Microsoft calls out Google amid escalating Search spat

Microsoft calls out Google amid escalating Search spat

President Brad Smith calls Google’s reaction to Australian legislation “dramatic”

Brad Smith (Microsoft)

Brad Smith (Microsoft)

Credit: Microsoft

Microsoft President Brad Smith has lashed out at Google over its reaction to the Australian Government’s proposed media bargaining legislation.

In a blog post published on 12 February, Smith described Google as acting “dramatic” in the face of the News Media Bargaining Code, which would force Google to pay for local news links it displays on its Australian search engine.

While Microsoft endorsed the News Media Bargaining Code on 3 February, Google threatened to remove its search engine from the country if the legislation passed. 

Google even ran “experiments” where it removed some Australian news content from its search results for a select number of users

While Microsoft’s initial endorsement made no mention of Google, Smith has now directly called out Google and even claimed his original endorsement caused the search giant to back down to Prime Minister Scott Morrison about Search leaving the country.

Indeed, Google did launch its News Showcase product in Australia — which pays publishers to provide content — a few days after Microsoft's first endorsement. 

However, Smith added that Google is continuing to argue against “baseball arbitration”, where an arbitrator chooses one out of two final offers from both parties. If arbitration is required, then it should be through a traditional “slow and legalistic” process. 

He also claimed the legislation could be adapted to search businesses with over 20 per cent market share, instead of specific companies, adding that Microsoft is aiming for that percentage and would be willing to meet any legal obligations under that hypothetical scenario.

On the use of "baseball arbitration", Smith said: “Ignoring the fact that an imbalanced bargaining position has created this disparity in the first place, Google in effect asserts that its own inflexibility at the negotiating table means that it should not have to participate in arbitration that rewards reasonableness over intransigence.

“More importantly, Google’s position ignores the fact that baseball arbitration was invented, and is now used, to encourage a reasonable outcome precisely when there is this type of unequal bargaining dynamic.” 

Essentially Smith argued baseball arbitration was being deployed as a haggling tactic to get both parties to move towards an agreement. 

“The Australians deserve credit for studying this landscape and discerning the similarity to negotiations between tech gatekeepers and smaller news organisations that have no choice but to do business with them,” Smith added. 

On the final point, Smith said a focus on a traditional arbitration process would “clearly would benefit those with deep pockets rather than the smaller parties that need the help”.  

The Australian government is set to report on the amendments to the News Media Bargaining Code on 12 February. 

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