Google has warned it could pull its search engine from Australia if the federal government proceeds with a planned media code that would force the tech giant to pay for news content.
Executives from tech giants Google and Facebook have fronted a Senate committee examining a bill underpinning the proposed legislation.
Google's Australian managing director Mel Silva said the current code is "unworkable" and the uncertainty of its impact presented a financial risk.
"It would give us no real choice but to stop making Google search available in Australia," she told the committee.
Independent Senator Rex Patrick pressed Ms Silva on why the social media giant would take such a drastic step.
"Do you think that's the proper conduct for a large international corporation like Google," he asked.
"Any rational business needs to assess the impacts of any legislative change on our business, our product and our operations," Ms Silva replied.
"It is the only rational choice if this law were to pass for us.
"We have a workable solution. We're not opposed to a code, we're not opposed to paying publishers for value but the details matter."
Greens Senator Sarah Hanson-Young also expressed scepticism at Google's concerns over the mandatory code.
Google Australia Managing Director, Mel Silva appears via video link before a Senate inquiry. Source: AAP
"Why come here and threaten the Australian people with cutting off all of their search results because you haven't been able to negotiate?" she asked.
"What we are outlining is the worst-case scenario, we don't want that to be the outcome - the code as it stands sets an untenable precedent for us that puts our Australian operations at risk," Ms Silva replied
Ms Silva said Google has put forward an alternative solution - it believes meets the government's intentions for the mandatory code.
"There is a clear pathway to a fair and workable code - with only slight amendments the code can support Australia as a world leader in news innovation, media diversity and consumer choice," she said.
The planned media code forces tech giants to pay for news content or face fines of up to $10 million.
The Australian Competition and Consumer Commission (ACCC) estimates Google accounts for around 95 per cent of search traffic.
Prime Minister Scott Morrison on Friday said the government would not respond to Google's threats.
"Let me be clear. Australia makes our rules for things you can do in Australia," he said.
"That's done in our parliament, it's done by our government and that's how things work here in Australia.
"People who want to work with that ... you're very welcome. But we don't respond to threats."
Facebook has also voiced its concern over the plan.
It's instead pushing for commercial deals to be reached and warned the mandatory code could have a deterrent effect on investment in the Australian news industry.
Facebook vice president for public policy Simon Milner repeated warnings the social media platform could withdraw news from people's feeds in Australia if the news media code went ahead.
"That is not what we want to do but we have explained it's something that we would have to seriously consider given the nature of this unworkable law," he said.
Mr Milner said the "sheer volume" of deals it would have to strike and the mandatory nature of the code would make it unworkable.
"We want there to be a workable code - we want to be able to invest more in the news industry in order to support journalism," he said.
Treasurer Josh Frydenberg introduced the underpinning bill to parliament in December, praising the legislation as a "world-leading" code.
The government has stated it would prefer Facebook and Google to negotiate commercial deals with news media companies.
If these talks fail the parties would be forced into talks under the "bargaining code" to decide how much the digital platforms should pay.
One of Google's main concerns is that it would have to pay all registered news businesses for having results through the platform's search engine.
The company doesn't want this and is instead offering to have its "news showcase" feature included, which allows users to read some stories that are otherwise behind paywalls.
News media have typically relied on advertising for funding, with the loss of revenue having a significant impact on the industry.
The mandatory code aims to combat the power imbalance between news businesses and digital platforms.
ACCC chair Rod Sims said he believed the code is “workable” and the tech giants were being resistant because of their own interests.
“This is a code they don’t want,” he told the committee.
“Google and Facebook like to do things on their terms. The code does what it’s intended to do.”
Additional reporting by AAP.
