Google is facing the greatest challenge yet to its might in Australia as two of its largest media customers threaten to pull their business over the internet company's decision to enter the real estate listings market.
Fairfax Media and News Limited are independently weighing up whether to pull the millions of dollars they collectively spend on buying key search terms on Google following the latter's decision to list properties for sale on Google Maps.
Domain, which is owned by Fairfax, and Realestate.com.au, which is controlled by News, dominate the market for properties being searched for on the internet and the $144 million of classified advertising revenue that goes with it.
What had been a symbiotic relationship between Google and its media partners in Australia has been showing signs of strain.
In April News Corporation's chairman, Rupert Murdoch, fired the first shot, accusing Google of not paying the media for content that it was using to aggregate and sell ads against.
Google began sourcing listings from real estate aggregators such as Homehound and My Home this month and opened up the service to allow real estate agents to list their properties free on Google Maps.
Greg Ellis, the chief executive of REA Group - which operates realestate.com.au - welcomed competition in the marketplace but added: "It will be interesting to see how Google reconciles its ability to encourage companies to purchase Adwords, buy Google Maps and DoubleClick services and then compete with those companies who currently or intend to buy these services.
"It's a discussion that should occur across the Australian internet landscape, not just within REA. We are reviewing our options. No decision has yet been made."
Lloyd Whish-Wilson, the head of Fairfax's NSW metropolitan publishing, which includes Domain's online and print properties, and the publisher of the Herald, released a short statement. "We are looking at our options at the moment. We are obviously not keen to support a would-be competitor with our revenue," it said.
At stake is a market that grew 38 per cent last year and that the analyst Frost & Sullivan forecasts will grow 23 per cent this year.
Nielsen reckons nearly half a million people a day visit property websites, with realestate and Domain accounting for nearly 90 per cent of that traffic.
But almost a third of their traffic comes via Google, Hitwise reports, which raises the question of who needs whom more? Google has 92 per cent of the search advertising market and this year is expected to book revenues close to $1 billion.
Simon Baker, chief executive of the online classified marketing specialist Classified Ad Ventures, said Google would struggle to get more than half the agents listing their properties on Google Maps. It would also find it difficult to ensure that listings were up to date and free of scammers who might target Australian property hunters with bogus listings.
Mr Baker, a former chief executive of REA, said Google might be shooting itself in the foot. Its real estate service risks undermining its core business model, which relies on selling advertising against internet search queries.
"Google is moving from being a search engine to a portal," he said. "Instead of sending you to other websites - which have paid money to be there on its listings - it is now serving up the end data itself. That then raises the question: why would you need to go to the other sites and why would they then pay Google money [for search key words].
"Google has opened up a Pandora's box of questions."
A spokeswoman for Google, Lucinda Barlow, said it had received "great feedback" about its site to date and would like to work more closely with Fairfax and REA to take its listings - which both groups are refusing to do.
"We are partners and we would like to discuss this [issue]," she said. (Credit: The Sydney Morning Herald)
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