Why Google and Facebook Might Soon Have to Pay Australian Media Companies

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Australia’s consumer watchdog has been tasked with solving the issue of tech companies controlling how audiences access media companies’ news and content. With a draft plan revealed and legislation expected to be introduced before the end of 2020, it’s possible we could see Google and Facebook having to pay Australian media companies in a world first.

What sort of power does Google and Facebook have over media companies?

Traditional media companies have had a rough transition from printed newspapers since the advent of the internet. While the print advertising revenue model largely worked for decades, a push to the on-demand and free delivery of news on the internet has left many media companies without consistent and viable revenue streams.

It’s something the industry’s been talking about for years, but in July 2019, a new report delivered by the ACCC, Australia’s consumer watchdog, outlined the impact.

The ACCC found that Google and Facebook, the dominant distributors of news media in the country, had substantial bargaining powers. Due to their large audience reach and opaque handling over how the sites promoted certain content over others — the ever-changing algorithm — media companies were left to scramble in order to respond and maintain audiences.

“While the digital platforms clearly value the news media content that they are able to display to their users, Google and Facebook each appear to be more important to the major news media businesses than any one news media business is to Google or Facebook,” the report read.

“This provides each of Google and Facebook with substantial bargaining power in relation to many news media businesses.”

Following the ACCC’s report, the federal government asked the watchdog to propose a code of conduct in April 2020 in order to address the power imbalance between the tech companies and Australia’s media companies.

A few short months later, that draft legislation was released on July 31, detailing a world-first — Google and Facebook would need to level the playing field by paying for content.

What do the ACCC’s proposed laws say?

The core of it is simple — it’s about balancing Google and Facebook’s power so that news media businesses can claw back some of that control over their content.

“Google and Facebook each appear to be more important to Australian news businesses than any one Australian news business is to each of Google and Facebook,” the bill’s explanatory material read.

“This has resulted in Australian news businesses accepting commercial deals with these platforms that are less favourable than they would otherwise agree to.”

In order to do that, the new laws, titled Treasury Laws Amendment (News Media and Digital Platforms Mandatory Bargaining Code) Bill 2020, would aim to enforce a number of key changes.

The companies would need to provide news media outlets with notice of changes to the algorithm and the display and presentation of news content among other aspects.

Google and Facebook would also not be allowed to discriminate between news media outlets participating in the code or not.

And then there’s the most contentious part of the proposal — the money situation.

The proposed laws don’t outline how money might need to be paid to news media businesses but they do force Google and Facebook to engage in discussions. It’s suggested payment to media could take a number of forms, including lump sums, regular payments calculated with respect to volumes or amounts of news content, or other measures of user engagement.

But not just anyone with a news blog can claim this sort of bargaining power.

The proposed laws outline that in order to use the code a news media outlet must be registered with the Australian Communications and Media Authority (ACMA) and have made $150,000 in the most recent financial year or that amount in three of the five most recent years. It’ll also need to show it’s subject to appropriate professional journalistic standards and predominantly serves Australian audiences.

Interestingly, while the ABC and SBS are allowed to bargain with Google and Facebook regarding minimum standards — algorithmic and display changes, for example — the proposal denies them the opportunity to request payments.

Google and Facebook have until August 28 to respond to the draft code with a submission.

Would Facebook and Google actually pay?

Given few countries have taken the drastic step of pushing Google and Facebook to pay media for content, the world is watching to see what happens.

Earlier in 2020, French authorities ordered that Google pay media outlets in the country. Instead, it responded by removing any content that fell under the orders.

Similarly, Google News has been shut down in Spain since 2014 after the country’s legislators demanded Google pay up for displaying news media content.

“Legislation in Spain requires every Spanish publication to charge services like Google News for showing even the smallest snippet from their publications, whether they want to or not,” a post by Google read.

“This approach is not sustainable for Google News.”

In Australia, Google and Facebook have made it no secret they’re unhappy with the ACCC’s requests, which follow in the path of European legislators. Will Easton, Facebook Australia’s managing director, signalled the social media giant would work on its own framework more favourable to the site.

“We are reviewing the Government’s proposal and will continue to work towards a framework that helps publishers to innovate their business without discouraging us from doing the same,” Easton said in a statement.

“We hope to make long-term investments in Australian journalism, including the launch of innovative news products, such as Facebook News. However, only with effective, transparent and fair rules in place, will Australia continue to signal that it welcomes industry investments towards the long-term sustainability of journalism.”

Google Australia was a little less diplomatic, with managing director Mel Silva slamming the proposal and calling it “deeply disappointing”.

“Our hope was that the Code would be forward thinking and the process would create incentives for both publishers and digital platforms to negotiate and innovate for a better future — so we are deeply disappointed and concerned the draft Code does not achieve this. Instead, the government’s heavy handed intervention threatens to impede Australia’s digital economy and impacts the services we can deliver to Australians,” Silva said in a statement.

“We urge policymakers to ensure that the final Code is grounded in commercial reality so that it operates in the interests of Australian consumers, preserves the shared benefits created by the web, and does not favour the interests of large publishers at the expense of small publishers.”

As we’re approaching the pointy end of the decision making process, we’ll know soon enough how the fates of news media outlets, Google and Facebook will intertwine in the country. Something that’s been years in the waiting.