Australia is making Google and Facebook pay for news: what difference will the code make?
The government’s legislation to force the tech giants to negotiate with news media companies is being closely watched around the world
The Australian government tabled world-first media legislation in parliament on Wednesday that will force Google and Facebook to negotiate a fair payment with news organisations for using their content in Facebook’s newsfeed and Google’s search.
The Australian law is separate to a recent deal Facebook made to pay mainstream UK news outlets millions of pounds a year to license their articles, but has a similar motivation. The social network signed the deals as it faces the threat of a government crackdown over its dominance of online advertising.
Why was the law necessary?
The law has been designed to address the loss of advertising revenue from traditional media companies to the digital behemoths: for every $100 of online advertising spend, $53 goes to Google, $28 to Facebook and $19 to everyone else. The loss of advertising revenue has been partially offset by subscriptions but it hasn’t been enough to stem the cuts to newsrooms, journalists leaving the industry and media outlets going broke and closing. Meanwhile Google and Facebook are doing very well: Google made $4.3bn in advertising revenue in Australia last year and Facebook made $0.7bn, according to documents filed with the Australian Securities and Investments Commission.
Newspapers say Google makes money from news and analysis provided by media organisations, and users would find Google and Facebook much less helpful if no news appeared on their feeds or in their search results.
The draft code was made more urgent as it was released in the midst of the pandemic, as News Corp Australia stopped printing 60 of its local newspapers and regional newspapers in Victoria, some older than 100 years, shut suddenly as advertising revenue dried up overnight.
The code aims to ensure that news media businesses are fairly remunerated for the content they generate, helping to sustain public interest journalism in Australia.
Why has it taken so long?
It’s been three years since the government asked the competition regulator, the Australian Consumer and Competition Commission, to inquire into the impact of Facebook and Google on the state of competition in media and advertising.
Its 18-month inquiry found a bargaining power imbalance between news media organisations and the large digital platforms, and recommended that codes of conduct be negotiated to govern their commercial deals. The ACCC released a draft code and media companies and the platforms were asked to comment.
Was the proposed code welcomed?
The recommendation was welcomed by media companies and advocates of public interest journalism.
But Google and Facebook feared it would set a global precedent. The world is watching Australia’s landmark legislation.
Read Also: Level platforms: on new law in Australia
Facebook threatened to block Australians from sharing news and Google ran a campaign against the draft media code arguing it was unfair.
Google took the extraordinary step of encouraging its users to fight the proposed legislation with yellow warning signs that said “the way Aussies search every day on Google is at risk from new government regulation”.
Google also took the campaign to YouTube, telling creators to swamp the ACCC with objections.
The prime minister stepped in and warned them against employing “coercion” in their opposition to his plans.
The Treasury Laws Amendment (News Media and Digital Platforms Mandatory Bargaining Code) Bill 2020 was finally tabled by the treasurer, Josh Frydenberg, in the last sitting week of 2020.
How will the code work?
Media companies are encouraged to make commercial deals with Facebook and Google outside the code.
But the code gives them a framework to bargain and reach a binding agreement.
If they can’t agree, an arbiter will implement the “final offer arbitration” model to determine the level of remuneration.
The digital platforms will have to give the media 14 days’ advance notice of deliberate algorithm changes that affect news media businesses.
To keep bargaining costs low for smaller companies, the digital platforms can make standard offers, or media companies can bargain collectively.
Can Google and Facebook just refuse to negotiate?
If they do, they will pay a penalty of $10m, or 10% of annual Australian turnover, or three times the benefit obtained, whichever is the greater.
But the stiff penalty only applies if they breach the key provisions of failing to negotiate or take part in arbitration in good faith; failing to comply with an arbitration decision; or engaging in retaliatory action against news media companies.
Which media companies will be eligible for payments?
While News Corp Australia has campaigned aggressively for the code, it has the broad support of the industry including Guardian Australia. Nine Entertainment, publishers of the Sydney Morning Herald and the Age, are on board as is Seven West Media, Australian Community Media, regional and small publishers.
A late change was made to the code to add the ABC and SBS, after the Greens said they wouldn’t support the legislation unless the public broadcasters were included.
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Will the code affect me when I am reading news on Facebook or searching for news on Google?
No, the public won’t be aware of any differences.
A recent Guardian Essential poll found that a majority of Australians wanted the government to regulate the digital giants, and voters also supported moves to make Facebook and Google pay for mainstream media content.
The latest fortnightly survey of 1,034 voters showed three in five Australians (59%) agreed that Facebook and Google had too much power and should be regulated by the government, with 13% of respondents disagreeing with that proposition.
Has the code been watered down after lobbying by big tech?
Not really. The ACCC chair, Rod Sims, said he was pleased to see the final legislation and he supported what was tabled in parliament. Facebook successfully argued that Instagram should not be included in the code, and it also acknowledges that Google sends traffic to media companies.
“The aim of the code is to address the uneven bargaining position between Australian news media businesses and the big digital platforms who have clear market power,” Sims said.
“It would be good to see commercial agreements between platforms and news media businesses taking place outside the code process. Arbitration is a last resort, and exists to strengthen the media businesses’ bargaining position.
“The ACCC has been fully involved in the preparation of and consultation on the legislation and supports what has now been introduced.”
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