It’s Google versus News Corp Australia in a battle to control the algorithms that drive search engine traffic. Billions in ad revenues are at stake.

The two bodies have traded barbs through submissions before the Australian Competition and Consumer Commission (ACCC) into alleged market dominance of digital platforms by the search giant, and social media platform Facebook.

News Corp has most recently called for Google to be “broken up”, a move it says would be a preventative measure into investment in the “quality content and sustainability of journalism”.

The media body also suggested an “algorithm review board” be established, to regulate Google in Australia.

Google has responded in its own submission, saying such a move was unnecessary.

“Google has no incentive to change its algorithms to harm news site,” the search engine’s submission said.

“The fact that Google sends many users to news sites – last year Google sent more than two billion visits to Australian news websites – suggests that Google is not attempting to reduce referral traffic to news publishers and has no incentive to do so.”

The algorithm inquiry

Australians are clicking more than ever on digital devices to access local and global content by search or social media.

Each click can be turned into cash through a nearby display advertisement or link.

Search engines such as Google use algorithms to decide the visibility of web pages. Algorithms can use the reputation of the page, relevancy, and popularity to decide which rank higher in search results.

The ACCC inquiry is expected to deliver an interim report before Christmas and a final report next year.

The inquiry was initiated after Australian publishers complained Google and Facebook were “hoovering up” more than $4 billion in ad revenue, making no local content and disrupting Australia’s mainstream media causing more than 3000 journalists’ jobs to be “vaporised” over the past 10 years.

News Corp’s complaints

News Corp Australia’s latest submission argued Google Search was the primary way people find news.

It claimed a separate ad-free Google News site was merely “a tool to drive more traffic to Google Search”, where it could monetise its services through mining user browsing data and targeting relevant ads at those users.

“Google may claim that it cannot harm competition or vertical players because any content is ‘just one click away’, but Google’s conduct ensures that any ‘clicks’ keep users within the Google ecosystem,” the News submission said.

Google’s role as both the gateway to the internet and news content, and as an ‘intermediator’ between readers and publishers ensured that any ‘clicks’ resulted in revenue generation for Google, at the expense of publishers.

The cost to publishers came in the form of erosion of margins by increasing the cost of their own digital distribution efforts, reducing the ability to convert readers to paid subscriptions and to retain readers on publisher websites to generate data that would improve the sale of targeted advertising and revenue “to continue to invest in content and innovation”.

Google denies it unfairly profits from displaying links to news sites in search results, or favours news sites that provide free content over pay walled sites.

It denies it misuses “snippets of news articles” so that users do not click on links of news websites.

Google says it has been working with news publishers to address changing consumer behaviour, by sharing at least 70 per cent of ad revenue when they display ads from Google, and partnering with publishers to promote quality journalism online through the Google News Initiative and Google News Lab.

But it is unlikely that News Corp and other Australian publishers will be mollified.

Google hits back

ACCC head Rod Sims will have to decide if regulation of either search engines or social media is warranted after the watchdog has used its coercive powers to get behind commercial-in-confidence constraints to prove or disprove there is unfair algorithm manipulation in the Australian market.

Mr Sims is understood to now have a full understanding of just how much Google and Facebook earn in revenue from domestic advertising derived through user aggregation and precision ad targeting techniques.

Google told the ACCC: “Certain comments suggest that Google does not provide enough information about how its algorithms work. These comments do not recognise that Google is constantly engaged in finding the right balance between providing transparency about how search works while playing a cat and mouse game against sites that try to ‘game’ Google’s algorithms without providing any benefit to users.”

Google rejected submissions it should be regulated as a news publisher and required to verify the accuracy and legality of news content.

“Google cannot serve as a fact-checker for every news article on the internet. Google’s search engine systems have seen over 130 trillion web addresses.”

While it was true that Google’s algorithms determined the order in which links to news sites were displayed, Google did not manually “curate” news articles.

In its submission News Corp Australia said Google had become an “unavoidable trading partner” and was exercising its dominance to thwart original publishers’ attempts to monetise their own content.

“In order to prevent the further erosion of incentives to invest in quality content and sustainability of journalism, a number of legislative or regulatory interventions should be considered,” the submission said.

“However, Google’s prior conduct suggests that more permanent and possibly structural interventions would better preserve the incentives for continued investment in journalism.”

News Corp, which enjoys more than 60 per cent of Australia’s newsprint market and is top ranked in online news, often editorialises against any regulation.

In spite of the heavy losses from its failed MySpace social media acquisition in the un-regulated US market, News Corp Australia is rejecting claims of hypocrisy in now seeking enforced regulation here.

Quentin Dempster is a Walkley Award-winning journalist, author and broadcaster. He is a veteran of the ABC newsroom. He was awarded an Order of Australia in 1992 for services to journalism.