Google threatens to shut down search in Australia

Google threatened to block its search engine in Australia on Friday if the government there proceeds with a new code forcing it and Facebook to pay news companies for the right to use their content.

Australia looks set to pass laws that would make tech giants negotiate payments with local publishers and broadcasters for what's included in search results or news feeds.

And if they can't strike a deal a government-appointed arbitrator will decide the price.

It grew out of an investigation where Australia found Google and social media giant Facebook held too much market power in its media a situation it said posed a potential threat to a well-functioning democracy.

Google's local managing director, Mel Silva, called the Code overly broad.

She says the company faces what it calls "the unmanageable financial and operational risk" under the code and that this is grounds for shutting down search in Australia.

"In it's current form the code remains unworkable and if it became law, would hurt not just Google, but small publishers, small businesses and the millions of Australians that use our services every day."

The U.S also government piled pressure on Australia on Tuesday to scrap the proposed laws and on Friday, Prime Minister Scott Morrison hit back:

"Australia makes our rules for things you can do in Australia. That's done in our parliament. It's done by our government. And that's how things work here in Australia. And people who want to work with that, in Australia, you're very welcome. But we don't respond to threats."

This fight is being closely watched around the world being the biggest challenge so far to the way US tech giants use news on some of the world's biggest websites.