As we reach the pointy end of the Australian government’s negotiation on the mandatory news media bargaining code, it’s worth thinking through some of the consequences if the code becomes law. The most dramatic would be a nationwide pull-out of Google’s search engine.

Last week, Google provided the most serious indication yet that it is contemplating withdrawing its search service from Australia. In guidance issued to the market, the parent company stated:

Changes in international and local social, political, economic, tax, and regulatory conditions or in laws and policies governing a wide range of topics may increase our cost of doing business, limit our ability to pursue certain business models, offer products or services in certain jurisdictions, or cause us to change our business practices. We have in the past had to alter or withdraw certain products and services as a result of laws or regulations that made them unfeasible, and new laws or regulations, such as the News Media Bargaining Code drafted by the Australian Competition and Consumer Commission currently tabled in parliament, could result in our having to alter or withdraw products and services in the future. These additional costs of doing business, new limitations or changes to our business model or practices could harm our business, reputation, financial condition, and operating results.

For the uninitiated, the mandatory media code is a highly unusual bit of policy. It attempts to address two policy problems in one hit. The first is how to tax large, multinational technology companies. The second is how to ensure that Australia maintains a strong, independent media. The code’s solution is to mandate transfer payments from the tech companies to news organisations.

For those concerned about the survival of Australia’s news outlets, requiring tech companies to pay for news is a better solution (although not the only one) than having the government directly subsidise them, which would result in obvious conflicts. For market-minded people, though, it’s an awkward solution.

There’s no question that both issues are worthy of policy consideration, but compelling one industry to subsidise another, unrelated industry is a suboptimal solution that creates a bad precedent. It’s like forcing computer manufacturers to sustain typewriter manufacturers, or airlines paying wheelwrights. And given that search engines link to everything, there’s no end to who should be paid for referrals to their business.

Discussions continue on finding a way out of this jungle, but if Google does indeed pull its search function from Australia, it’s worth considering how things might play out. There are two key markets to consider: search and online advertising. For search, the ACCC estimates that Google has 95% market share in Australia. Microsoft Bing is the only search engine with the product and advertising heft to fill the vacuum and would likely assume a position similar to Google’s (pre-withdrawal). Others, like DuckDuckGo, may also make much smaller inroads.

If Bing assumed this dominant position, you would have to anticipate it would soon be designated under the code, and Microsoft has indicated that it would abide by the code. So, the most likely outcome in the search arena from a Google withdrawal would be the replacement of one dominant provider with another. It would only be if Bing decided the code was unsustainable and also withdrew that a genuine scramble for market share would occur, potentially opening up opportunities for more problematic providers.

The fallout in the online advertising field is a little more complicated to predict. The unwinding of Google’s dominance in online advertising may not lead to a straight transfer of this $9.1 billion industry to Bing. A few factors could come into play. First, the initial uncertainty about where consumers are going and unfamiliarity with Bing’s advertising platform could lead advertisers to experiment and diversify.

Second, alternatives to advertising on search engines are growing, and app-based advertising is likely to take an increasing market share. It’s here that things could become interesting and potentially complicated. TikTok, which the Trump administration tried to ban in the US, has a substantial and growing user base in Australia (2.5 million, according to Roy Morgan), is rapidly growing its Australian presence, and has launched a range of advertising services, including a self-service advertising platform for small businesses.

Australian regulators have so far focused their efforts on Western platforms, but when they inevitably turn their minds to more problematic non-Western platforms, the deeper they are embedded in the Australian market the harder the eventual unwinding will be.

So, if Google does withdraw, in the area of search we will most likely end up with a less competitive market but the same effective situation of one dominant player. In the area of online advertising, Bing should be able to eventually win over a large chunk of Google’s online advertising business, but the market is likely to splinter somewhat, especially to app-based advertising via platforms like TikTok.

For Australian public policy students, the code will provide rich ground for analysis and head-scratching for many years to come.

For more than a year, debate has raged over allegations that the Chinese military is taking advantage of Google’s research and expansion into China. General Joseph Dunford, chairman of the US Joint Chiefs of Staff, told a senate committee in March that Google’s work in China indirectly benefits the Chinese military, an accusation echoed by President Donald Trump. Google’s response was unequivocal: ‘We are not working with the Chinese military.’

There is no evidence that Google has a direct relationship with the People’s Liberation Army, but, as with the collaboration seen between many Western universities and the PLA, artificial intelligence researchers from the Chinese military have worked with Western technology firms’ employees on research that could advance China’s military capability.

The situation reflects the lack of a clear policy on engagement with Chinese entities across universities, companies and governments.

A scientist from the PLA and a Google employee were among the five co-authors of a paper related to artificial intelligence published in January 2019. The lead author, Guan Naiyang, is an associate professor at the PLA National University of Defense Technology (NUDT). His research focuses on non-negative matrix factorisation, an algorithm used in machine learning.

Guan’s story is emblematic of the PLA’s efforts to leverage overseas expertise. He received all his university degrees from NUDT but worked abroad as a visiting PhD scholar. In 2012, he visited the University of Technology Sydney, studying under one of Australia’s leading AI researchers, who is also a visiting professor at NUDT. His doctoral thesis earned him top prizes from the PLA and the China Computer Federation. Australian law doesn’t yet regulate the transfer of technology and training to foreign nationals or members of foreign militaries who are physically in Australia.

Guan worked on three PLA projects about online-surveillance and intelligence-collection technology when he was a PhD student. From what little information is available, we can establish that at least one of the projects—focused on analysing intelligence sourced from the internet—relied on the same kind of technology discussed in the paper he co-authored with a Google employee.

Last year, two NUDT scientists worked at a lab at Princeton University as visiting scholars. Their supervisor and colleague at Princeton is also a senior staff research scientist at Google and worked with the NUDT scientists on computer vision. Other papers written by the NUDT scientists examined target detection in sea clutter and the automatic recognition of objects including planes.

While most scientists in academia dedicate themselves to expanding our knowledge of the world, Guan’s goal, and the goal of PLA scientific research in general, is different. In 2016, he told a PLA newspaper: ‘I want to hasten the software development and application of high-performance computers, comprehensively propelling artificial intelligence toward the battlefield.’

Scientists like Guan and those who visited Princeton are among the thousands of PLA officers and cadres who have been sent abroad as PhD students or visiting scholars in the past decade. In Picking flowers, making honey, an ASPI report published last October, I analysed these activities in detail and showed how the Chinese military exploits the openness of academic institutions to improve its own technology and expertise. The report’s title comes from a saying the PLA has used to describe its international collaboration: ‘Picking flowers in foreign lands to make honey in China.’

Many Western companies and their employees have worked with the Chinese military in ways that could advance its intelligence and warfighting capabilities. A Financial Times article recently uncovered Microsoft’s ties to Chinese military AI researchers. Since at least 2010, Microsoft’s Asian research arm has taken interns from the PLA.

It shouldn’t be much of a surprise that companies such as Google and Microsoft have been caught up in the PLA’s efforts to leverage domestic and overseas expertise. Universities often engage in little scrutiny of their Chinese partners; leading universities in Germany, Australia, Norway, the US and the UK have all accepted Chinese military officers who claimed to be from non-existent institutions as visiting scholars. Some companies and even governments have made similar mistakes.

It’s encouraging to see that efforts are emerging to develop clearer policy guidance and regulation to help universities and companies understand and address this critical national security problem, although much more needs to be done.

Collaboration with the PLA often crosses a red line, but activities that indirectly benefit the Chinese military pose a tough challenge. Military–civil fusion, the Chinese government policy that’s pushing the PLA to cultivate international research ties, is also building greater integration between Chinese civilian universities and the military. As ASPI non-resident fellow Elsa Kania has pointed out, Google’s work with Tsinghua University is worrying because of the university’s growing integration with the PLA.

This raises a troubling question: if a company, government or university is unable to control collaboration with overt Chinese military entities, how can it effectively manage more difficult areas, like collaboration with military-linked entities?

Without clear policies and internal oversight, Western tech firms that don’t intend to work with the PLA may have employees who are doing so. Greater debate and robust policies are needed to ensure that universities and companies avoid contributing to the Chinese military and technology-enabled authoritarianism, and don’t inadvertently give fuel to those wanting an end to all collaboration.

A starting point here is for governments to begin setting out clear policy guidance and improving export controls to target entities that universities and companies should not be collaborating with. In the meantime, self-regulation and internal oversight by these companies will help address government concerns—and help inform future regulation. Civil society—NGOs and media—can also develop resources to help universities improve their engagement with China. ASPI’s International Cyber Policy Centre is currently developing a database of Chinese military and military-linked institutions for this purpose.