Google denies Peter Costello’s claim it uses Australian news content to boost revenue

Nine chairman says company invests millions of dollars in content that Google and Facebook use to bolster their platforms

Peter Costello
Google and Facebook use content created by Nine Entertainment at a cost of millions of dollars ‘to generate revenue and build their platforms’, Nine chairman Peter Costello says, but Google says this is ‘demonstrably incorrect’. Photograph: Dean Lewins/AAP
Google and Facebook use content created by Nine Entertainment at a cost of millions of dollars ‘to generate revenue and build their platforms’, Nine chairman Peter Costello says, but Google says this is ‘demonstrably incorrect’. Photograph: Dean Lewins/AAP

Last modified on Fri 13 Nov 2020 00.47 EST

Google Australia has said a claim by the Nine Entertainment chairman, Peter Costello, that the global search engine profits from local news content was “demonstrably incorrect”.

Costello told Nine’s annual general meeting that the company invested $1bn this financial year in premium content across its platforms – which include Channel Nine, nine.com.au, the Sydney Morning Herald and the Age – but Google and Facebook “use this content to generate revenue and build their platforms”.

Tension has escalated between the digital platforms and media companies as the government puts the finishing touches to its news media code legislation, which will probably be introduced at the next parliamentary sitting.

Facebook has warned it will block Australians from sharing news if the landmark plan to make digital platforms pay for news content becomes law. Google says it wants a “workable code” and has been running a public campaign highlighting what it says is its support for Australian business.

The legislation will force Google and Facebook to share revenue with Nine, News Corp, and other eligible media companies including Guardian Australia, or pay hundreds of millions of dollars in fines.

The director of government affairs and public policy for Google Australia, Lucinda Longcroft, said every year Google Search sends billions of free clicks to Australian news publishers. The company says that traffic was valued at $218m in 2018 alone.

“Mr Costello’s comments are demonstrably incorrect … Google doesn’t ‘use’ news content – we link users to it, just like we link you to every other page on the web – think Wikipedia entries, personal blogs or business websites,” Longcroft said. “In fact, most news businesses also provide links in the stories they cover, including Nine. Links are part of what makes the web work.”

Google says news-seeking queries account for just over 1% of total queries on Google Search in Australia and clicks on ads in response to news-seeking queries generated only $10m in revenue, not profit, for Google.

Last month, a report from the Australian Competition and Consumer Commission found Google, Facebook and YouTube had increased their already substantial share of the digital advertising pie in Australia, leaving less than 20% for news and other websites.

Costello said this loss of revenue to the digital platforms was threatening the viability of the news business and without the news media code it may become “uncommercial to make all the premium content we now make”.

“This outcome would not worry Facebook or Google since it would not affect their global businesses in any significant way,” Costello said “But it will affect Australian creators, Australian consumers, and Australian culture. We know these companies have enormous market power and enjoy significant regulatory benefits including tax advantages that Australian companies do not.”

Google said it invested $1bn in Australia last year and its search advertising and productivity platforms generated more than $35bn in business benefits for more than 1m Australian businesses.

“During Covid-19 we’ve helped more than 1.3m Australian businesses stay connected with their customers,” Longcroft said. “We support 117,000 jobs in Australia, including 1,800 jobs within Google and 116,200 across the wider economy.”

The draft code did not include the ABC and SBS, prompting the Greens to say they would not support the government unless the draft code was updated to include public broadcasting. News Corp has also backed the push for the ABC and SBS to be included in the code.