Asked to pay, Google says its profit from News content 'very small'

Sydney: Following suggestions that online platforms should be forced to pay publishers in Australia AU$600 million or more every year, Google has said that the direct economic value it gets from News content in Search is "very small".

Google last year generated approximately AU$10 million in revenue --not profit --from clicks on ads against possible news-related queries in Australia, Melanie Silva, Managing Director and Vice President, Google Australia, said in a blog post on Sunday.

"The bulk of our revenue comes not from news queries, but from queries with commercial intent, as when someone searches for 'running shoes' and then clicks on an ad," she said.

Australia is in the process of developing a mandatory code to govern the relationship between digital platforms and companies that have news media interests.

This code would ensure that Australian media companies, such as News Corp, Seven West Media and Nine Entertainment, would get a share of the advertising revenue that digital giants such as Facebook and Google earn.

Nine Entertainment Chairman Peter Costello last month said that Google and Facebook should pay around 10 per cent of their revenue from Australia, or about AU$600 million.

Silva said that the figure "is based on an assertion that news accounts for 10 per cent of queries and generates about 10 per cent of our gross revenues in Australia."

She said that in reality both direct and indirect economic value Google gets from News in Google Search is very small.

On the other hand, Google helps news publishers pull traffic to their sites, all for free, Silva said.

"In 2018 Google Search accounted for 3.44 billion visits to large and small Australian news publishers for free," Silva said.

"A study by Deloitte in Europe valued each visit between euro 0.04-0.06 or around AU$0.063 -- which equates to approximately AU$218 million in value going to Australian publishers each year from Google traffic alone. In summary, news media businesses are likely to derive far more cross-content benefit than they generate," she said.

Silva warned that the mandatory code will have important consequences for Australians, including how and which types of news they can search and discover through Google.