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It also means potentially explosive market share growth. From Google's perspective it isn't that they can't pay, it's that they don't want to. A competitor pro

It also means potentially explosive market share growth. From Google's perspective it isn't that they can't pay, it's that they don't want to. A competitor product such as DDG or Bing suddenly looking at pretty big market with no Google competition would say, yep, I'll pay you x% or x cents per result, the overall growth in my market share will make it worth it.

docdeek 6y ago
Except that if the competitor (Bing, DDG) fell under the same regulation, they can’t offer to pay anything and avoid the regulation. The media organizations make their claim (likely enormous, because they are not adapting to the new reality of online news) and it goes to arbitration and they get TOLD what to pay. I’m pretty sure Google has offered to pay something to media organizations and to do deals with media organizations for their content - but they aren’t interested in an arbitration process that is going to stick them with a mùuch bigger bill, and they don’t want to change the business model they have where they index links and offer search results for free (well, for ad views…).
- anon98356 6y ago
  My understanding of the regulation is that it requires a good faith negotiation. Not Google/FB/DDG/Bing just paying what the media organisations demand. Google's posturing inherently indicates they aren't negotiating in good faith and are attempting to use their market power to pay less than what most would consider equitable (I have no figures at all or even ballpark so who knows what that actually is). Arbitration is just that, arbitration. It doesn't mean media organisations say we demand x and that's what the settlement is. Both sides present their case to the arbitrator who decides on the price. If you're in DDG/Bing's position, you put your cards on the table and take the extra revenue from having a massive boost to market share. It is highly unlikely an arbitrator would actually set the price at an unsustainable value. If it means the search engine is actively making a loss overall then of course they'll walk away. But for DDG/Bing, making a loss on news links may be worth it for the extra revenue in non news search. In reality it probably wouldn't even be a loss, just a much lower profit margin. Obviously Google is going to try and pay as little as possible, any business would. The difference is market share and power dynamics. Google believe they are in the position that if they can't get the price they want they can walk away. To the no. 2/3 player in the market it presents to a massive opportunity if google does walk away. According to the latest guardian article [1] on this, Google declared $134M in profit in Australia last year on $4.8B. That's a big incentive for player no 2/3 to pay some of that profit to the media organisations. [1] https://www.theguardian.com/media/2021/jan/22/google-threatens-to-shut-down-search-in-australia-if-digital-news-code-goes-ahead https://www.theguardian.com/media/2021/jan/22/google-threate... [edit] fixed spelling/grammar
  - sidibe 6y ago
    Not all of that revenue is search. When you add consider not all of that revenue is from Search, the cost of compliance (adding more to legal team and the toil of actually negotiating with all the other parties), much less actually paying for the links, they might see it as genuinely not worth it so it might not just be a case of punishment for Australia daring to regulate them. In that case, other search engines that pick up enough market share for the law to apply to them, which will probably much less profitable to begin with, will feel the same way.
    - anon98356 6y ago
      You're right it won't all be search revenue. What I guess I'm trying to say in a nutshell is: For a competitor, the overall boost in revenue due to a much higher all round use of their search engine is likely to offset the extra costs associated with serving news content.

docdeek 6y ago

Except that if the competitor (Bing, DDG) fell under the same regulation, they can’t offer to pay anything and avoid the regulation. The media organizations make their claim (likely enormous, because they are not adapting to the new reality of online news) and it goes to arbitration and they get TOLD what to pay. I’m pretty sure Google has offered to pay something to media organizations and to do deals with media organizations for their content - but they aren’t interested in an arbitration process that is going to stick them with a mùuch bigger bill, and they don’t want to change the business model they have where they index links and offer search results for free (well, for ad views…).

anon98356 6y ago
My understanding of the regulation is that it requires a good faith negotiation. Not Google/FB/DDG/Bing just paying what the media organisations demand. Google's posturing inherently indicates they aren't negotiating in good faith and are attempting to use their market power to pay less than what most would consider equitable (I have no figures at all or even ballpark so who knows what that actually is). Arbitration is just that, arbitration. It doesn't mean media organisations say we demand x and that's what the settlement is. Both sides present their case to the arbitrator who decides on the price. If you're in DDG/Bing's position, you put your cards on the table and take the extra revenue from having a massive boost to market share. It is highly unlikely an arbitrator would actually set the price at an unsustainable value. If it means the search engine is actively making a loss overall then of course they'll walk away. But for DDG/Bing, making a loss on news links may be worth it for the extra revenue in non news search. In reality it probably wouldn't even be a loss, just a much lower profit margin. Obviously Google is going to try and pay as little as possible, any business would. The difference is market share and power dynamics. Google believe they are in the position that if they can't get the price they want they can walk away. To the no. 2/3 player in the market it presents to a massive opportunity if google does walk away. According to the latest guardian article [1] on this, Google declared $134M in profit in Australia last year on $4.8B. That's a big incentive for player no 2/3 to pay some of that profit to the media organisations. [1] https://www.theguardian.com/media/2021/jan/22/google-threatens-to-shut-down-search-in-australia-if-digital-news-code-goes-ahead https://www.theguardian.com/media/2021/jan/22/google-threate... [edit] fixed spelling/grammar
- sidibe 6y ago
  Not all of that revenue is search. When you add consider not all of that revenue is from Search, the cost of compliance (adding more to legal team and the toil of actually negotiating with all the other parties), much less actually paying for the links, they might see it as genuinely not worth it so it might not just be a case of punishment for Australia daring to regulate them. In that case, other search engines that pick up enough market share for the law to apply to them, which will probably much less profitable to begin with, will feel the same way.
  - anon98356 6y ago
    You're right it won't all be search revenue. What I guess I'm trying to say in a nutshell is: For a competitor, the overall boost in revenue due to a much higher all round use of their search engine is likely to offset the extra costs associated with serving news content.