Google currently has in place about 20 commercial partnerships with New Zealand publishers. Photo / 123rf
Media Minister Paul Goldsmith faces a huge test of will as he oversees a new law in the face of strident opposition from one of the world’s biggest tech companies. Some industry and Government insiders accuse Google of employing bullying tactics. Shayne Currie reports.
Tech giant Google – whose New Zealand operation made almost $1 billion last financial year – has been accused of employing hardball tactics with the Government and media companies over a planned new law which would force it to pay for the journalism and news content that help drive its business model.
Several sources have alleged Google’s tactics include threatening to not renew existing contracts with media companies, while the new law goes through Parliament.
One source said the tactics were tantamount to bullying. “They’re playing their usual games, being as obnoxious as they can be.”
The source indicated the tech giant had even raised the spectre of reviewing its New Zealand operations – the source said any threat of a pullout would be “ludicrous” and extremely unlikely given Google operated a $1b business here and Microsoft would move in rapidly with its own search engine, Bing.
The tech giant says it is committed to New Zealand but has previously said it would have to “reassess the manner in which it operates in New Zealand” if the “misconceived” Fair Digital News Bargaining Bill is passed into law.
The bill – expected to come into force by the end of 2024 – was introduced by the Labour Government last year and supported, with amendments, by National and NZ First (but not Act) at the coalition Cabinet table this year.
The new law would force tech giants such as Google and Meta (Facebook) to negotiate with media companies and pay for the New Zealand journalism and news content that help drive their fortunes.
The bill and its amendments have been in front of industry and tech players for further consultation, ahead of its next reading in Parliament.
Google has now written to the New Zealand Government about the bill – part of what appears to be refreshed tactics to oppose the planned law.
The offices of Prime Minister Christopher Luxon and Media and Communications Minister Paul Goldsmith have refused to release the letter; the NZ Herald has requested it under the Official Information Act.
Sources say Google wants the law ditched in the first instance but if it is passed, it wants to be exempt.
In Canada, Google has been ruled exempt from the Online News Act, after agreeing to pay an annual sum of money – $C100 million ($119m) – to be shared amongst news media companies. The money will be administered and distributed by the Canadian Journalism Collective, an organisation set up of independent publishers and broadcasters.
It is understood Google wants a similar arrangement here but administered by the minister rather than the industry.
Google’s positioning in New Zealand represents a stern test of Goldsmith’s mettle and his legislation.
The Herald requested an interview with Goldsmith. “Unfortunately, the minister isn’t in a position yet to discuss the consultation process,” his office said in a statement.
Google currently has in place about 20 commercial partnerships with New Zealand publishers – representing almost 50 different mastheads – with the tech giant paying several millions of dollars each year to showcase news content on its search engine.
Google said in an earlier submission to Parliament that the new bill, which is likely to generate more revenue for media companies than the current deals, “puts at risk existing commercial arrangements”.
Media companies approached by the Herald will not comment or have not returned calls, reflecting what are believed to be strict non-disclosure agreements that, if breached, put at risk hundreds of thousands of dollars of revenue.
One source believed Google even prevented media companies from lobbying for new legislation. Sources say that highlighted the desperation of media companies when the deals were signed.
They said Google was now indicating it would not renew existing contracts as they came up for expiry and even threatening to end early other agreements.
The Herald sent a list of specific questions to Google, including:
In a statement in response, Google New Zealand country manager Caroline Rainsford said: “We’re proud of our local partnerships and investments to contribute to a sustainable, diverse and innovative news ecosystem in Aotearoa, including through Google News Showcase – a licensing programme paying almost 50 publications across the country to curate content and build deeper relationships with readers.
“As a significant ongoing supporter of New Zealand’s news industry, we’ve transparently outlined our concerns with the Fair Digital News Bargaining Bill in a submission. We remain committed to New Zealand and look forward to continuing to engage constructively with the Government on a sustainable path forward.”
As the Herald’s Chris Keall reported in May, Google NZ paid nearly $1b to its international parent in what was described as inter-company service fees for the year to December 31, 2023 – a true indication of the size of the business in New Zealand.
Google NZ’s 2023 revenue – net of those inter-company payments – was $84.3 million, with an after-tax profit of $17.8m.
Estimated income tax expense was $5.6m v $4.4m in 2022.
A spokeswoman said in a statement at the time: “We continue to invest locally through infrastructure, community engagement and product launches, and work in co-operation with Inland Revenue to comply with New Zealand’s legislative requirements.”
As reported above, Google has been ruled exempt from the Online News Act in Canada, after agreeing to pay an annual sum of money – $C100 million ($119m) – to be shared amongst news media companies.
The Google money will be allocated on a formula based on the journalist headcount at each company.
The money will be administered and distributed by the Canadian Journalism Collective, an organisation set up of independent publishers and broadcasters.
The collective was committed to distributing the funding in a “fair, transparent, and inclusive manner” said CJC independent board director Sadia Zaman.
“We look forward to working with the full diversity of the Canadian news ecosystem, including traditional print and broadcast organisations, and independent local news publishers, including those who serve indigenous, black and racialised communities and francophone communities.”
It is understood Google would want a similar arrangement here, but for the minister to administer the pool of money.
Any pool of money is likely to be well short of what the media industry believes it should be paid, and even what it receives now.
Media industry representatives have previously stated Google should not be exempt.
In Australia, Google has been negotiating individual deals with publishers under that country’s News Media Bargaining Code but it has also been reportedly adding a clause that allows it to cancel contracts after each year.
Google is reportedly paying more than $A130m ($140m) a year to media companies in Australia.
The Australian Financial Review reported in July that Google had renewed agreements with several specialist and regional news publishers.
Google has an existing five-year deal in place with two of the biggest media companies, Seven West Media and Nine Entertainment.
Rupert Murdoch’s News Corp has a global deal in place with Google, in which the tech giant reportedly pays at least $US100m ($162m) a year. The AFR said it understood this had been renewed in May, for one year “on similar terms to its previous deal”.
“Sources close to Google’s new round of deals with publishers, not permitted to speak publicly, described them as being year-long arrangements that roll over,” reported the AFR.
“This made sense from Google’s perspective, publishers said, given the uncertainty over the future of the Code.”
Editor-at-Large Shayne Currie is one of New Zealand’s most experienced senior journalists and media leaders. He has held executive and senior editorial roles at NZME including Managing Editor, NZ Herald Editor and Herald on Sunday Editor and has a small shareholding in NZME.
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