Australia’s two biggest newspaper groups have threatened to pull their advertising from Google over Google’s recently launched Google Maps Real Estate service.

News Ltd (the Australian arm of News Corp) and the Fairfax group, owners of Australia’s largest real estate sites Realestate.com.au and Domain respectively, complained to the Sydney Morning Herald that Google’s new service competes with them. “We are looking at our options at the moment. We are obviously not keen to support a would-be competitor with our revenue,” Fairfax said in a statement.

Google Maps Real Estate primarily works as an aggregator for real estate listings on other sites, offering a basic mashup that allows users to search by suburb, building type, and features such as the number of bedrooms. Listings on the site are published with permission from other real estate sites (a number of small players currently provide listings) or can be submitted directly from Real Estate agents themselves. The site however does not offer a hosting/ listing service in a traditional sense: you can’t walk up and list your house on the site, instead it has to be listed for sale elsewhere on the web to be included.

In part there seems to be a misunderstanding of what the Google service offers. Simon Baker, who is claimed in the article to be an online classified expert, had this to say about the service:

“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.”

The problem there is that it hasn’t turned into a portal, nor is it serving up the end data in any shape or form. Google Maps Real Estate is an aggregator similar to what Google already does with Google News, Google Blog Search and other Google sub-sites. This is an aggregator that refines real estate search at its core, then delivers the traffic back to the originating seller on their site.

The real issue isn’t that Google competes with Realestate.com.au or Domain directly, but instead potentially reduces their appeal as middlemen. Both sites charge real estate agents to advertise their inventory even when that inventory is already on the web, and Realestate.com.au charges heavily for the privilege (from talking to Real Estate agents in the past, Domain is far more reasonable cost wise.) All Google is doing here is making current online listings easier to find with the actual seller getting the traffic.

Baker again though goes overboard:

Simon Baker…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.

Give that Google is offering real estate agents the ability to list their properties for free, suggesting that they’d struggle is a bold statement in the medium term. Stating though that Google would find it difficult to keep listings up to date and free of scammers compared to the existing players is beyond a joke: having used Realestate and Domain when recently purchasing a house, some listings are so frequently out of date as to be a joke (the number of times I’ve rung up about a property to be told it was sold the week before) and the data is worse again: a scam is listing a house on Realestate.com.au for a list price at auction of $540-$580,000 when the reserve price is $680,000 or higher to begin with. PGoogle won’t be immune to these problems, but no more so than the existing players.

Lets hope Google stands its ground. As the SMH article points out, both sites get one third of their traffic from Google, so let them live without the traffic and see how they go. Real Estate Agents and vendors should and will embrace the Google alternative, one that reduces costs for selling or renting a property.