Google has said that cutting off advertising from piracy sites is much more effective than censoring the sites from access.
The Australian government last month introduced legislation that would allow rights holders to get an injunction placed on internet service providers (ISPs) to force telcos to block specific overseas piracy websites from access by Australian users.
The rights holders would need to demonstrate that the primary purpose of a website is for the infringement of copyright before the Federal Court will order ISPs to block it.
The move has been welcomed by rights holders, but faces opposition from Google, which told the parliamentary committee looking into the legislation that site blocking "is not the most effective means of stopping piracy".
"A recent study of the piracy 'ecosystem' in which the authors conducted a detailed analysis of the effectiveness of various anti-piracy measures found that anti-piracy efforts directed towards blocking access to pirated content have not been successful," Google said in its submission.
Google said that more effective measures include providing legitimate content that is more attractive to consumers than piracy, and cutting off advertising to piracy websites. The introduction of site blocking could have unintended consequences, Google warned.
"Site blocking also has the potential to be used in ways that were unintended, included by blocking legitimate content."
Google said that legislation allowing sites that "facilitate" access to infringing copyright content to be blocked could lead to virtual private network (VPN) services being blocked.
"VPNs also have many other legitimate purposes, including privacy and security," Google stated.
The court should be forced to consider the impact on freedom of speech when blocking sites, the company said.
To tackle piracy, Google said that in the US, it is experimenting with ad formats so that when people search for films with the words "free", "download", or "watch", it includes ads in the results that show users how to find that content legitimately through Google Play, Amazon, or Netflix.
The company revealed that it has also upgraded its algorithm to down-rank piracy sites and links for which the company has received copyright notices. It has reported a significant drop in traffic for those sites.
The online giant said that it has helped cut off advertising from piracy websites, and has ejected more than 73,000 sites from its AdSense program, mostly through its own proactive screens.
Google expressed disappointment that the government opted not to pursue safe harbour for online service providers as part of the legislation.
Australian Communications Minister Malcolm Turnbull said safe harbour is "related to broader issues than just online copyright", so it would not be pursued.
Google said that this hampers the ability for online service providers to reduce piracy.
"The lack of a safe harbour for online service providers is also a serious impediment to the growth of Australia's digital economy. Common activities -- transmitting data, caching, hosting, and referring users to an online location -- are not covered by the scheme," Google stated.
The legislation will need the vote of Labor in order to pass the Senate, and Labor's shadow communications spokesperson Jason Clare indicated on Tuesday that he wants to see the Bill include a fair use provision. He also said that he would like the government to address the IT pricing report on the disparity in prices between Australia and the rest of the world.