Google absolutely can stop users from searching for News, by removing all News tabs, News boxes, and News News-specific metadata uses (such as current events timeliness) in search results at Google.com.au. They can then legitimately claim that they are no longer indexing news, only websites in general, and if site operators don’t wish to be indexed they can follow the standard practices for exclusion.

Whether they (Google) will do so or not is a timely question to consider.