Australia is introducing a landmark law to make Google, Facebook and potentially other tech companies pay media outlets for their news content.

But the US tech giants have fought back, arguing the laws are onerous and would damage local access to services.

Australian PM Scott Morrison said lawmakers would not yield to “threats”.

The proposed news code would tie Google and Facebook to mediated negotiations with publishers over the value of news content, if no agreement could be reached first.

Google Australia managing director Mel Silva told a Senate hearing on Friday that the laws were “unworkable”.

“If this version of the code were to become law, it would give us no real choice but to stop making Google Search available in Australia,” she said.

Australia rebukes Google for blocking local search results

Morrison said his government remained committed to progressing the laws through parliament this year. At present they have broad political support.

“Let me be clear: Australia makes our rules for things you can do in Australia. That’s done in our parliament,” he told reporters on Friday.

“And people who want to work with that, you’re very welcome. But we don’t respond to threats.”

Other lawmakers on Friday described Google’s ultimatum as “blackmail” and “big corporations bullying democracy”.

Google Search is the dominant search engine in Australia and has been described by the government as a near-essential utility with little market competition.

The government has argued that because the tech platforms gain customers from people who want to read the news, the tech giants should pay newsrooms a “fair” amount for their journalism.

In addition, it has argued that the financial support is needed for the embattled news industry because a strong media is vital to democracy.

Australian print media has seen a 75% decline in advertising revenue since 2005, according to the government. Many Australian news outlets have shut down or cut jobs in recent times.

Google’s threat to remove its primary product is its most severe yet, amid a debate that is being closely watched by other nations.

Earlier this week, US trade representatives urged Australia to drop the laws which they said attempted regulation “to the clear detriment of two US firms”.

Ms Silva said the laws would set “an untenable precedent for our businesses and the digital economy” if the company had to pay for link and search results.

This was not compatible with the free-flowing share of information online or “how the internet works”, she argued.

“We do not see a way, with the financial and operational risks, that we could continue to offer a service in Australia,” she said.

Last week, Google confirmed it was blocking Australian news sites from its search results for about 1% of local users. It said it was an experiment to test the value of Australian news services.

Facebook last year also threatened to stop Australian users from sharing news stories on the platform if the law went ahead.

The social media giant repeated that position on Friday, with executive Simon Milner telling the Senate hearing it was “a potential worse-case consequence”.

He said Facebook derived almost no commercial benefit from having news content on its platform.

Both Google and Facebook have also argued that news organisations already get the benefit of the platforms driving readers towards their websites.

Google dominates the search engine market with a nearly 90% market share. Almost all its revenue is from ads. For Google to threaten to pull out of an entire country suggests the company is worried.

Australia is nowhere near its biggest market. But Google execs are fearful about the precedent these new laws could have.

Google has had a very profitable pandemic so far, whilst many local newspapers have struggled. That doesn’t look good, and Australian politicians aren’t the first, and won’t be the last, to point that out.

Google says it wants to help fund original, local journalism. But clearly it believes that what is being proposed in Australia could fundamentally hurt its business model if replicated elsewhere.

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