The Australian government has passed a new law requiring Google and Facebook to negotiate with news outlets to pay for their content or face arbitration.
“This is a significant milestone,” said Josh Frydenberg, the Liberal party’s deputy leader who spearheaded the new law. “This legislation will help level the playing field & see Australian news media businesses paid for generating original content.” The Australian Competition and Consumer Commission (ACCC) says the law will address “a significant bargaining power imbalance between Australian news media businesses and Google and Facebook.”
The new code has seen fierce opposition from the two tech giants. The most vocal of the two has been Facebook, which temporarily blocked users and publishers from sharing news content on its main social network and only relented after the Australian government agreed to make a series of amendments to the proposed law.
Google also suggested initially that it would have to pull its search engine from the country if the law came into force, but it later walked back its plans. Instead, Google chose to ink deals with media organizations to pay them for news content. These include a major three-year agreement with Rupert Murdoch’s News Corp. that will see Google make “significant payments” to host content from publishers like The Wall Street Journal and The New York Post in its News Showcase product. According to The Washington Post, these deals are intended to allow it to sidestep paying for stories linked to in regular search results.
The News Media Bargaining Code requires Facebook and Google to pay a negotiated fee to link to or use news content, and includes a mandatory arbitration process if an agreement on fees can’t be reached. It also asks tech companies to give advance notice to news organizations about upcoming algorithm changes. It’s the threat of arbitration that both Google and Facebook had hoped to avoid, a process whereby an independent body decides the value of news content in news feeds and search results.
The law is currently designed to target Facebook and Google specifically, but in the future it could be expanded to other platforms “where fundamental bargaining power imbalances with Australian news businesses emerge.” However, amendments to the law mean the government can also take into account any commercial agreements a tech company has made with news publishers before formally designating it as a platform under the code. The law is due to be reviewed a year after it comes into effect to assess its impact.
Although Google has walked back its threat to pull its search engine from the country, the company is still opposed to the law because it’s against the idea of paying the websites its search engine links to. It has also expressed concerns about its arbitration process. In a blog post last year, the company argued that the specific form of arbitration being proposed (binding final-offer arbitration) is unpredictable, and is biased against Google because the arbitrator “isn’t required to consider the value Google provides to news media businesses in the form of traffic to their websites.” The arbitrator also considers news outlets’ production costs, but not Google’s, it says.
But the ACCC argues the law is necessary after its 18-month inquiry found tech giants were taking a disproportionately large share of online advertising revenue, which it believes comes at the expense of media organizations. And that was before the pandemic hit Australia’s media industry hard, with over a hundred local newspapers across the country either laying off journalists, stopping printing, or shutting down completely last year, The Guardian reported at the time.
At least one tech company has come out strongly in support of the new law: Microsoft. The operator of the Bing search engine — which has less than 5 percent of the search engine market in Australia — publicly backed the law, saying it “reasonably attempts to address the bargaining power imbalance between digital platforms and Australian news businesses” and that it would be willing to abide by the rules “if the government designates us.” It later came out in support of regulators introducing similar laws in the EU and US.
Regardless of whether other countries end up introducing similar laws, Australia’s news code has likely already had an impact outside its boarders. The deal struck between Google and publishers like News Corp cover publications all around the world, and the Financial Times reports that the value of these deals has increased markedly as a result of Australia’s law.