A lot at stake for Google in its threat to exit Australia

In Australia, like many other parts of the world, if we want to know something, we Google it.

But in the coming weeks or months, when we go to the Google search screen, we might be told that the service is no longer available in Australia.

Threatening to turn off its internet search function in Australia is Google’s latest salvo in the increasingly acrimonious battle over the Australian Government’s plans to make it pay publishers for using their news content.

The Government plans to force Google and Facebook to negotiate with publishers for any of their news content they use on their sites. The news media bargaining code will even up the power imbalance between the internet giants and the media companies, the Government says.

In a dramatic upping of the stakes Google Australia managing director Mel Silva told a Senate hearing on Friday the proposed news media bargaining code remained “unworkable”, and the company was prepared to exit the Australian market. “If this version of the code were to become law, it would give us no real choice but to stop making Google Search available in Australia,” she said.

The internet giant earns A$4.8 billion a year in Australia, and the bulk of that — A$4.3b — comes from internet search. The fact that Google says it is willing to forgo this revenue shows what’s at stake for Google. If the Australian Government succeeds in making the internet giant pay, then other governments around the world are likely to follow.

If Australian consumers could no longer Google, we would quickly find alternative ways to search for Sydney’s best Vietnamese noodle soup or discount kitchen wear or to sticky beak into how much our friends paid for the new house.

Microsoft’s Bing is the obvious alternative. While some experts say it isn’t quite as good as Google, it still provides useful results that would tell most of us what we need to know.

If Google carries out its threat, we might all Bing it instead.

Retail spend up

The sudden onset of the pandemic and the resulting business-crippling shutdowns introduced unprecedented uncertainty about the economy. But none of the dire predictions have come true.

The unemployment rate is about 6.6 per cent — higher than this time last year but not a disaster — and forecasters expect the economy to bounce back to where it was before the pandemic by mid-year.

It means another bumper year for Australia’s retailers. Thanks to the coronavirus pandemic, the year just passed was a good one for retailers of electronic goods and camping and leisure equipment as Australians focused on setting up home offices, upgrading their home entertainment systems and taking local holidays, such as camping.

Profits at electronics retailer JB HiFi in the six months to December jumped a massive 86.2 per cent to A$371.7 million.

And at Super Retail Group, which owns Supercheap Auto, BCF and sports equipment retailer Rebel, sales were up 23 per cent in the half year to December. The best-performing business was the camping, outdoor equipment and clothing chain BCF, with sales up 51 per cent. Supercheap Auto has benefited from extra spending by vehicle owners as they kitted their cars out for long road trips.

And the spend-up looks likely to continue into 2021.

Even with Covid-19 vaccines being rolled out around the world, Australia’s borders are likely to remain closed this year, health authorities say. So, it means another year of having to entertain ourselves at home and spending much of the A$65 billion we usually spend on overseas travel in this country, particularly in shops.

People will also spend more on home office equipment. Working from home now looks like a permanent arrangement for many people, at least part of the time, and JB Hi-Fi chief executive Richard Murray expects more spending as employees upgrade their home offices.

Furniture and electronics retailer Harvey Norman and Bunnings owner Wesfarmers are also likely to report bumper profits.

Australians are now a lot more confident about spending some of the money they might have otherwise spent on trips to Bali or the UK.

In fact, by some estimates there is about A$100 billion burning holes in the pockets of Australian householders, much of which will find its way into the tills of retailers.