“If you had, for example, two or three search engines that had much more equal market share than is the case now, then you don’t have a bargaining power imbalance and it may well be that the code doesn’t apply,” Mr Sims said. “They will still do deals with news media businesses because competition will encourage them to do so.”
Mr Sims said Google’s market dominance had created a “take it or leave” bargaining environment for publishers.
Google holds 94 per cent search engine market share in Australia. Its next closest rival in Australia is Bing with 3.7 per cent, followed by DuckDuckGo with 0.79 per cent, Yahoo! with 0.73 per cent and Ecosia on 0.2 per cent, according to independent web analytics company Statcounter.
The ACCC relied on Statcounter data during its 12-month review into Google and Facebook, which led to the development of the code.
Drawing a hypothetical example involving Nine Entertainment Co, owner of The Sydney Morning Herald and The Age, Mr Sims said: “If there were three players [in the search engine market], Nine could go to the three of them and say: ‘If you don’t deal a with me, I’ll pull my links off your platform’,” he said.
“Each of them doesn’t know when the others will do a deal with Nine or if Nine will walk and they will be the only ones without Nine.”
Google Australia’s managing director, Mel Silva, told a Senate inquiry last week shutting down Google search was a “worst-case scenario” but a “reality” if the code was legislated without significant amendments.
Google has argued the code would “break” its business model by forcing it to pay news outlets to provide links to their news content and give them with 14 days’ notice of algorithm changes – a move the $1 trillion company claims undermines the concept of a free and open internet.
Under the proposed code, the Treasurer is given the power to determine which platforms must comply with the code. The Morrison government has said the code will initially apply only to Facebook and Google.
However, Mr Sims said if another search engine established a monopoly in Google’s absence, the government could designate that company as one that must abide by the code.
“If Bing become Google, then you are back to where you are now,” Mr Sims said.
Google and Facebook, which also strongly opposes the code, have maintained they are prepared to compensate news publishers for their content through their respective initiatives called Google News Showcase and Facebook News. However, both companies have refused to roll out the products in Australia following the government’s decision to press ahead with the code.
In evidence at Friday’s Senate inquiry, Nine’s chief digital and publishing officer, Chris Janz, said the company’s negotiations with Google and Facebook had resulted in payment offers, but said they were “not offers we could credibly explore or accept”.
News Corp executive Campbell Reid told the inquiry the company had had “many negotiations” with the digital giants over a long period of time but said it would be “disingenuous to say it is not tortured”.
Lisa Visentin is a federal political reporter at The Sydney Morning Herald and The Age, covering education and communications.