Google Australia and New Zealand managing director Melanie Silva (Image: Google)

If, as Google asserted today, the federal government’s news media bargaining code is “unworkable”, will the search giant do the unthinkable and pull its search engine from the Australian market? Or will a global deal between News Corp and Google kill Australia’s brief foray into tech regulation?

As those two corporate elephants, Google and News Corp, dance in New York towards a global content deal, today’s push-back by Google against Australia’s proposed bargaining code suggests that it could be the local media companies that end up trampled.

In a blog post today by Google’s Australia and New Zealand managing director Mel Silva, Google warns that the current draft “affects the free services and tools we provide to 20 million Australians and more than a million Australian businesses”. Facebook has already announced that it will block Australians from posting news if the code is adopted.

After the federal government tabled legislation for the code in the last parliamentary sitting last week, News Corp’s US-based CEO Robert Thomson confidently responded that negotiations for Google payments were at an advanced stage. Then he added words that should chill Australian-based negotiators: “it’s not in one particular country at the moment, these are global negotiations because we’re a global company”.

The News Corp confidence is not shared by Nine, which says that the offers on the table from the giant tech platforms (Facebook, as well as Google) for Australian-specific deals are nowhere near adequate for the value their products bring. 

News Corp may be able to force a deal through its global clout and US content. Purely local players like Nine rely more on the power given by the code, particularly through its compulsory arbitration model.

The differences surfaced in the initial responses to last week’s draft legislation. While News Corp was relaxed about the concessions the government had made to big tech, Nine was anything but. Now, a week later, it seems Google isn’t happy either and it’s looking to next autumn’s Senate inquiry to win further changes. 

If, by then, the global players like News have cut deals with the tech platforms, expect a pivot in News Corp lobbying which could lead the bargaining arrangements to be quietly filed away into that bulging Canberra filing cabinet of announcements that never make it to action.

Facebook, meanwhile, has further isolated the purely Australian players with an extension of its deals for paid content in its News Tab into the UK, which included money for The Guardian. News Corp was already receiving money from Facebook for news appearing in the tab in the US.

At the heart of the dispute between old media and big tech is: are the platform publishers liable for the material they link to? Are links “content”? Not as a matter of law in most countries. 

Google and Facebook are prepared to cut the knot by paying to publish content in dedicated spaces on the platforms: News Showcase for Google and News tab for Facebook. In September, Google tabled US$1 billion to fund content for its News Showcase. (Neither product is available in Australia yet.) 

This provided the basis for the €50 million a year deal between French publishers and Google and the Facebook deals in the US and UK. It also seems to underline Thomson’s reference to having the platform’s pay a “premium for premium content”.

Media companies rooted in television (like Nine) are more cautious, with longer histories of content deals for video through YouTube and Facebook Watch. The result? “Not meaningful,” Nine’s director of commercial partnerships Lizzie Young told an industry conference last year. (Young is a contender to be the next Nine CEO.)

Global deals suit global companies. News Corp would be betting there are more dollars in selling Wall Street Journal and London Times content to Google than can be forcibly extracted in Australia alone through hand-to-hand combat under the proposed code.

Google, too, has global reasons to get the Murdochs off their back — and, with the Murdochs, the Australian government. This week, 10 US state attorneys-general (all Republicans) launched an anti-trust action over Google’s murky ad tech monopoly.

At the end of this year, the Australian Competition and Consumer Council will be handing Treasurer Josh Frydenberg  its own report on ad-tech in Australia.