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Google threatens to shut down search engine in Australia

Yahoo Finance's Dan Howley discusses Google's threat to shut down its search engine in Australia if a controversial bill designed to benefit the news media becomes law.

Video Transcript

SEANA SMITH: Google is threatening to shut down in Australia. The dispute is over a proposed law that would require the company to pay publishers for news. We want to bring in Dan Howley for more on this. And Dan, I guess the big question is, one, the details of Google's argument and then, two, if Australia's government has responded to this threat yet.

DAN HOWLEY: Yeah, Australia's government has responded. The prime minister said that Australia doesn't respond to threats, so obviously taking this very seriously. And the argument here is based on a law that's in the works to be passed regarding how outlets or services like Google and Facebook use links for news outlets.

Now the media industry obviously has been hurt tremendously by the pandemic, as have others, but it's also been hurt by the massive amount of advertising that's gone to both Google and Facebook, which are essentially the online ad industry in total. Outside of Amazon, which is also up and coming.

But one of the issues here with this law that Google is taking is, essentially, if you were to go and click on a link in Australia from a Google search to one of those outlets or if you see a preview of one of those outlets' stories, Google would have to pay the outlet.

Now, Google's objection is that if there's a snippet of one of those stories and a link, then that means that Google would have to pay the outlets as well, and that, they say, would fundamentally break the internet because that's essentially the groundwork that the internet is laid on, free linking between different companies.

Now, Australia says that they are continuing to work on this. Right now, as the negotiations go, Google can either enter or-- if the law goes into effect, Google can either enter into negotiations with media outlets. Or, if they can't do that, they would go into arbitration, and whatever kind of negotiations they reach there would be binding.

So it really is interesting, and this is something that's being watched globally as how these kinds of companies, Google and Facebook, will be kind of held accountable--

ADAM SHAPIRO: Hey, Dan.

DAN HOWLEY: --to the media services that they benefit from.

ADAM SHAPIRO: Dan, I'm trying to understand. I'm going to use a crude analogy. It's almost like in the 1990s if you went to the Yellow Pages and then you looked for something, you'd have to pay-- the Yellow Pages would have to pay each time you found a listing in the Yellow Pages. Not the service you went to, but the actual search device would be the ones paying.

Could this set a precedent for US lawmakers, if this thing were to pass?

DAN HOWLEY: And that's the hope, really, for some publishers. And, you know, the idea here being that, look, a lot of the revenue from newsrooms around the world has been siphoned off because of the digital advertising that's basically, again, run by Google and Facebook, as well as Amazon. So they want to be able to kind of pull some of that back, and this is a way for them to do that.

And Google and Facebook have pushed back on this around the world. They have made donations to certain efforts to raise journalism in different countries, and they have made agreements in Europe with some organizations to pay publishers.

But that doesn't account for the massive number of organizations around the world that aren't seeing any benefit from working with Google and Facebook. They, however, say that the links that Google and Facebook provide to their websites is more than enough compensation. But, obviously, if people are clicking, it doesn't matter as long as the advertisers aren't buying.

SEANA SMITH: All right, well, despite this dispute, Google is still holding on to gains today, with the stock up nearly 1%. Dan Howley, thanks for breaking that down for us.