Google has today said it would disable its search function in Australia if the government proceeds with a media code that would force it and Facebook to pay local media companies for sharing their content.
Australia is on course to pass laws that would make the big tech giants negotiate payments with local publishers and broadcasters for content. If they can't strike a deal, a government-appointed arbitrator will decide the price.
"The code's arbitration model with bias criteria presents unmanageable financial and operational risk for Google," Mel Silva, managing director for Australia and New Zealand, told a senate committee.
"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."
Australia announced the legislation last month after an investigation found Alphabet Inc-owned 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.
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.
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.
Google's testimony "is part of a pattern of threatening behaviour that is chilling for anyone who values our democracy," said Peter Lewis, director of the Australia Institute's Centre for Responsible Technology .
(Reporting by Renju Jose; Editing by Byron Kaye and Gerry Doyle)