#AceNewsReport – Feb.17: Google is well and truly the dominant player in Australia’s online advertising market: It’s followed by REA Group with a 7.9 per cent share, and Facebook at 7.4 per cent share.
‘Google search departure could devastate Australian small businesses, owners say: According to research firm IBISWorld, Google has more than 40 per cent share of the $9.7 billion industry’
The impact on my business would be devastating, as well as [for] thousands of other small businesses in Australia,” Mr Sali told ABC News.
Al Sali fears what would happen to his photography business if technology giant Google pulled its search engine from Australia: Mr Sali runs a Melbourne-based business called The Headshot Guy. He said if Google left, his revenue would plunge by 90 per cent: That’s because just 10 per cent of his clients come from word-of-mouth referrals. The rest find him through a Google search: Whatever we have invested on Google in terms of advertising or in terms of building the client base, we would have to do everything from scratch,” Mr Sali said: It [Google pulling its local search engine] would definitely kill the business, because the ongoing costs are going to be there, but the income stream would stop.”
Google and media companies in deals
Until this week, there was a 50:50 chance that Google could leave.
Google Australia managing director Melanie Silva had vowed the company would withdraw its local search engine if they could not come to political agreement on how much it should pay news publishers for their content, as part of a new media bargaining code.ACCC calls out market dominance of Facebook, GoogleTech giants may have to make it clearer to consumers how their private information is used, get proper consent and face significant penalties for breaching privacy laws.Read more
But the threat seems to have subsided in the past week. Google and media companies are striking deals.
On Monday, Seven West Media signed an agreement with Google for its news content that was reportedly worth tens of millions of dollars.
It’s hoped that more agreements like this will be possible as Federal Parliament prepares to debate laws to make Google and Facebook compensate news publishers.
Google says its economic contribution to small businesses is worth $39 billion a year — although think tank The Australia Institute says that may be overstated.
Whatever Google’s exact contribution, most businesses understand it’s big.
That’s why Mr Sali is relieved a compromise could be near.
“Google as a corporation will benefit if they stay, and we will benefit from it,” he said.
A ‘really scary day’ if Google leaves
He’s not the only businessperson counting on Google staying.
Rebecca Keogh runs Paint Plot, an eCommerce store selling crafts, including paint by numbers kits for adults.
They work with local artists and photographers to create the designs. They then send out a design, canvas, and paints to the customer to paint as they like.
So far they have built up about 7,500 clients in their Facebook group and delivered kits to about 35,000 customers in Australia and overseas.
She says Paint Plot relies heavily on Google search for its marketing.
It has invested tens of thousands of dollars in the past year alone to feature prominently in Google ads and Google shopping campaigns.
“It’s difficult to know at this point in time what could happen,” Ms Keogh said.
“But for us as a small business owner, it’s certainly very daunting thinking that we may not have access to Google ads.
“It would be a really scary day if someone said you can’t use Google anymore next week — for your business.”
She says the revenue impact would be “immediate”.
“Over half of our traffic that comes from our website and people who purchase our kits are coming through Google,” she said.
“So it [Google leaving] would have the potential to maybe cut our Australian business in half.”
It could take years for another search engine to step in
While another player like Microsoft Bing could step in to try to fill Google’s place, IBISWorld senior industry analyst Liam Harrison says that would take time.
“Three to five years is sufficient time for search engines such as Microsoft Bing, Yahoo search, Duck Duck Go and other search engines to step in and fill that void,” he told ABC News.Digital tax plan delayedA plan to tax digital giants has been delayed due to COVID19. In the meantime, Google Australia is still counting lucrative advertising revenue offshore.Read more
Mr Harrison says the potential loss of Google search would cause supply disruptions for small businesses, as well as job losses in sectors such as hospitality, tourism and the trades.
Reviews would need to be rebuilt and advertising and SEO optimisation would have to be rebought, which he says could be problematic for some businesses as they’ve invested heavily in optimising for Google.
“That can be devastating for small businesses that rely on income week to week,” Mr Harrison said.
“Business failures may come not from the fact that the business is unable to move to the [new] platform but is unable to be visible on the platform for a sufficient time.”
While Australia is a big market for Google, Mr Harrison says the global picture is what really matters.
Google makes about $4.8 billion in local advertising revenue annually, but Mr Harrison says that is just 2.5 per cent of Google’s total advertising revenue globally.
“And the precedent that the Australian news media bargaining code could set could potentially risk a lot more revenue for Google in the long term,” he said.
“The media bargaining code creates a precedent, potentially spurring regulation in larger markets such as the United States. In its current form, the legislation would fundamentally alter the principles on which Google Search currently operates.”
Can a compromise can be reached?
For now, the online giant says it remains “committed to a workable code”.
“The concerns that we, and others, have been raising consistently are about specific aspects of the Code,” said Google’s director of government affairs and public policy, Australia and New Zealand, Lucinda Longcroft.
“We look forward to engaging with policymakers through the parliamentary process to address our concerns and achieve a Code that works for everyone — publishers, digital platforms, and Australian businesses and users.”
After speaking to both Facebook boss Mark Zuckerberg and Google chief Sundar Pichai over the weekend, Treasurer Josh Frydenberg said the Government was getting closer to a workable code.
“I think we’re very close to some significant commercial deals, and in doing so that will transform the domestic media landscape,” Mr Frydenberg said.
He said his hope was to soon pass the legislation on the code through Parliament.
“We’ve just had a committee report that’s just endorsed our code,” Mr Frydenberg said.
He said both the digital giants “recognise that we have something that is workable here in Australia, something we can take forward and sustain a media landscape and will see journalism continued and journalists rewarded for generating original content.”
Ms Keogh is also hopeful Google and news publishers can reach a fair deal, so she can get on with her business.
“I just really hope that both Google and the Australian Government can come to a fair compromise so that everyone’s happy and small businesses like ours can continue with the services that have been delivering us traffic and customers and growth,” she said.
#AceNewsDesk report …………Published: Feb.17: 2021:
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