Google pull-out will crush Australian business

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Via Crikey:

This weekend brought a lot of heated bluster from old media (and its political representatives) about Google’s supposed threat to democracy.

In Senate hearings on Friday, Google Australia head Mel Silva confirmed the company would pull the search engine from Australia if the federal government hurried ahead with its mandatory news bargaining code as currently drafted. This confirmed Crikey’s report the week earlier: the code, as is, means no Google search.

It gave Scott Morrison a Howard moment — “we’ll decide who searches Australia and the manner in which they search!” — as he huffed, “we don’t respond to threats”. (This will surely be news to anyone who follows the LNP-News Corp relationship.)

Morrison was wrong as a matter of law. The Australian Parliament is constrained by the Howard-era Australia-US free trade agreement, and the US trade representative last week raised concerns that the code may breach the agreement.

This allowed tech reform campaigners to highlight the demonstration of big tech’s raw power, even at risk of an “enemy of my enemy is my friend” embrace of News Corp. Meanwhile, people on social media canvassed alternatives from the not-for-profit search engine DuckDuckGo to Microsoft’s Bing to a VPN (virtual private network) to access Google offshore. Australia would no doubt adapt in some way.

On the way through, however, a Google-less Australian internet threatens a crisis for small businesses which rely on a hyper-local market (that is, most of them). In Australia, as in most of the world, among the most common words at the end of any search are “near me”.

A December report (funded by Google) on the search engine’s economic impact on Australia concluded that the company provided $39 billion of value to Australian businesses, 60% of it to small and medium businesses.

As the Mandy Rice-Davies heuristic goes: they would say that, wouldn’t they?

Still, search and social media distribution has inarguably provided greater and cheaper advertising opportunities for small businesses — from keywords in general search to Google’s geographical interfaces Maps and Waze. As we mourn the loss of local newspapers, Google and Facebook have given these businesses the ability to micro-target new and existing customers.

Thousands of local businesses have shaped their offering and their branding around the opportunities they’re offered. There will be transition costs if they’re now forced to change (for lesser alternatives) and, coming in the midst of the pandemic, it will tip more than a few businesses over the edge.

This is a reminder that there are no good guys in the big tech v old media fight. When the elephants butt heads, the ants get trampled.

Here’s the key: the fight is not about whether the big platforms will pay for journalism. That’s agreed. It’s more about how much they pay and what they pay for.

Google is offering to pay for articles that are published in its editorially curated News Showcase which leans towards journalistic quality, small media and sits outside paywalls. That’s the deal it reached with French publishers, most German publishers (other than the Murdoch-lite Springer group) and Reuters.

Google is Australian business. Any pull-out will deliver instantaneous recession.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.