Google rejects call for huge Australian media payout

Google has denied it makes anything like the money the Australian government says it does from domestic advertisers AFP/DENIS CHARLET

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 ACCC, has estimated that Google and Facebook together earn some A$6.0 billion (US$4.0 billion) per year from advertising in Australia.

Leading news publishers have demanded the two companies pay at least 10 per cent of that money each year to local news organisations, which they say have lost the vast majority of their advertising revenue to the global technology giants.

Mel Silva, Google's managing director for Australia, 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 Sunday (May 31).

She said Google last year earned just A$10 million in revenue from clicks on ads placed next to news-related search queries.

"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.

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 suggested last month that Australian publishers might need to organise 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 July to draw up the final code, which the government has said it will 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.

In response to falling revenues, exacerbated by the economic impact of the coronavirus pandemic, Australian outlets have permanently or temporarily closed more than 150 newsrooms, slashing more than 20 per cent of jobs in the sector since 2014.