The Australian government has passed a new law forcing Google and Facebook to negotiate with the media to pay for their content or face arbitration.
“This is an important step”, noted Josh Frydenberg, the Deputy Leader of the Liberal Party who spearheaded the new law. “This legislation will help level the playing field and see Australian news media companies paid to generate original content.” The Australian Competition and Consumer Commission (ACCC) states that the law will approach “A significant imbalance in bargaining power between Australian news media companies and Google and Facebook”.
The new code has met fierce opposition from the two tech giants. The louder of the two was Facebook, which temporarily blocked users and editors from sharing news content on its main social network and did not give in until after the Australian government agreed to bring in a series of news. ‘amendments to the proposed law.
Google also initially suggested that it would have to pull its search engine out of the country if the law went into effect, but then backtracked. Instead, Google chose to make deals with media organizations to pay them for news content. These include a major three year agreement with Rupert Murdoch’s News Corp. which will see Google making “large payments” to host content from publishers like The Wall Street Journal and The New York Post in its News Showcase product. According to at The Washington PostThese offers are meant to enable him to avoid paying for stories related to regular search results.
The News Media Trading Code requires Facebook and Google to pay a negotiated fee for linking or using news content, and includes a mandatory arbitration process if a fee agreement cannot be reached. He’s also asking tech companies to notify news outlets in advance of upcoming algorithm changes. It’s the threat of arbitrage that Google and Facebook had hoped to avoid, a process by which an independent body decides the value of news content in news feeds and search results.
The law is currently designed to specifically target Facebook and Google, but in the future it could be extended to other platforms “Where fundamental imbalances in bargaining power with Australian newspaper companies emerge. ” However, amendments to the law means the government can also take into account any trade deals that a tech company has with news publishers before officially designating it as a platform under the code. The law must be revised one year after its entry into force to assess its impact.
Although Google has canceled its threat to pull its search engine out of the country, the company is still against the law because it is against the idea of paying the websites to which its search engine links. He also expressed concerns about his arbitration process. In one blog post last year, the company argued that the specific form of arbitration proposed (binding final offer arbitration) is unpredictable and one-sided against Google because the arbitrator “is not required to take into account the value that Google brings to businesses. news media in the form of traffic to their websites. The arbitrator also takes into account the production costs of the media, but not those of Google, he says.
But the ACCC maintains that the law is needed after its 18 month survey found tech giants were taking a disproportionate share of online advertising revenue, which he said comes at the expense of media organizations. And that was before the pandemic hit Australia’s media industry hard, with more than 100 local newspapers across the country laying off journalists, halting printing or shutting down entirely last year, The Guardian reported at the time.
This new law is a big step forward. It helps ensure that publishers and journalists receive a fairer share of their work. Australia has shown what is possible and other democracies around the world can build on their ideas. https://t.co/je2J5CpIvY
– Brad Smith (@BradSmi) February 25, 2021
At least one tech company has spoken strongly in favor of the new law: Microsoft. The operator of the search engine Bing – which has less than 5% of the search engine market in Australia – publicly supported the law, saying that he “is making a reasonable attempt to address the imbalance in bargaining power between digital platforms and Australian news companies” and that he would be prepared to play by the rules “if the government appoints us.” He later came out in support regulators introducing similar laws in the EU and the US.
Regardless of how other countries end up introducing similar laws, Australia’s news code has likely already made an impact outside its borders. The deal between Google and publishers like News Corp covers publications around the world, and the Financial Time reports that the value of these transactions has increased significantly as a result of Australian law.