Aust big business opposes Big Tech code

James Riley

Big business in Australia is concerned the Big Tech media bargaining code sets a “troubling precedent”, with the Business Council of Australia worried similar laws could be applied to other industries.

A Senate committee is currently considering legislation introducing a bargaining code between Facebook and Google and Australia media companies. The code would force the parties to enter final offer, baseball-style arbitration if a revenue sharing deal for the use of news content on the platforms is not reached within three months.

It would also require advanced notification of relevant algorithmic changes made by human intervention.

Big End of Town: Aussie big business is concerned about the media code

Both tech giants have railed against the proposal, with Google threatening to withdraw its search service from Australia entirely if the code is introduced. Facebook has previously said it may be forced to block all Australia news content if the legislation is passed unamended.

The Business Council of Australia’s (BCA) opposition to the bargaining code is unsurprising, with the main subjects of it – Facebook and Google – included in its list of members.

But the BCA focuses on its concern that the introduction of such legislation sets a precedent that will impact industry and damage Australia’s ability to attract foreign investment by large tech companies.

In its submission to the Senate committee scrutinising the bill, the BCA said the legislation presented an “unmanageable level of commercial risk for any business and carries with it significant sovereign risk”.

“Onerous regulation will have a chilling effect on digital investments and threaten the introduction of news services in the digital sphere, just as they always have in other domains,” the BCA submission said.

“Legislation should not unnecessarily deter foreign technology companies from establishing and growing their presence in Australia. Similarly, it should not discourage local entrepreneurs investing their time, capital and creative energies,” it said.

“While each piece of regulation may be worthy individually, government should consider the sum of its interventions. The overall consequence may be to create the market power imbalances and monopolies government is seeking to avoid while diverting the investment Australia is trying to attract to other locations.”

The BCA shares many of the concerns that Facebook and Google have with the mandatory code, particularly on the forced final offer arbitration and the notification requirement for algorithmic changes.

But the business council also flagged concerns that the code will set a “troubling precedent” for government regulation, and similar codes could be imposed in other sectors.

“It will require businesses to enter into commercial agreements with other businesses, while providing no certainty about the financial exposure these agreements may create and limiting the ability of businesses to manage their own financial exposure,” it said.

“This would be a deeply troubling intervention by the government in the commercial arrangements for any business. We encourage the government to carefully consider the precedents this legislation will set for how businesses are regulated more broadly.”

If the code were implemented it would create “substantial sovereign risk” for companies looking to operate or invest in Australia, the BCA said.

“It will set poor policy precedents for government intervention and sends a bad message about Australia’s position as an open economy that welcomes investment. Australia will not become a leading digital economy if policies are put in place running directly in conflict with this objective,” it said.

At a public hearing last week, Australian Competition and Consumer Commission chair Rod Sims rejected the key arguments made by Facebook and Google against the code and accused the tech giants of engaging in “brinkmanship”.

“You can’t do a deal with a monopoly unless you have something on your side. This code gives the possibility of arbitration, which I suspect won’t be used very often, but that evens up the bargaining,” Mr Sims said.

“If you don’t have arbitration, you don’t have any evening up of the bargaining power. If they don’t want arbitration, I don’t see how you accommodate that. If there are suggestions that could help this be a better code that’s fine, but suggestions to make the code unworkable are not fine.”

The senate committee is set to report back on the bargaining code legislation next month before it is debated by Parliament.

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