Google is unusually emotive about Australia's news industry

Google's Australia MD Mel Silva has released a rare display of passion for a Google employee, in a blog post that seeks to correct "inaccurate claims" in the press about the value of news to the search giant's bottom line (see "Google mounts Australia legislation defence, says economic value of news is 'very small'").

The blog post, fittingly titled 'A fact-based discussion about news online', claims that both the direct and indirect economic value Google gets from news content in search is "very small", discusses the "substantial" value exchange Google already provides for news, and the investments it has made in supporting the industry thus far.

It is rare, because Google is known for fire-fighting behind closed doors and holding back on detail it releases to the public. It carefully treads the corporate line, and rarely provides rebuttals to government or industry plans beyond short statements. Google didn't even show up when the US Congress called tech giants to a hearing on election meddling in 2018. When CEO Sundar Pichai eventually appeared before Congress a few months later, he said very little, and evaded important questions about privacy and censorship (and the Committee did a very poor job of drilling down on crucial topics). To be clear, this is not an unusual approach for a public company, but it has garnered a lot of criticism given Google's enormity.

Clearly, Silva, and her employer, believes this topic is too important to ignore, and worthy of a more detailed response.

The most obvious reason for this—the Occam's razor, if you will—is financial. The code of conduct threatens to force Google to share some of its precious ad revenue, so it would naturally be inclined to bring this figure down as much as possible. The chairman of Nine Entertainment argued that the tech giants should pay 10% of their ad revenue they generate in Australia to publishers—a figure Silva addressed head-on in the blog post.

"This is based on an assertion that news accounts for 10 percent of queries and generates about 10 percent of our gross revenues in Australia," she wrote, before going on to say that news provides "very small" economic value to Google's business, and accounts for just over 1% of total search queries in Australia.

Another reason is that under Silva's leadership, Google has brought initiatives such as the Google News Initiative (GNI) to the APAC region, promising grants of up to $300,000 for publishers developing new and innovative business models and revenue streams. It has also been working with The Walkley Foundation—a not-for-profit offering grants to support public interest journalism—since 2013. And last year announced it will partner with the organisation to develop a training network across Australia. These efforts are part of a concerted campaign to position Google as a supporter of news. These solutions, coupled with the value exchange it currently provides publishers, is enough, in Google's eyes.

But some grants and an algorithm change will not fix years of tension between the news industry and news aggregators such as Google and Facebook, as one has struggled and the other has prospered phenomenally. And the price of that can't really be quantified—that's what Silva's blog post fails to take into account. 

Yes, it is true, as Silva points out, that publishers benefit from additional reach through platforms like Google and are able to monetise this. It is also true that Google may not be deriving as much monetary value from news as the news industry would have us think. But what Silva does not discuss, is how the dominance of platforms like Google in advertising has made it very difficult for publishers to compete.

It comes back to the much-discussed topic of what is 'safe' for marketers: Why would advertisers, especially digital-first or new-to-digital ones, put marketing dollars into publishers when they can get much broader reach and fine-tuned targeting with Google and Facebook? These platforms are a 'safe' bet, and safe bets become even more important during times of economic strain, as the world is experiencing now.

You also can't put a cost on the way Google and Facebook have undermined the news industry's distribution model—from print and satellite TV, to morsels of news on news feeds, social platforms, and search results. They can't bear the full responsibility for this—the digital revolution was coming regardless—but the level of control they have over the way news appears on their platforms means the true cost to the news industry is more nuanced.

So if what Silva said is true—that the value of news to Google isn’t about economics but supporting a thriving democracy—and that thriving democracy is being threatened by the challenge of monetising news online, then it doesn't matter if Google is getting less from the news industry than it is putting back. It is having far bigger implications on the news industry's business model, and can ultimately do more to recognise this.

More transparency like this from tech titans like Google and Facebook will help resolve some of the tensions between them, the news industry and the government. Having key executives provide emotive responses could also help to humanise the tech companies, which often come across as robotic and overly manicured, and therefore easier to target. But the defence—which touts the need for a debate of 'facts'—is still lacking detail. Some of the figures Silva cited are not Google's own and the ones that are internal are not given in context. In fact, Google (and Facebook) remain reluctant to provide access to their own data. Without this, it remains Google's word against the industry's.

Jessica Goodfellow is the editor of media and technology at Campaign Asia-Pacific.