Microsoft (MSFT) Search Engine Bing May Gain if Google Exits Australia

Microsoft Corporation (MSFT) reportedly is positioning Bing to be the internet search engine of choice in Australia if Alphabet Inc. (GOOG, GOOGL) makes good on a threat to make Google unavailable in that country. The bone of contention is a proposed law that would force Google and Facebook, Inc. (FB), among others, to pay for content that these tech giants copy from Australian news sites.

Australian Prime Minister Scott Morrison indicates that he has spoken to Microsoft CEO Satya Nadella about whether Bing can fill in the gap. "I can tell you, Microsoft's pretty confident" that Australians would do just as well with Bing, Morrison told the National Press Club of Australia. Microsoft has not commented so far. Google has a 95% market share in Australia, while Bing is a distant second at 3.7%.

Binding Arbitration Is a Sticking Point

Google is under similar pressures elsewhere around the globe to pay for news content. In December 2020, for example, Google did reach a deal with French newspaper publishers that sets the groundwork for individual licensing agreements, with payments linked to factors such as the amounts published daily and the traffic that they draw. The sticking point for Google in the proposed Australian law is that it would establish a binding arbitration process to determine what an online platform must pay to a given news organization, if the two sides cannot reach an agreement on their own. 

What Google Earns in Australia

In 2019 and in Australian dollars, Google Australia booked revenue of $4.8 billion, $4.3 billion of which was from advertising, and reported a profit of $134 million. Converted to United States dollars, these figures were, respectively, $3.7 billion, $3.3 billion, and $103 million.

Could Bing Fill the Gap?

Back in 2018, a writer for tech-oriented website Wired ran a test for three months in which he stopped using Google search, utilizing Bing instead. In general, he concluded, "if you want to find something online, Bing will almost certainly get the job done." 

On the other hand, Google offers a number of other widely used services in addition to its search engine. Among these are Gmail, Google Maps, and YouTube, and it is unclear what impact a Google exit from Australia would have on services such as these, which many consumers in that country, as elsewhere, have found to be essential.

Significance for Investors

If Google actually does exit Australia, the big opportunity for Microsoft with Bing would be not so much the additional revenue and profit that it can earn in that country but the chance to boost the profile of Bing worldwide as a solid alternative to Google. Meanwhile, the stakes for Google in Australia are much wider than the possibility that its profits may slip.

"The wider concern is whether Google wants a modern Western democracy to showcase how using its competitors can be perfectly viable," the BBC observes. Chief among those competitors is Bing.