Google has joined Facebook in threatening to withdraw its services from Australia if legislation introducing a media bargaining code is passed by Parliament.

In a sometimes fiery Senate inquiry public hearing, the local bosses of Google and Facebook faced senators to push back heavily against the proposed code, which would force them to enter into final offer, baseball-style arbitration with media companies to determine revenue-sharing deals.

The final code was unveiled and introduced to Parliament late last year. It will require Google and Facebook to enter into final offer arbitration if they cannot reach a revenue sharing deal with an Australian publisher for the use of its content within three months.

The code will also require the tech companies to provide 14 days’ notice of any relevant changes to the presentation of news on their platforms as a result of human intervention.

Google and Facebook have railed against the code since it was first proposed by the competition watchdog more than a year ago, with Facebook already having threatened to block the sharing of Australian news content on its platform.

Google has now backed this threat, with its Australian managing director Mel Silva telling a public hearing for the Senate inquiry into the legislation that Australians would be blocked from using its search engine if it is passed as is.

Under this scenario, which Google is actively preparing for, any Australian trying to make a search on Google would be presented with a screen telling them the company is “unable” to offer the service in the country, Ms Silva said.

“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,” Ms Silva said.

“Withdrawing services from Australia is the last thing that I or Google want to happen, especially when there is a way forward.”

The threat from Google came on the same day that the tech giant signed an agreement with a number of French publishers to pay for the use of their content on Google search results.

Australia Institute’s Centre for Responsible Technology director Peter Lewis quickly hit back at Google’s threat and urged the government to stick to its guns on the code.

“Google’s testimony today is part of a pattern of threatening behaviour that is chilling for anyone who values our democracy,” Mr Lewis said in a statement.

“Our elected representatives must stand firm against this bullying and support a viable media to act as a counterweight to the power of big tech: the eyes of the world are watching.”

Ms Silva also told the public hearing that the proposed code is “unworkable” and incompatible with how the search engine, and internet in general, functions. She labelled the arbitration process laid out in the code “very vague and one-sided”, before laying out three proposed changes to make the legislation more palatable for Google.

These include a focus on its News Showcase feature, replacing the final offer arbitration with standard commercial arbitration, and the removal of the algorithm notice requirement.

Independent Senator Rex Patrick hit back at Ms Silva’s argument that the code would break the way the internet works, saying this is a distraction and “technically not correct”.

“That’s like saying that the government is introducing speed limits and that will affect the way a car works at a technical level. Your argument is distracting, and the way it is distracting it is misleading,” Senator Patrick said.

“This whole code is not about in any way breaking the internet, it’s about breaking your revenue streams, it’s about breaking your bank account. It does not touch the internet and the way in which it works.”

Senator Patrick also compared Google’s threat to those made by the Chinese government as part of ongoing trade disputes with Australia.

Nearly all of the senators at the public hearing seemed in close alignment in their support of the bargaining code and the criticisms of the big tech companies.

The emphasis on News Showcase, which is yet to be launched in Australia, was also labelled a “pillar of smoke” by Liberal Senator Andrew Bragg, who pointed towards Google’s recent tax bill of $59 million on gross revenue of $4.8 billion in Australia.

Facebook vice-president of public policy in APAC Simon Milner also appeared at the Senate inquiry, standing by the company’s previous claim that it may block all Australia news content from the platform if the code is implemented.

“We have explained in order to inform the policy-making process, that that is a potential worst-case scenario of the law as it stands. We clearly have been doing some work to figure out what that would actually look like,” Mr Milner said.

“This would not mean that Facebook would no longer be available. That is not what we want to do, but it is something we have to seriously consider given the nature of this unworkable law.”

Mr Milner labelled the legislation as “highly prescriptive micro-regulation” that “fundamentally fails” to acknowledge how publishers use Facebook.

The representatives from Google and Facebook both claimed that their respective news services have not yet launched in Australia due to the planned laws, despite earlier plans to do so.

The Senate committee will hold another public hearing on 1 February and is expected to table its report on 12 February. It has received 55 submissions as part of its inquiry.

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