Uphill battle to force big tech to pay for news

Denham Sadler
National Affairs Editor

The federal government has admitted it is facing an uphill battle to go where other countries have failed, and to legally force Google and Facebook to share ad revenue with media companies for the content used on their platforms.

Treasurer Josh Frydenberg announced on Monday that the Australian Competition and Consumer Commission (ACCC) would develop a mandatory code of conduct to address the “bargaining power imbalances” between the large digital platforms and Australian media companies.

This was a key recommendation from the ACCC’s inquiry into digital platforms last December, and the competition watchdog was subsequently tasked with developing voluntary codes covering the sharing of ad revenue, information on how algorithms sort news content and the sharing of data.

In an early progress report to government, the ACCC said there was little prospect of reaching an agreement with the tech giants over sharing revenue with news companies, leading the government to then order it to develop mandatory rules that will be legislated by Parliament.

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Australia will not be the first country to try to make Facebook and Google pay for news content posted on their platforms, but it would be the first one to do it successfully.

Countries including France and Spain have attempted to force the hand of the tech giants, but this has just seen Google threaten to remove all domestic content from its services. Or to shut the Google News service.

The challenge for policy-makers is to ensure that any deals between the tech giants and the mainstream media giants doesn’t crowd out small independent media companies.

Mr Frydenberg admitted that negotiating with some of the biggest tech companies in the world would be difficult.

“We’re very conscious of the challenges we face and that we’re dealing with some of the most valuable and powerful companies in the world. In France and Spain and other countries where they’ve tried to bring these tech titans to the table to pay for content, they haven’t been successful,” Mr Frydenberg said on Monday.

“But we believe this is a battle worth fighting. We believe this is critical for the future viability of our media sector, and it’s all about competition and creating a level playing field. We understand the challenges that we face,” he said.

“This is a big mountain to climb, these are big companies we are dealing with, but there is so much at stake and we’re prepared to fight. We won’t bow to their threats.”

The Treasurer outlined how the legislation could force Facebook and Google to pay a percentage of what it cost a media company to produce a piece of content, or pay the company a share of the ad revenue it has generated on their platforms.

The final model would be decided by the ACCC by July, which will then open a series of consultations on the proposed legislation.

Communications Minister Paul Fletcher said efforts in Europe had focused on using copyright law to bring the tech giants to the table, whereas Australia would look to use competition laws.

“We’re instead looking to competition law and the powers of the corporate regulator here. The ACCC has highlighted the way these issues have played out in other countries, they’re alive to the issue, this is the backdrop to which they will develop the mandatory code,” Mr Fletcher said.

The establishment of codes of conduct between the tech giants and media companies was a core recommendation from the ACCC’s 18-month inquiry into digital platforms.

The federal government accepted this in its response in December and tasked the competition watchdog to work with the tech platforms on voluntary codes of conduct, to be finalised by November.

But the tech giants would not budge on the notion of providing cash to media companies to use their content.

“The ACCC informed the government that while the parties were engaging well on a number of issues, it appeared unlikely that they would reach agreement before November 2020 on the complex and critical issues including value exchange and payment for the news content on Google and Facebook services,” ACCC chair Rod Sims said.

“The negotiations on developing voluntary bargaining codes will now cease. The ACCC recognises that there had been worthwhile engagements on both sides of these negotiations and will take all parties’ representations into account in developing a draft mandatory bargaining code. The ACCC recognises that there is now considerable vital and urgent work to be done.”

The COVID-19 pandemic’s impact on the Australian media industry made the development of these codes more urgent, Mr Frydenberg said.

“The Australian media sector was already under significant pressure; that has now been exacerbated by a sharp decline in advertising revenue driven by coronavirus,” he said.

A spokesperson for Google said the company would cooperate with the government’s plan for a mandatory code of conduct.

“We’ve worked for many years to be a collaborative partner to the news industry, helping them grow their businesses through ads and subscription services and increase audiences by driving valuable traffic,” the spokesperson told InnovationAus.

“Since February, we have engaged with more than 25 Australian publishers to get their input on a voluntary code and worked to the timetable and process set out by the ACCC,” the spokesperson said.

“We have sought to work constructively with industry, the ACCC and government to develop a code of conduct, and we will continue to do so in the revised process set out by the government today.”

The news has been welcomed by the Opposition, which has previously called for a mandatory code to be fast-tracked.

“Australian media companies must get a decent return for their investment in public interest journalism from digital platforms such as Google and Facebook,” shadow communications minister Michelle Rowland said.

“There is still much to work through before this code of conduct will operate to support the news media, and still much on the media reform to-do list – which the minister’s so-called roadmap doesn’t canvass.”

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