Room to wriggle: Big Tech media bargaining code

Denham Sadler
National Affairs Editor

For most of this year, the federal government has been stuck between a rock and a News Corp after announcing plans to force Facebook and Google to pay for news content.

On Tuesday, Treasurer Josh Frydenberg and Communications Minister Paul Fletcher unveiled an attempt to wriggle out from between the most powerful tech giants in the world on one side, and News Corp and other media firms on the other, by unveiling a final version of the news media bargaining code that features concessions on either side.

The government has planned to require Google and Facebook to enter into forced baseball-style arbitration with media companies to agree on a revenue-sharing deal for the use of news content for more than a year. The bargaining code was a key recommendation from the ACCC’s 18-month inquiry into digital platforms.

After unveiling a draft code in April, which outlined a forced “final offer” arbitration process for media companies and Google and Facebook if a revenue sharing deal was not agreed on within three months, the government faced intense lobbying from the tech and media giants.

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Days after the draft code was released, Facebook threatened to ban all Australia news content from its platform if it went ahead, while Google has made numerous public statements and campaigns saying it would put free Google services at risk.

On the third last sitting day of 2020, the federal government has announced the final version of the draft code which will be introduced to Parliament on Wednesday and quickly referred to a Senate legislative committee for inquiry, meaning it won’t be implemented or debated until next year.

While announcing details of the code, the actual legislation has not yet been unveiled, and the media was not provided the details before the press conference.

“This is a huge reform. This is a world first, and the world is watching what happens here in Australia. But our legislation will help ensure that the rules of the digital world mirror the rules of the physical world. That’s been our intention all along,” Mr Frydenberg told the media.

The final version of the code makes some concessions to Facebook and Google but retains the key element of the plan in the forced arbitration process.

Most significantly, the code will now allow for the value that Facebook and Google provide to media companies in terms of referral traffic to be taken into account when the revenue sharing deal is being formulated.

There won’t be any two-way payment flow, but this will reduce the size of payments the tech giants will be required to pay the media firms.

“The arbiters need to take into account the benefits that traditional news media businesses get by having eyeballs on their product when they appear on Google or Facebook,” Mr Frydenberg said.

A requirement in the draft code for the tech giants to provide 28 days’ notice of any algorithm changes relevant to the presentation of news content has also been watered down, with the timeframe reduced to 14 days and now only relating to changes made by human intervention, rather than through machine learning.

“Where they’ve made fair points, we’ve responded. We’ve also responded to fair points made by the news media businesses. The code has evolved, the version to be introduced to Parliament reflects the consultations with all parties and we believe it’s an appropriate framework against which commercial negotiations can occur,” Mr Fletcher told the media.

The code will initially only apply to Facebook’s news feed and Google search, and not to Instagram or YouTube. But other tech companies could later be included by the government “if there is sufficient evidence to establish that they give rise to a bargaining power imbalance”.

In an attempt to guarantee the code’s safe passage through the Senate, the government has also caved and allowed public broadcasters ABC and SBS to be included in the code, something the Opposition and Greens have publicly called for. Mr Fletcher said the ABC has agreed to use revenue from deals with Google and Facebook on regional news.

He said the government has not backed down to the demands of Google and Facebook.

“We have reached a fair and balanced outcome. I think it would be remiss of you to not remember how much Google and Facebook opposed this idea in the first place. I’m sure if they had their intention there wouldn’t be any legislation before the Parliament,” Mr Fletcher said.

“Google and Facebook didn’t want to see this legislation come forward. We as the government have said it is a substantial reform, and one we are committed to. The outcome is very much fair and balanced.”

The final code will now be scrutinised through a Senate committee inquiry, and requires support of Labor or the Senate crossbench to be passed.

While not criticising any elements of the final code yet, shadow treasurer Jim Chalmers slammed the government for the protracted process through which the code has been developed.

“The government has been dithering and delaying and stuffing around for a year now. It was this time last year that the government said that they would act to level the playing field between the tech platforms and the news media organisations,” Dr Chalmers said.

“This is another stunning example of a government that chases headlines, but just doesn’t deliver. Time and time again we’ve heard from the Treasurer, in particular, big promises, big announcements about finalising this deal and getting it legislated before the end of the year and yet we still haven’t even seen the legislation that the ministers were talking about a short time ago.

“It’s been a year that this has been on the table and still we haven’t seen the legislation.”

This uncertainty has been damaging for local businesses impacted by the code, Dr Chalmers said.

“All of this uncertainty that’s been created by the big announcements and no delivery has been difficult for business. It’s been a difficult enough time for business as it is without all of the regulatory uncertainty which is created by a government which makes announcement after announcement and then can’t even deliver the legislation on the Tuesday of the last week of the Parliament,” he said.

Labor has said it will be examining the legislation properly through the Senate committee process next year.

Do you know more? Contact James Riley via Email.

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