Google Australia and New Zealand managing director Jason Pellegrino has ruled out the suggestion of introducing a levy on news aggregators, as Australian MPs search for ways to protect journalism business models buffeted by the market power of social and search.
Appearing before the Senate Inquiry into Public Interest Journalism yesterday, Mr Pellegrino said that placing a levy on its news aggregator, Google News, would be unviable for the platform, as it only served as a vehicle for consumers to access relevant news and did not generate any revenue.
“What we observed overseas is that content levies are not affecting or solving the underlying issue. They are … supply side solutions for what is fundamentally a demand side problem,” Mr Pellegrino said.
The Spanish government introduced a similar levy to news aggregators in January 2015. Which resulted in Google pulling its news service in December 2014, stating that the “new approach was not sustainable”.
Mr Pellegrino used the situation in Spain as an example of what may happen if a similar policy was introduced in Australia.
“Distribution of content through Google News is completely free. There are no ads served on the Google News property, so we do not monetise it. What we do is send billions of clicks and traffic to news publishers globally every month, allowing them to access an audience which reads the content on their sites and allowing those publishers to monetise that audience on their own sites.
“To asks us to pay for that content and then send that traffic to the websites is not commercially feasible for us and we decided to shut that [Google News Spain] down,” Mr Pellegrino said
The rejection of a levy followed scepticism expressed by Senator Nick Xenophon over Google’s claim that the Australian advertising market generated just $1.14 billion from advertising revenue, accusing the Google executives of deliberately misleading the inquiry.
Media analysts believe that the amount of advertising revenue Google generates in Australia is closer to $3 billion, almost triple the amount claimed at the inquiry.
“This is really upsetting me, Mr Pellegrino, because journalists are being laid off seemingly on a weekly basis in this country,” said Senator Xenophon.
“You’re telling us that Google only takes in $1.1 billion in advertising revenue when the advertising industry is saying it’s more like $3 billion. Can you categorically say … it is only $1.1 billion? Are you absolutely sure?”
Mr Pellegrino said he was not in a position to speculate on that number, while Google’s head of public policy Ishtar Vij interjected stating that 2016 was a transition year for the company as it restructured.
Google resisted providing the inquiry alternate options to fund journalism, placing the onus back on government. Instead, Mr Pellegrino and Ms Vij highlighted the ways in which the company was already aiding the media industry.
However, the senators chairing the committee we unconvinced by the Google representatives.
Ms Vij said that there were three ways publishers with digital subscription models could approach Google Search. The first was the publisher actively deciding to opt out of search results, the second was to designate content with a subscription label and the third being “first click free”.
Upon the mention of Google News’ “first click free” program, which allows readers to access one free article behind a publications paywall, Senator Xenophon accused the company of using its market power to bully publishers.
“I just wanted to put to you a very serious allegation,” said Senator Xenophon. An unnamed source told him that in the last couple of years, publishers would “receive a phone call from a Google executive to say we demand that you adopt the first click for free changes”. The claim suggests Google essentially bullies publishers into complying with Google’s compliance standards, or be “told their website would be placed lower in search results”, he said
The executives rejected this claim, stating that the search engine’s algorithm did not rank articles based on visibility, but is a complex system. However, Ms Vij did say that the system was in part influenced by data the company’s software crawlers could access.