Google says it will have no choice but to make its search engine unavailable in Australia if the government implements a media code that will make it pay for news.
That implies the search giant would rather take a multibillion-dollar hit than set a precedent. Last year, Google's Australia operation reported A$4.8b in revenue.
Google Australia and New Zealand managing director Mel Silva told a Senate committee the company would not allow Australians to use its search engine if the code, now in legislation before the Federal Parliament, is enacted.
Silva said a provision in the law requiring the company to pay for links and snippets, would make keeping Google Search unviable in Australia.
"The principle of unrestricted linking between websites is fundamental to search and coupled with the unmanageable financial and operational risk," she said.
"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.
"Now that would be a bad outcome for us, but also for the Australian people media diversity, and the small businesses who use our products every day.
The hardball move follows what Google called "an experiment" last week, when it buried headlines from mainstream newspapers such as the Sydney Morning Herald deep in search results.
Google argues that it helps publishers by delivering a huge audience from links with search results.
But an Australian Competition and Consumer Commission report last year found Google handles 95 per cent of internet search traffic in the country and with search traffic dominating online ad spend, and online advertising sucking billions from traditional media, the ACCC flagged Google's dominance as a potential threat to a well-functioning democracy.
A draft code released by the regulator did not put a dollar figure on what digital platforms should pay for news, instead putting forward guidelines for an arbitrator to follow if voluntary agreements could not be reached.
Politicians and regulators on this side of the Tasman are keeping a watching brief.
Opposite stance in Europe
Google Australia-New Zealand's position has been complicated by news overnight that Google's European operation has agreed a deal with an association of French media publishers that will pave the way for the internet giant to make copyright payments for re-use of news content online for a yet-to-be-determined sum.
The accord signed with the Alliance de la presse d'information generale (APIG) involves "neighbouring rights", which call for payment for showing news content within internet searches, a joint statement said.
The agreement provides a framework for Google to negotiate individual licence agreements with newspapers. It will also give papers access to its new News Showcase programme, which pays publishers for a selection of enriched content.
Payments are to be calculated individually and will be based on criteria including internet viewing figures and the amount of information published.
The deal covers papers that carry "political and general news", the statement said.
Google has long sought to deny French publishers payment for previews of news in its search tools. Last year, it stopped showing news results from European publishers on search results for French users to comply with the new copyright law.
But in April, an appeals court ordered the company to open talks with publishers.
The company was told to discuss remuneration for news agencies if they shared content, photos, or videos online in Google Search results or on Google News. Google failed in its appeal against the decision in October.
Sebastien Missoffe, director general of Google France, said it was a "major step" for the company.
"It's opening new perspectives for our partners and we're happy to contribute to their development to support journalism," he said.
Pierre Louette, president of the APIG said the agreement marked the "recognition of neighbouring rights of press publishers and the start of remuneration".
Publishers across Europe have been pushing for tech companies to compensate them for their content as advertising revenues were siphoned away.
In November, the Lords Communications Committee report recommended a "mandatory news bargaining code" in the UK - based on the proposed Australian model - that would require platforms to pay publishers for the right to use content.
With reporting by the Telegraph and news.com.au