Google, accounting last year for barely 1 percent of actions on Google Search in Australia, she said.
The company on the other hand provided Australia’s news media with “substantial” value by sending people to their Web sites, Silva added.
“To put it plainly, a lot of people (Australians and beyond) click from Google through to Australian news websites, which gives publishers the chance to make money by showing them ads or turning them into paying subscribers,” she wrote in the blog post.
She said Google search accounted for 3.44 billion visits to large and small Australian news publishers in 2018, valuing those referrals at more than A$200 million per year for the news companies.
Google’s position bodes ill for negotiations which the ACCC hopes to pursue between Google, Facebook and Australian media companies over a mandatory “code of conduct” governing issues such as revenue sharing, curbing disinformation and protecting user privacy.
The regulator last month suggested that Australian publishers might need to organize a “collective boycott” of Google and Facebook if voluntary negotiations on the code of conduct fail.
Silva said Google was prepared to take part in the process, but added that “it’s important to base decisions on facts, not inaccurate numbers and unfounded assertions.”
The ACCC has until the end of next month to draw up the final code, which the Australian government has said it would quickly implement.
Google and Facebook have had a huge impact on media companies across the globe as they capture the lion’s share of online advertising spending.
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