The advertising giant says its News Showcase product may not be viable under the news media bargaining code but could be an alternative to it.

Google is continuing its firm opposition to the Australian government’s attempt to make it pay publishers for the news content it uses, today saying it has put its global $1 billion commitment to build partnerships with news publishers on “pause” in Australia because it may not work under the new bargaining rules.

Announced in October, the Google News Showcase was touted as a way of paying publishers to “create and curate high-quality content for a different kind of online news experience”. Google displays stories selected by news editors across its apps and platforms, theoretically opening up more in depth coverage and context by making publishers less beholden to ranking algorithms.

Google says it has deals with nearly 200 publishers, including some in Australia. Google News Showcase is already available to users in Brazil and Germany and was scheduled to roll out in Australia soon.

In a blog post on Sunday, Google Australia VP Mel Silva said the company no longer knows “if a product like News Showcase would be viable under the code”.

Mel Silva, managing director at Google ANZ

Silva does not explain why the new service could not work, instead arguing against the new bargaining rules which effectively force Facebook and Google to pay large commercial publishers for the use of news content on their platforms.

Under the world first code, Google and Facebook are required to negotiate with publishers on payment and face compulsory arbitration if a deal is not struck. The competition regulator says it designed the code as a way of addressing power imbalances between the platform giants and publishers.

Both Google and Facebook have railed against the code, the former launching a public campaign to undermine it and the latter threatening to pull all Australian news content from its platform to avoid it all together.

Some independent media outlets have also criticised the code as being too much in favour of large commercial publishers like Newscorp and Nine. Public broadcasters have been excluded from receiving payment and smaller publishers may not meet the turnover threshold.

Today, Google’s Silva described the payment system as unworkable. 

“The draft code proposes, in effect, a ‘must include, must pay’ system, something that’s extreme and unprecedented. It essentially forces Google to provide a benefit to Australian news businesses and to pay them to receive that benefit. 

“A ‘must include’ regime is rare. And when this type of system is used, parties have a right to be included, but not a right to be included for free — let alone be able to demand payment to be included.”   

Silva, who previously suggested the code will threaten Google’s free services in Australia, said the code’s financial penalties create a risk no other company in Australia is subject to. 

“We could be fined up to 10 percent of our Australian revenue for a single breach. No business in Australia should have to manage the huge risk that comes with such severe penalties for such uncertain provisions.”

Silva concludes Google’s News Showcase product could work under a different code.

“We want to find a way through and we believe the solution should involve bringing News Showcase to Australia, which would help publishers grow their audiences and contribute to their ongoing sustainability.”

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