Google and Facebook will be forced to pay news companies for their content under new laws proposed in Australia – with media bosses declaring: ‘Their free-riding days are over’
- Google and Facebook would be required to negotiate with news organisations
- The US tech giants have siphoned advertising revenue away from publishers
- Australia’s government says this is a ‘fundamental bargaining power imbalance’
Australia has today unveiled a new law to force Google and Facebook to pay news companies for using their content.
The ‘mandatory code of conduct’ would force the tech giants to negotiate ‘in good faith’ with news organisations – with fines of hundreds of millions of dollars if they do not comply.
The crackdown is targeting stories that appear in Google searches, Facebook’s news feed and on Instagram without any money going to the news businesses which actually produce them.
Australia says this is a ‘fundamental bargaining power imbalance’ which means that news websites are unfairly deprived of advertising revenue siphoned off by Facebook and Google.
Media bosses hailed a ‘watershed moment’ and said that Facebook and Google’s ‘days of free-riding are ending’ after Australia announced one of the most aggressive moves by any government to curb the power of the US digital giants.
Australia has today unveiled a new law to force Google and Facebook (file photo) to pay news companies for using their content
Australia’s treasurer Josh Frydenberg announced the draft law today after 18 months of negotiations failed to bring the two sides together.
‘Nothing less than the future of the Australian media landscape is at stake with these changes,’ Frydenberg said, calling the legislation a ‘world-leading regulatory framework’.
He said legislation implementing the code would be introduced to parliament in the coming weeks after a final round of consultations.
While the code could eventually apply to any digital platform, Frydenberg said it would initially focus on Facebook and Google.
Under the code, drawn up by the Australian anti-trust watchdog ACCC, tech companies will be required to negotiate with news firms ‘in good faith’ over payments for use of their content.
If agreement cannot be reached within three months, the issue will go to binding arbitration.
Violations of the code will draw penalties of up to Aus$10 million (US$7 million) per breach or 10 per cent of the company’s local turnover, which the ACCC has estimated at some US$4 billion annually.
News companies worldwide have suffered in an increasingly digital economy, where advertising revenue is overwhelmingly captured by the US tech giants.
The crisis has been exacerbated by the economic collapse caused by the coronavirus pandemic, with dozens of Australian newspapers closed and hundreds of journalists laid off in recent months.
A 2019 study estimated about 3,000 journalism jobs have been lost in Australia in the past 10 years, as traditional media companies bled advertising revenue to Google and Facebook which paid nothing for news content.
Australia’s government says Facebook and Google not only benefit financially from showing the news stories, but also boost their status as news providers in Australia and collect user data which is used to improve their services.
The move has been strongly pushed by Australia’s two biggest media companies, Rupert Murdoch’s News Corp and Nine Entertainment, who stand to gain the most from the crackdown.
News Corp Australasia executive chairman Michael Miller called Friday’s announcement a ‘watershed moment’ and declared the ‘platforms’ days of free-riding are ending’.
Unlike other countries’ efforts to force the platforms to pay for news, the Australian initiative uses competition law and not copyright regulations to challenge what Australia calls an ‘acute bargaining power imbalance’.
In addition to payment for content, the code covers issues such as access to user data and transparency around the algorithms used to rank content.
The code will require Google and Facebook to give publishers 28 days notice of any algorithm changes that are likely to have a significant impact on their traffic.
A 2019 study estimated about 3,000 journalism jobs have been lost in Australia in the past 10 years (file photo)
Google responded quickly, saying it was ‘deeply disappointed’ with the proposal.
‘The government’s heavy-handed intervention threatens to impede Australia’s digital economy and impacts the services we can deliver to Australians,’ said Mel Silva, Google’s managing director for Australia and New Zealand.
Facebook issued a one-line response that hinted it could reconsider its activites in Australia if the proposals were implemented.
‘We are reviewing the government’s proposal to understand the impact it will have on the industry, our services and our investment in the news ecosystem in Australia,’ said Will Easton, Facebook’s local manager.
Frydenberg warned Google and Facebook that any ‘discrimination’ against Australian media as a result of the new law would be considered a breach of the code.
He said the aim was ‘not to protect Australian news media businesses from competition, or from disruption that’s occurring across this sector’ but rather ‘to create a level playing field’.
‘We want Google and Facebook to continue to provide these services to the Australian community which are so much loved and used by Australians.
‘But we want it to be on our terms. We want it to be in accordance with our law. And we want it to be fair.’
Both Facebook and Google say advertising revenue linked to news content is a small fraction of their overall revenue and that they have contributed hundreds of millions of dollars to local news media by driving traffic to their online services, providing grants and purchasing some content.
But ACCC chief Rod Sims said Friday such efforts failed to address the unfair power wielded by the tech titans.
‘We wanted a model that would address this bargaining power imbalance and result in fair payment for content, which avoided unproductive and drawn-out negotiations, and wouldn’t reduce the availability of Australian news on Google and Facebook,’ he said.
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