Google would block its search engine in Australia if the government proceeds to force it and Facebook Inc to pay media companies for the right to use their content, the company said on Friday.
The search giant had warned that its 19 million Australian users would face degraded search and YouTube experiences if the new code were enforced.
Google’s threat escalates a battle with publishers such as News Corp that is being closely watched around the world.
Australia is on about to pass laws that would give local publishers and broadcasters the power to negotiate payments with search engines for content included in search results or news feeds.
If they cannot strike a deal, a government-appointed arbitrator will decide the price.
The Managing Director for Australia and New Zealand told a Senate Committee that “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.”
Silva made no mention of YouTube in prepared remarks, as the video service is expected to be exempted under revisions to the code last month.
Google’s comments drew a sharp rebuke from Australian Prime Minister Scott Morrison who said the country makes its rules for “things you can do in Australia.”
“People who want to work with that in Australia, you’re very welcome. But we don’t respond to threats,” Morrison told reporters.
Australian Competition and Consumer Commission chair Rod Sims, while noting that”there’s always brinkmanship in serious negotiations”,said he could not predict what the tech giants would do .
Google has called the code overly broad and said that without revisions, offering even a limited search tool would be too risky.
The company does not disclose sales from Australia, but search ads are its biggest contributor to revenue and profit globally.
The United States government this week asked Australia to scrap the proposed laws, which have broad political support, and suggested Australia should pursue a voluntary code instead.
Australia announced the legislation last month after an investigation found Google and social media giant Facebook held too much market power in the media industry, a situation it said posed a potential threat to a well-functioning democracy.
Google’s threat to limit its services in Australia came just hours after the internet giant reached a content-payment deal with some French news publishers as part of three-year, $1.3-billion push to support publishers.