Google Search to Leave Australia?!?!

Adam Keily: [00:00:53] Hello and welcome to comedian versus economist, we demystify the world of money and help you get a handle on the bigger picture. My name is Adam and I'm joined, as always by my older brother and real life economist, Thomas Thomas. How are you going? [00:01:05][12.7]

Thomas Keily: [00:01:06] Yeah, I'm good. Adam, how you doing? [00:01:07][0.9]

Adam Keily: [00:01:08] Yeah, I'm very good, thanks. Hey, we're going to talk today about what's been happening with Facebook and Google and to use a media term, this stoush with the Australian government and mainstream news outlets. So what's going on? [00:01:23][15.2]

Thomas Keily: [00:01:24] Oh, that's a question. Yes. All right. Well, I just straight from the intro into the first question, [00:01:28][3.9]

Adam Keily: [00:01:30] how interviews work, the intro followed by a question or other, you might provide more context, but no. That's right. So this is in the news because [00:01:40][10.0]

Thomas Keily: [00:01:40] Google is apparently threatening to leave Australia. [00:01:42][2.4]

Adam Keily: [00:01:43] What? [00:01:43][0.0]

Thomas Keily: [00:01:44] Um, yeah, that's what the news media is reporting, [00:01:48][3.7]

Adam Keily: [00:01:51] that we know more email from me. I've got a Gmail account. No more email. Yeah, that's not the worst news I've had all day, to be honest. [00:01:57][5.5]

Thomas Keily: [00:01:59] Yeah. Now they're threatening. They're threatening to remove search. They haven't mentioned Gmail and docs and all of that, but, um, yeah, they're talking about well it's being reported that they're threatening to remove Google search from Australia. So this comes out of well this this this comes out of. So currently last week, the Senate Economics Committee followed that very closely. [00:02:27][27.6]

Adam Keily: [00:02:28] Oh, no. Well, yeah. [00:02:29][0.8]

Thomas Keily: [00:02:30] So they're debating the news media and digital platforms bargaining code. So this is a code that's been developed by the ABC to help, primarily to help. It's not about helping Google or Facebook to help the news agencies in Australia. So News Corp Nine Entertainment and The Guardian, few others help them. [00:02:51][21.0]

Adam Keily: [00:02:52] Yeah, the other half a percent of news outlets beyond News Corp and nine entertainment. [00:02:57][5.1]

Thomas Keily: [00:02:57] Yeah, yeah. [00:02:58][1.0]

Thomas Keily: [00:02:59] It's about helping them bargain from a greater position of strength with Google and Facebook. And the argument that they're running is that Google and Facebook derive significant benefit from being able to access the news agencies content and that the news agencies should be able to bargain with them and ask Google and Facebook to pay for accessing that content. [00:03:28][28.9]

Adam Keily: [00:03:29] Right. So it's Google, it's Google and Facebook. It's it's big tech. It's who are these are the major players, obviously. [00:03:37][7.7]

Thomas Keily: [00:03:38] Yeah. It's funny. They specifically aimed at Google and Facebook. Google and Facebook are named in the code of conduct. That's right. Yeah. And yeah. So it's just them is quite it's quite unusual in that sense that it's aimed specifically at two companies [00:03:54][16.2]

Adam Keily: [00:03:58] that's not going to age. Well, they're going to have to review the code. You know, like technology comes and goes, like if you put MySpace in the in your legislative code. Well, boys, we've got this wrong. Yeah, they saw that coming. [00:04:18][19.3]

Thomas Keily: [00:04:18] And they've said this can be extended to other platforms in the future, including YouTube at the moment, YouTube, which is owned by Google, that's not included, but they have left that open to including them at a later date. [00:04:32][13.7]

Adam Keily: [00:04:33] Right. And so so they're talking about search for for Google at the moment because. Is that right? Look, I don't quite understand how. So the news companies are saying we're giving you content, Google, that you're showing in what? Search results? Search results. Yeah, and therefore you should pay us because we're. What are we doing? We're making we're making a search better by giving you things to find. Funnily enough, that is the essence of the argument. OK, OK, I'm sometimes I'm a bit slow on the uptake, so I just wanted so so so so Rod Sims, who [00:05:20][47.1]

Thomas Keily: [00:05:21] is the head of the ACC, they ACC have come up with the draft code of code. Right. That's being debated and is set to become legislation some point later in the year. He's saying this is a quote, News content bring significant benefits to the digital platforms far beyond the limited direct revenue generated from advertising shown against a news item. News media businesses should be paid a fair amount in return for these benefits. It doesn't actually go on to say what those benefits are specifically, but significant, though, where we're told. [00:05:57][36.0]

Adam Keily: [00:05:59] They love words like significant. Well, like I did do some reading on this. And apparently this content that's significant, like Facebook have said, like it makes up five percent of the of the content that's hanging, like it enriches the Facebook community. But didn't I say it provides something like it is provides almost no commercial value, [00:06:20][21.1]

Thomas Keily: [00:06:21] which again, they obviously have a vested interest in making it seem less than significant. [00:06:26][4.4]

Thomas Keily: [00:06:27] Yeah, yeah. I mean, it's like maybe it's a ambit claim. They're just setting up the negotiation with a strong starting point. But, yeah, they're not saying that there's any value that's being created. There is no commercial value because none of that all those news stories [00:06:44][16.1]

Adam Keily: [00:06:44] and things that you've produced using your you know, what's a commercial grade TV camera go for? You bought the camera. You've hired a reporter or the camera crew, and you'vecovered the latest breaking story. And Facebook guys, not nothing in that for us. Absolutely no commercial value whatsoever. [00:07:09][25.4]

Thomas Keily: [00:07:10] It's interesting that it's targeting specifically Google and Facebook because Google and Facebook run very different operations. They have a very different, very different business model. It is interesting that they're lumped together [00:07:22][11.7]

Adam Keily: [00:07:22] well, just because they're the biggest, right? Yeah, that's the easiest to call out. Are these guys the only ones who are fighting it as well? I mean, Facebook and Google, are the kind of alone in taking the stand against the government on this code, or is there? [00:07:37][14.5]

Thomas Keily: [00:07:37] Yeah, there were a few groups that made submissions. Google noted the figures made submissions in support of Google's position. Uh, that was list here, the Business Council of Australia. So that's a solid one. The US trade representative, um, US is typically not happy with you to know, there's a big debate in the US about breaking up big tech, but they tend to not look too favorably on other nations going and breaking up big tech for them. They're a bit parochial like that. The US. Yeah, right. Right. Yeah. So you've got the Business Council of Australia, the US trade representative, the inventor of the World Wide Web, who? [00:08:18][41.1]

Adam Keily: [00:08:21] What is that? Just like a person. Didn't the Army invent the Internet? The US? I reckon the US Department of Defense invented the Internet. [00:08:28][7.2]

Thomas Keily: [00:08:28] Yeah, I don't know. You have to take this up with Google. I'm just reading from the. Oh, oh, forget it. Who invented the Internet? It was us. Yeah. So yeah. [00:08:43][14.4]

Thomas Keily: [00:08:43] Business Council of Australia US represented the inventor of the World Wide Web and the Bundaberg Regional Council. [00:08:48][4.5]

Adam Keily: [00:08:51] But as in just the local council in Bundaberg, they've signed on as well,. [00:08:56][5.9]

Thomas Keily: [00:08:57] Apparently that they put it and they took the time out to put a submission into the Senate inquiry into the what is it, the news media and digital platforms bargaining code, obviously, obviously a hot topic in Bundaberg. [00:09:11][14.0]

Adam Keily: [00:09:12] head of that council meeting go there is some guy with is just is inflated self a sense of self-importance, just like we cannot stand by and let Google face this challenge on their own. They need our help, I believe. And a lot of Google stock, Eric. And that's what's happened. Yeah, maybe. [00:09:35][22.8]

Adam Keily: [00:09:36] Yeah. I mean, people, you know, like people are going to be annoyed if they can't find that won't be naughty or it's hard to find if you tried to find out like BENOT because as I know you don't put out the not have no idea what not one [00:09:57][20.9]

Adam Keily: [00:09:57] One day the guy in my street who put his brain out first is going to get it wrong. And the whole street is going to be we're going to be it's going to be Green Week and we're going to be all yellow because the guy with these BMF. Yeah. Bundaberg Council was ahead of the game on this. I've seen the danger there. And I have it's breaking the Internet because that's what people are talking about. They're saying it's going to break search. It's going to break the Internet. If yeah, if if Google take search away, it will like Google must be like it must they must do the bulk of the searching. [00:10:34][37.2]

Thomas Keily: [00:10:37] Yeah, that's right. Ninety five per cent is the stat that that's bandied around that 95 per cent of searches. Google like it. Yeah. It dominates search. Um you know, and there's a handful of other players but yeah there is nothing in comparison who those people are being have been biding their time rather than mama. Just if anyone from Bing is listening you still need a working product on and that's it. That's old. That's data thinking about, you know, business proposition these days. [00:11:18][41.2]

Adam Keily: [00:11:19] People wouldn't even know I reckon. Like I wouldn't know. You people just don't read, don't go to Google anymore and find things that are you just open a browser and your words usually relying heavily on auto, correct. Or whatever device you're using. A combination of auto. Correct. And Google's I powered. Did you mean algorithms to it when it's Bonnot or is it just like that episode of The Simpsons where home is like home or eats all that fatty food because he's trying to get like workers comp or something and then his fingers get too fat and he can't do the keypad anymore on the phone. And the operator is like, it seems you have fingers are too. You should to speak to the operator, please mash the keypad with your swollen fist. That's like, oh, that's how I feel. Typing search terms in my Uroboros. It's just this random collection of letters and punctuation that somehow makes up a word that Google recognizes. And actually, uh, turns out you just want to find out when [00:12:30][70.4]

Thomas Keily: [00:12:30] green binaries. Um, yeah. I mean, it's interesting. It is interesting that it's being reported in the media that Mel Silver, who's the head of Google in Australia and New Zealand, that she threatened to remove Google from Google search from Australia. We and I had to go to I had to go to the Mudgee Mudgee reader or something many times to find the actual quote that the Bundaberg council would in the area. Uh, yeah. To find out the [00:13:07][37.0]

Thomas Keily: [00:13:07] To find out te quote, they actually said, you got to remember here, like and I was actually it when I first started reading it, I was surprised at how hard it was to find out what the actual issue was here and what the bargaining thing was about. Because obviously, if you're reading the news, you're getting one side of the story. Um, but what mouseover seems to be saying is that, yeah, that it did it just might not work anymore. Like you kind of imagine. I mean, the arbitration model is also particularly interesting and potentially, you know, Google saying it's unworkable and I think there might be an argument there. So so basically. Only one Google has to pay the news agencies a fee of some sort for the intangible benefits that Google derives from having news sites come up in their search feed when people search for new stuff. [00:14:05][57.4]

Adam Keily: [00:14:06] So it's not about the actual snippet of news. Like it's not like saying we've got some copyrighted stuff that's going to appear in your search results page. If you want to display that, then you need to pay us for that content, that that line and a half of content that we're giving you for nothing. It's about saying, no, it's not providing you things to find. Yeah, I just can't imagine. Like, yeah. I mean, if Google said, all right, well, just stop living. It's like this. Companies can just turn off their what is it. They're robots dot text file to make the sites and indexable like Google just be like well good on you. Good. Good luck out there. Yeah. Good luck with your Bing hits. Good luck. [00:14:52][46.4]

Thomas Keily: [00:14:56] That's right. Like people pay to show up on the Google search feed, right. Yeah. And the other thing is Google doesn't have any advertising. If you go to the news tab on a Google search, Google doesn't run any advertising on the news tab. Right. So they don't get any revenue from that. And they say they say that they do get they get about ten million dollars a year in Australia from ads run on news related search terms like I don't know how you what is a news related search terms, like how you even define that like, [00:15:24][27.3]

Adam Keily: [00:15:24] you know, well, what's the news anymore? It's just. Yeah. [00:15:26][2.2]

Thomas Keily: [00:15:27] What did Candy be? Where do the Loki's. Yeah. [00:15:29][2.2]

Adam Keily: [00:15:33] Yeah, so be it. [00:15:34][1.2]

Thomas Keily: [00:15:34] So they reckon, they reckon it's ten million a year but their revenue in Australia, that's revenue. Ten million revenue in year, their total revenue in Australia is four point eight billion. So it's, it's, you know, it's pretty small but. Yeah, but the news agencies are arguing that there are intangible benefits that Google derives, that Google is more useful because they can people can find their news sites through the Google search function and that is worth to them. New Nine Entertainment reckons it's worth six hundred million [00:16:04][29.7]

Adam Keily: [00:16:05] where ? [00:16:06][0.4]

Thomas Keily: [00:16:06] News Corp reckons it's a billion dollars worth of intangible benefits. [00:16:09][2.6]

Adam Keily: [00:16:10] Yeah, I would, yeah. [00:16:14][3.8]

Thomas Keily: [00:16:14] Wow. And so er so it's not for hosting content, it's just for, for showing up in the news feed for Google is about to erm at Google. So again it's a different story for Facebook, but for Google that's what, that's what the argument seems to be. [00:16:27][13.2]

Adam Keily: [00:16:29] Yeah. I mean I guess if you, if you expand that out and you say, look, if every company on the planet turned around and said we're not going to let Google index our site and and show our page in search results anymore, then yeah, I guess that would that would affect Google pretty significantly, but. [00:16:47][18.2]

Thomas Keily: [00:16:48] Men like that, because this. Google got where it is because it like it just started searching the Internet, like it was used to post things on the Internet, and then Google was like, oh, people really need a way of finding this information. [00:17:02][13.7]

Adam Keily: [00:17:04] So they just made a thing that found stuff. And now they're saying, well, if you want to find us, you're going to have to pay. Does everyone have to pay to find them? [00:17:17][13.4]

Thomas Keily: [00:17:18] Yeah, I mean, that's the question. Like, where does it stop? Like, why do the news agencies get this special? Like, what if Jim's mowing says, like, I'm providing valuable because everyone who wants a mowing service can find me when they search on Google. Therefore I make Google more valuable. That argument seems just as valid. [00:17:34][16.3]

Adam Keily: [00:17:36] Or anyone who makes content. You know, if you put on Facebook or you're uploading content to YouTube, I think for anyone who's creating content of any kind and wanting to then monetize it, obviously everyone would love to monetize the content that they're producing and be paid for what they're making. [00:17:53][17.4]

Thomas Keily: [00:17:54] I mean, it's very interesting. The code, the code is very broad. So saying media businesses, by defining what media businesses are that would be eligible is if the online news content they produce investigates and explains issues of public significance for Australians, issues that engage Australians in public debate, and informed Democratic decision making or issues relating to community and local events may not be. Exactly. Exactly. [00:18:18][23.7]

Thomas Keily: [00:18:18] In addition, they must adhere to minimum levels of professional editorial standards. So that's the teli out and maintain a suitable degree of editorial independence. But independence from what? Like is Rupert Murdoch's flagships independent? Like they've never pretended to be anything. You know, that Rupert Murdoch has a say in what happens in his flagships like they've never pretended that that's not the case. Um, they have to operate in Australia and they have to generate revenue of more than one hundred and fifty thousand dollars a year. Fifty. Yeah. One hundred fifty thousand. That's a very low bar. [00:18:50][31.3]

Adam Keily: [00:18:51] I reckon you can run a blog and make. [00:18:54][2.8]

Thomas Keily: [00:18:55] I reckon equity meets media like that. B you know they're minting it right now, but now that we've joined the team this year we might not come back underneath. They should be paying us for it. [00:19:10][15.1]

Adam Keily: [00:19:16] But that's, that's pretty as you say, that's pretty broad and that's a pretty low bar, pretty low. [00:19:21][5.2]

Thomas Keily: [00:19:21] But if I was Google I'd be like this could open the floodgates from like just getting every content producer, you know, every tick tock channel personality or whatever, going like Google needs to pay me for being there, like not even kind of for links. Yeah. Coming through or something. Just being there somehow [00:19:39][18.2]

Adam Keily: [00:19:40] or for content. Yeah, that's right. Like, I mean I can speak from firsthand experience about what it's like to be blacklisted by Google. I made this video right. Um, this video is about ten years ago as I was called Port Adelaide versus the by and it was like a cut-up edited thing where Port Adelaide, the football team, the power who are going through a difficult season, they played the by and like this, fictitious by where no one else was running around. And so there was just this footage of Port Adelaide running around by themselves and it did or I got like two, two or three hundred thousand hits. And so I just like spread the word. I like monetize it straight away. I signed up for Google ads. There's like blasted everywhere. I knew that's said I've got monetize this video. Oh, check my balance in Google ad sense or whatever it is. And it was like I think it was nearing the end of the month, nearing payday. And I was like I had like sixty three dollars or sixty three bucks. I remember that. I got on, I got on and then click all the ads for Pepsi and whatever I might like me and my mate Nick Gill, he does radio, I think it's in Newcastle now, ex crows player. So we sort of made this, we made this video together, and then we then created this whole website around, like off the back of this thing, trying to get some momentum. And we had ads for the video ads on the website where it just like spread the word. Come on, click on our ads. Basically, no one was finding us through Google search. It was just word of mouth. Please click on our ads. [00:21:21][101.1]

Adam Keily: [00:21:22] Anyway, Google Google sent me a fairly terse email on payday instead of my fat check [00:21:28][6.8]

Speaker 3: [00:21:29] for sixty three dollars. I said really well said. [00:21:31][2.1]

Adam Keily: [00:21:32] Due to invalid click activity [00:21:33][1.3]

Adam Keily: [00:21:34] you are now banned for life. Yeah, it's like what's love coming again. Google. So yeah I had, I wrote back to them [00:21:43][9.0]

Adam Keily: [00:21:43] and, and I was like oh this seems a bit [00:21:45][1.9]

Adam Keily: [00:21:45] harsh. Lifetime ban. Are you sure that can't be [00:21:51][6.0]

Adam Keily: [00:21:51] right, obviously, and not in that lifetime ban? I actually write an email to Google about once every five years since it happened and just checking to see whether I'm still banned. [00:22:01][10.0]

Adam Keily: [00:22:02] And they actually reply with them, but I'm still banned. [00:22:07][5.7]

Thomas Keily: [00:22:08] Well, you should have taken it up with ACCC. Um, I know I might join the Bundaberg region, probably some guy I got a lot from then maybe if I do Google a favor. Uh, all right. Look, let's let's [00:22:25][16.7]

Adam Keily: [00:22:25] just pause there and take a quick break. Get a word from our sponsors. Hopefully we've got time on board. I know there's been a little bit of silence in between our sponsor sponsors. So, uh, hopefully, uh, we've got someone here to hear from. If not, we'll be back in a second. [00:22:39][13.2]

Adam Keily: [00:23:08] And we're back. You're listening to comedian versus economist, we are talking about Google and Facebook and their fight with the Australian government, the privacy and news media outlets in Australia. And Thomas, where we covered off, I guess, what it's all about, I guess we understand now at least why this fight exists. The news companies want to be paid. Google doesn't want to pay because I don't really see the value that they're providing. So how are they going to work it out? [00:23:36][27.5]

Adam Keily: [00:23:36] Like, well, yeah, what's in the code is something that's called the baseball arbitration model. So basically, did they copy and paste the code from the US and just done it? Can you please write this report? Sure thing, boss. I want to find find a place competition legislation competition. [00:24:11][34.7]

Thomas Keily: [00:24:17] the code says that the news agencies and Google have to sit down together and try and negotiate a fee or some sort or some sort of payment system. If they can't after three months, I think it comes to an agreement, then they've got to go to arbitration. But the arbitration is this baseball model. So basically there's a committee that the government sets up that sits in the middle between them. Each party has to come up with their best offer and sorry, [00:24:46][29.1]

Adam Keily: [00:24:46] hang on between who sits in the middle between big tech and the news companies. [00:24:50][4.5]

Thomas Keily: [00:24:51] Yes. So the news companies have the right to collectively bargain that's written into the code because that'll probably correct me if I'm wrong. But the, you know, supporting the right to collectively bargain, whether it's in the workplace or in the digital media landscape, the central pillar of Liberal Party policy has been for decades. [00:25:09][17.3]

Thomas Keily: [00:25:10] But the news companies can collectively bargain with Google individually for a payment system. If they can't come up with something after three months, then they go into arbitration. The arbitrator is a panel appointed by the government. Each company go to each party, Google and the News Corp News Agency, whether individually or collectively, come up with their best bid, what they think it is. And then the arbitration panel selects the one that is closest to their estimation of fair value. [00:25:42][32.3]

Adam Keily: [00:25:43] What each person on the panel selects one or know. [00:25:46][3.4]

Thomas Keily: [00:25:47] The panel collectively chooses one, as I understand it, of the two. [00:25:51][4.4]

Adam Keily: [00:25:52] So they pick one of one of the two. [00:25:53][1.3]

Thomas Keily: [00:25:54] Yeah, yeah. The idea is that that should force them to make each party to make a reasonable offer, something that that is right. Is reasonable, but it's. Yeah, but we're talking about something that, you know, already. There's a wide variety in what, what, what the value is, is we're talking about something that has isn't actually in the market as such. And there's no market price on this intangible value that the companies provide. So, yeah, it's tricky. It's tricky. [00:26:22][28.5]

Adam Keily: [00:26:23] So the so the news companies can bargain collectively, but Facebook and Google known collectively. [00:26:29][5.4]

Thomas Keily: [00:26:30] No, no, that's collusion. That's, uh, that's a monopolistic behavior. Anti-Trust behavior that. No, no, no, no, no. That's that's what. Well, who's [00:26:40][10.0]

Adam Keily: [00:26:41] who's on the other side then. Just Google. [00:26:42][1.7]

Thomas Keily: [00:26:43] Just Google. [00:26:43][0.3]

Adam Keily: [00:26:45] What about what happened to the Bundaberg Regional Council? Where do they feel like they have to do it themselves as well. No. Then fill out. Fill out. They haven't got the resources to take on a collective every musical identity. Yeah, no, no. I mean, I don't know why Bundaberg Regional Council was making a submission to the Senate inquiry. I've no idea what they're doing. But they're not I mean, they're not actually involved at all. [00:27:12][27.6]

Thomas Keily: [00:27:13] I know. Is just they're negotiating how much Google has to pay the media companies. So it's just between them. [00:27:21][8.2]

Adam Keily: [00:27:21] Yeah, but isn't that going to apply. Ah. So that only applies to Google then. So then Facebook has to negotiate its price as well and then everyone else has to negotiate their own price. [00:27:32][10.7]

Thomas Keily: [00:27:32] Yeah, yeah, yeah. Yeah that's right. [00:27:34][1.8]

Adam Keily: [00:27:34] But I thought we were talking about negotiating the code. [00:27:36][1.6]

Thomas Keily: [00:27:37] So this is we're talking about what will be legislated if the code comes into effect. Right at the moment it's a draft code that the agency has prepared. The Senate Economics Committee is debating it and they'll debate it again in early February. And then at some point, maybe this financial year might become legislation. Right. But isn't it it's not there yet. [00:27:58][21.3]

Adam Keily: [00:27:58] At which point Google will have to start paying if it did or they go, well, search is untenable. [00:28:03][5.0]

Thomas Keily: [00:28:04] Yeah, potentially. That's what they're saying. Right. [00:28:07][2.5]

Adam Keily: [00:28:08] So is this getting into monopoly territory now we're talking you know, Google has what you say, 95 percent of search traffic. Are they classed as a monopoly? You know, we're talking big tech now and their market power is that that they have too much. Is it a bad thing? [00:28:26][17.9]

Thomas Keily: [00:28:27] Yeah, generally, I would say yes. And I find it funny in this conversation, sort of taking the side of Google and Facebook on this one, that I think the market power of big tech is problematic. I think the conglomeration of the different businesses that you look at Facebook, it's got Facebook and Instagram and WhatsApp and a bunch of different business arms all under one banner. That kind of market power is problematic. And it's and it's going to be a big issue. There's sort of rumors that that Biden and the Bush administration might be looking at this, might look to break up big tech. So they might say to Facebook, no, you're too big. We just need we need to separate Facebook, Instagram, and WhatsApp into separate businesses and create firewalls between them and that. And that might happen. And typically, there's an idea in economics that monopolies are bad. To put it basically that once you have that much market power, then you start to have outcomes that aren't great for consumers, that they start to that market power creates inefficient outcomes and higher prices and lower quality products for consumers. And ideally, where possible, you want to break up monopolies. And that's what the U.S. is. The Australian Competition and Consumer Commission is the body. They do other things. But one of their primary jobs is to make sure that monopolies don't form, that you don't have too much power concentrating in in one entity. It's like the banking sector is a good example. We have the four pillars policy that you've got, the four big banks, ANZ, CBA, Westpac, NAB, they can't merge. They're not they're not allowed to NAB is not allowed to buy CBA or whatever. Like there need to be the four pillars holding up the banking sector. They can buy smaller banks and whatever, but they're not allowed to merge into a single banking entity because if there was only one bank in Australia, then you could imagine then things would get pretty rough. [00:30:20][113.3]

Adam Keily: [00:30:21] What if one bank, say, CBA goes releases some brand new product and everyone goes, that is the bee's knees and there's some IP that they've got. That means that the other three are 10 years away from replicating it and everyone goes to CBA and CBA have the monopoly on that product. So I guess that's unavoidable in a sense. And that's what they want. [00:30:47][26.3]

Thomas Keily: [00:30:48] Is this an interesting dance that happens in the modern economy with all companies wanted to create that moat. They want to create that that sort of thing that protects them from their competitors and gives them an advantage. And they're trying to create that moat. And investors are looking for companies that have a moat specifically. But at the end of that, if they get too good at building that moat, then they wipe out their competitors and they become a monopoly. And then that becomes bad. Not for the investors. No, no, no. This is where investors and consumers kind of their interests aren't totally aligned on this one. And yeah. But also in the modern economy, in the regulatory sense, we're trying to dance between these two. We want to allow firms to invest in their IP or build brands or create some sort of market power. But we also want to keep a brake on it and not let it run too far. And that's why I like intellectual property law, that there are time limits on patents, that, you know, you have a patent on something for fifty years or something. And then after that, it becomes publicly accessible. So if you do invest and have a great come up with great technology, you can extract all the benefits from it for a while. But then after a point, it becomes publicly available. So you sort of like you empower the mote in the early stages and then dismantle it later on. And that's sort of the dance that sort of that, you know, the book is is trying to work. And it is it it's pretty weird. [00:32:21][93.3]

Adam Keily: [00:32:24] Yeah. Because, I mean I mean, you know, one thing I've learned listening to Bryce now look over at Equity Markets Investing podcast is you want to look for these companies that have these moats and, you know, whatever that is, if that's Google in there and there, the 95 percent search volume, then that's awesome. That is one reason why you might consider investing in in that particular company. And so as an investor, you're right. It's like, hang on, something along comes the atrip will say, whoa, whoa, whoa, that's too much flying. And that's why I invested in the company. Now you do valuing the company that are invested in because they're [00:32:59][34.7]

Thomas Keily: [00:32:59] too big and too good. [00:33:00][0.7]

Adam Keily: [00:33:00] Because why they're too big and they now wield they're too big and too good. But presumably. You're saying it's a bad outcome for consumers, but presumably, consumers would be like, yeah, well, they're still happy with the service because consumers, if they're not happy with the service, would just go, well, I'll just go somewhere else, I'll go to Bing or I'll go to a doctor go. Or the one that you used versity or [00:33:24][24.3]

Thomas Keily: [00:33:25] it cozier plants, trees with you. Google searches somehow turns them into trees. Yeah, that's right. I mean, so what the people say typically looks at is how how they how they're holding that market power and how accessible the market is. So this is what's interesting with search is that there isn't really anything stopping anyone else using being or whatever. Yeah, it's mostly convention that people use Google or just laziness or whatever. So there's there are you know, it's not an anti-competitive marketplace for search because there are free search options easily available to any consumer. Yep. And so it's sort of coming at coming out attacking search like this is thus. Doesn't seem to be it seems to be off the mark, I think. But monopolies are fine until they're not. And it's it's the bad outcomes that happen with monopolies happen after the monopoly has been established. And once so once, you know, like, say, if there was a single bread maker in Australia, like in the competitive phase, it's really good for consumers because they're competing on quality, they're competing on service, they're competing on price. But then once, once all the competition's obliterated and you've only got one producer left, then the microeconomics of that firm changes. And it's no longer about how do we provide the best service, it's how do we gouge our customers for the most revenue that we can for the least quality cost product. Yeah, and that's and then and then consumers get a much worse outcome. I mean, there's other aspects as well. Like I think about Amazon has said it wants to control the pipes, it wants to control. It's not just about selling products and what products people get. It's about controlling the pipes of commerce. It's controlling how people buy stuff. And it wants to dominate that space entirely. And they're doing a very good job of that. But once they have dominated that space entirely and the only way to buy anything in the economy is through Amazon, that gives Amazon incredible power that, you know, is potentially like creates an alternative to to the government power, like that's the kind of power that is potentially very dangerous. And that's what a lot of thinkers that I admire like. Scott Galloway has done some great work on this. People should look him up. He's awesome. But yeah, like it's a dangerous outcome with Amazon controls everything and they have that much money that they then set up in Washington. You know, they had that bizarre Eurovision contest for where they going to set up their next office and then just set one upright in Washington because they recognized that lobbying government to stop them, stop them because they were getting too big in the threat. The biggest threat that they face is that the government's going to break them up because they're just too big and just too powerful and they just dominate every industry that they go into. Um, that's the sort of risk you're now talking not about an economic risk, but a social risk that's a risk to society. And so I think breaking up monopolies and addressing sort of imbalanced market power is a really good thing. And it's a really prosocial thing to be doing and we should be supporting it. What's weird about this one is that we're under that ship. We're trying to sail through legislation that seems to be supporting a very specific industry the with the major news outlets and trying to break, you know, break up Google, Facebook, which is, you know, maybe an admirable thing to be doing. But doing that by supporting these businesses, which are still doing pretty well in the scheme of things. And it's and it's not clear. You know, Richard Holden, an economist at A.W., calls it the gumtree effect that you look at where the major paper's revenue have seen revenue declines. It's in classified advertising. It's in, you know, job ads and stuff like that. But that's been siphoned off to pure plays like Secombe for jobs or car sales for for cars. And it's anything like that accounts for ninety-two per cent of the revenue decline that they've seen over the past ten years. And of that, almost none of that has gone to Google. So it is true that Google dominates advertising revenue, Facebook and Google to account for like three-quarters of the advertising market. It is true that they're dominating that, but it's not true. It doesn't seem to me that it's true that they've taken that from the newspapers and newspapers have lost that to other sources. [00:37:57][272.1]

Adam Keily: [00:37:58] Right. So it's just a coincidence. [00:37:59][1.0]

Thomas Keily: [00:38:00] Yeah, it just happens to coincide. The rise of Google has coincided with the demise of print newspapers. But that's really technology-driven, this is Internet-driven, and so it was sort of going to happen and it doesn't seem to have come through anti-competitive behavior on Google's part. Right. So so that's [00:38:18][18.0]

Adam Keily: [00:38:18] the kind of key thing there, really, isn't it? Like it's you would expect the government to step in if there was anti-competitive behavior going on. But that doesn't necessarily seem to be the case here. It's that News Corporation or news media kind of have missed the trick a little bit with the shift, you know, with handling the change in digital change and digital transformation, whatever you want to call it, they kind of missed the by a little bit and now feels maybe like they're just trying to claw back through the side door kind of thing. [00:38:55][36.6]

Thomas Keily: [00:38:56] Yeah, yeah. It's a bit whiffy because it does seem to be supporting supporting the major news outlets, which politicians rely on heavily for to get their messaging across. So yeah, it's a bit yes. Is a bit like yes, I find myself in a funny position, like I do support I do worry about the market power that Google and Facebook and the big tech have. But this one seems like a funny and problematic way to sort of go about addressing it. [00:39:24][27.9]

Adam Keily: [00:39:25] All right. Well, you will probably need to wrap it up for this week for more news and what might be WiFi and other terms from the floor of the Senate Economic Committee. [00:39:42][16.9]

Adam Keily: [00:39:43] Join us next week on comedian versus economist. Don't forget, you can always email us if you've heard something on the show that you want some more explanation on or you've got a topic that you want us to delve into, probably telling us to delve into, to be honest. You can email us at cve@equitymates.com. And if by some stretch you are having trouble searching for us on the web, maybe your search engine left the country and you're left having to rely on an inferior alternative, then you can [00:40:14][30.5]

Adam Keily: [00:40:14] always head straight to the website equitymates.com/cve and you'll find us there as well. Thanks again for listening. I hope you enjoyed this week's show and we'll talk to you again next week. [00:40:14][0.0]

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