The Economist - USA (2021-01-30)

52 Business The EconomistJanuary 30th 2021

Salesforce

Worldwide,toplistedcompaniesbyrevenues,latest 12 months*,$bn

Source:Bloomberg *FromfilingsatJanuary27th 2021

Company Revenues Netincome

Walmart 548.7 19.7

Amazon 347.9 17.4 1,622

Sinopec 320.2

PetroChina 303.8

Apple 294.1 63.9 2,390

BerkshireHathaway 279.2 35.8 534.7

CVSHealth 266.0

UnitedHealth 257.1 15.4

Volkswagen 248.4

To y o t a 241.2 13.3

5.5

2.7

8.0

5.3

407.0

72.0

110.3

94.8

315.9

102.8

236.0

Marketcapitalisation

January27th 2021

ChristmasmeansrichpickingsforApple.Thepandemicyearwasnodifferent.The

iPhone-maker’squarterlyrevenueexceeded$100bnforthefirsttime,two-and-a-half

timesMicrosoft’sownrecordsalesandfourtimesFacebook’s.Amongthetechgiants

onlyAmazonboastsbiggerannualrevenues—thoughmuchthinnermargins.

Bigtech’sbanneryear

I

t was quitethe dust-up. On January

22nd Mel Silva, Google’s managing direc-

tor in Australia, claimed before the coun-

try’s Senate that a set of laws it was ponder-

ing were so damaging that, if they came

into force, the firm would have “no real

choice” but to withdraw its search engine

from the country. Lawmakers condemned

Ms Silva’s remarks as “blackmail”. Scott

Morrison, the prime minister, headed for

the nearest flagpole: “Australia makes our

rules for things you can do in Australia,” he

said. “We don’t respond to threats.”

At issue are new rules that would force

big tech to pay publishers to display their

news alongside search results and social-

media posts. The argument has been sim-

mering for years. News publishers, in Aus-

tralia and elsewhere, have struggled in the

past two decades as advertising money has

flowed out of their pages and onto the in-

ternet—most of it to just two firms. Be-

tween them Google and Facebook account

for perhaps 60% of worldwide digital-

advertising revenues.

Publishers argue that news stories are

widely shared on Facebook, and are at least

one reason why people use Google’s search

engine. That, they say, entitles them to a

share of the two firms’ spoils. The tech

giants retort that, although they do not pay

publishers directly, they do send readers to

their websites, and that is plenty.

Both sides invoke grand principles.

Australia’s government argues that Google

and Facebook are monopolies, and that

laws are therefore the last resort for limit-

ing their power. It argues that news, which

costs money to produce, is vital for a

healthy democracy. The tech firms say that

paying publishers simply for linking to

their stories would break a “fundamental

principle” of the web—that anyone is free

to link to anything they like. And they

claim Australia’s proposed law is so broad

as to make compliance unfeasibly fiddly;

hence the talk of withdrawing entirely.

With a population of 26m, Australia ac-

counted for $4bn of Google’s $162bn in rev-

enue in 2019. Five years earlier, when

Spain, a similarly middling market, passed

a law requiring Google to pay for “snippets”

of articles that appear in its News search,

the online giant decided to yank that ser-

vice from the country rather than comply.

Despite such ultimatums, big tech has

been making concessions of late. In Octo-

ber Google used a folksy blog post from

Sundar Pichai, its boss, to launch “News

Showcase”, a $1bn scheme to pay some

news publishers for their work. Facebook’s

News Tab, launched in America in June and

in Britain on January 26th, offers a similar

revenue-sharing approach (The Economist

is a participant). And a few days before Ms

Silva addressed Australia’s Senate Google

announced a deal with French publishers,

after years of browbeating by French regu-

lators. The specifics are private, though it

probably involves payments for snippets

rather than links.

It may be too late for a backroom ar-

rangementà la française with Australian

newsmen; the current row with Canberra is

too public. An Australian law looks immi-

nent. Google and Facebook say they are

open to it in principle—just not to the Sen-

ate proposal’s sweeping specifics.

Whatever precedent the Aussies set is

likely to be seized upon by other places and

media groups. That may include America,

where neither Joe Biden’s Democratic ad-

ministration nor his Republican oppo-

nents are fans of big tech, and the eu,

which passed a revenue-sharing directive

in 2019 that member states must translate

into national law. Google’s threat to flee

Australia is just about credible (though

$4bn in annual revenue is nothing to sniff

at, even if it came at a cost of bigger cheques

to the press). Departing America’s and Eu-

rope’s huge markets is not an option. 7

Could Google quit Australia?

Online media

Big tech down under