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Microsoft, Google at war over news

Microsoft and Google, longtime peaceful competitors, have turned on each other in what has recently become a heated battle over the future of news.

Details: Google on Thursday clawed back at Microsoft, arguing that the Seattle tech giant's support of an upcoming Australian news law is flawed and self-serving.

  • "[O]f course they'd be eager to impose an unworkable levy on a rival and increase their market share," Google's SVP global affairs and chief legal officer Kent Walker said in a statement.
  • Earlier Thursday, Microsoft president Brad Smith told Axios: "I would be the first to acknowledge that we recognize that this is an opportunity to combine good business with a good cause."

Catch up quick: Australian regulators are close to passing a new law that would make it the first country to force both Google and Facebook to pay news publishers for their content or else be subject to hefty fines.

  • In a blow to Google, Microsoft has backed the law, suggesting it could help even the playing field in search and make Microsoft's Bing search engine a more viable competitor for Google.
  • Both Facebook and Google have said they can't run their businesses as usual if the law takes effect and warn that if Australia passes it as expected, they'll pull some of their services from the country.
  • Facebook says it would block users from being able share news links in Australia. Google says it would have to stop making Google Search available in the country.

Be smart: Microsoft has spent the past few years avoiding much of the drama that its other Big Tech peers have faced around news and content moderation. Now, it wants to use that positioning to leapfrog its biggest competitor in one of the biggest Western markets in the world.

  • The new bargaining code is expected to be delivered to Australian lawmakers as soon as this Friday, and passed within the next two weeks.

Driving the news: Smith on Thursday doubled down on Microsoft's position, telling Axios that the U.S. and other countries should consider adopting media rules like those Australia is poised to soon enact to force tech companies to pay publishers for content.

  • Smith noted that Microsoft, which has a revenue-sharing program with publishers through Microsoft News, would be able to bring more revenue to publishers in Australia if it had more market share.
  • "We can't share revenue unless we have revenue to share," he said.

The big picture: Both Google and Facebook have in recent months created new features that steer money to news outlets without having to totally reimagine their businesses.

  • Google has started to roll out its "Google News Showcase" product in the U.K. and Argentina. Facebook launched its Facebook News Tab last week in the U.K.
  • While those companies have committed over 1 billion dollars combined to paying news outlets, Microsoft has paid out $1 billion to news outlets since 2014, due to its market share size.

What to watch: News Corp, the global publishing giant run by Rupert Murdoch, has been aggressively lobbying for such reforms, as it owns a sizable portion of the newspaper market in Australia.

  • Smith said he hasn't himself spoken with anyone from the company after Microsoft came out in favor of the law last week, but that News Corp has since reached out to others at Microsoft.

The bottom line: "Sometimes it takes someone who has a powerful microphone to ensure that many voices are heard and that's not a bad thing," Smith argued.

Go deeper: Tech coughs up money for news as regulatory threats loom

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