Google has indicated it may discontinue its search engine service in Australia, escalating its efforts to oppose proposed legislation designed to compel it to compensate news organizations for utilizing their content.

The proposed law would similarly apply to Facebook, which has previously stated it would prohibit the sharing of news on its platforms if enacted, and has also reported a reduction in its investment within the country due to the potential legislation.

“The fundamental principle of unrestricted connections between websites is essential to Search functionality. Combined with the substantial financial and operational challenges presented by this iteration of the Code, we would have limited options other than to cease offering Google Search in Australia,” Google cautioned today.

In August of last year, the technology company voiced another objection to the proposal, asserting that the quality of its services in the country could decline and potentially cease being offered without cost if the government continued to pursue a requirement for technology companies to share advertising revenue with media outlets.

Since last summer, Google’s lobbying strategy appears to have shifted—seemingly abandoning attempts to completely invalidate the law in favor of modifying it to lessen the financial burden.

Its current lobbying efforts center on removing aspects of the draft legislation it deems most detrimental, while simultaneously promoting its News Showcase program, launched last year, as a preferred method for publisher payments under the Code.

The draft legislation for Australia’s digital news Code, currently under parliamentary review, includes a contentious provision requiring technology companies like Google and Facebook to compensate publishers for linking to their content—not just for displaying brief excerpts.

However, Google has warned Australia that requiring payment for “links and excerpts” would disrupt the established functioning of the internet.

In a statement presented to the Senate Economics Committee today, Mel Silva, Google’s Vice President for Australia and New Zealand, stated: “This provision within the Code would establish an unsustainable precedent for our business and the digital economy. It is incompatible with the operation of search engines and the internet itself—a view shared by numerous submissions to this Inquiry.”

“The fundamental principle of unrestricted linking between websites is essential to Search functionality. Combined with the substantial financial and operational challenges presented by this iteration of the Code, we would have limited options other than to cease offering Google Search in Australia.”

Google is not the only entity expressing concern regarding a proposal to mandate payments for links.

Sir Tim Berners-Lee, the inventor of the World Wide Web, has cautioned that the draft legislation “carries the risk of violating a core principle of the web by mandating payment for linking between online content,” among other concerns raised in submissions to the committee.

In his written testimony, he further elaborated:

However, it is important to note that Berners-Lee’s submission does not address excerpts. His focus is entirely on links.

Meanwhile, Google has recently reached an agreement with publishers in France, which they state encompasses payment for excerpts of content.

Within the EU, the technology company is subject to an already revised copyright directive that extends a neighboring right for news content to include the reuse of excerpts. However, the directive does not cover links or “very short extracts”.

In France, Google asserts it is only compensating for content “beyond links and very short extracts.” However, it has not commented on excerpts in that context.

French publishers contend that EU law clearly does apply to the text snippets that Google commonly displays in its News aggregator, pointing out that the directive stipulates the exception should not undermine the effectiveness of neighboring rights. Therefore, Google could face a significant dispute in France if it attempts to avoid payments for snippets.

However, the situation in Australia remains unresolved. Consequently, Google is attempting to equate two distinct issues—payment for links versus payment for excerpts—in the hope of minimizing the financial impact compared to the existing EU law. (Although this law has only been actively enforced in France thus far, which is ahead of other EU countries in implementing the directive into national legislation.)

In Australia, Google is also strongly advocating for the Code to “designate News Showcase” (the program it initiated once legislative action regarding publisher payments became likely) as the mechanism through which it can reach “commercial agreements to compensate Australian news publishers for value”.

Naturally, a commercial negotiation process is more desirable (and familiar) to the technology company than being bound by the Code’s proposed “final offer arbitration model,” which Google criticizes as having “biased criteria” and creating “unmanageable financial and operational risk”.

“If this is replaced with standard commercial arbitration based on comparable deals, this would incentivize good faith negotiations and ensure we’re held accountable by robust dispute resolution,” Silva also argued.

A further provision the technology company is keen to see removed from the current draft requires it to notify publishers in advance of changes to its algorithms that could affect the visibility of their content.

“The algorithm notification provision could be adjusted to require only reasonable notice about significant actionable changes to Google’s algorithm, to ensure publishers are able to respond to changes that affect them,” it suggested.

It is noteworthy how Google’s stance has evolved over several years, from “we will never pay for news”—prior to any relevant legislation—to “please allow us to pay for licensing news through our proprietary licensing program” after the EU passed a directive now being actively enforced in France (with the support of competition law) and with Australia moving towards enacting similar legislation.

It appears that legislation can significantly influence the perspective of a technology giant.

The concept of requiring payment for linking to content online is, of course, a problematic idea—and should be abandoned.

However, if this aspect of the draft is a negotiating tactic by Australian lawmakers to encourage Google to accept that it will have to compensate publishers in some form, it appears to be proving effective.

While Google’s threat to discontinue its search engine might seem drastic, as Silva suggests, considering the availability of alternative search engines, it is not as significant a threat as it once was.

Particularly as many alternative search engines prioritize users’ privacy more effectively.