On the 25th of February 2021, Australia passed a law that will force Google and Facebook to pay for the news content shared on their platforms.
What is the aim of the regulation?
The bill aims to redress the market imbalance between publishers and digital giants. Indeed, when content is accessed via a link shared by Google or on Facebook, it does not generate advertising revenue for the news provider. It only generates some for Google and Facebook. The advertising monopoly of these companies is a global problem: for every $100 of online advertising spend, $53 goes to Google, $28 to Facebook and $19 to everyone else.
The law will force digital giants to compensate news publishers for the loss in advertising revenue. In practice, it will enable news providers to strike commercial deals with the platforms instead of allowing Google and Facebook to freely profit from the news content they create. Google made $4.3bn in advertising revenue in Australia last year, Facebook $0.7bn. The law also aims to make the platforms more accountable for the way in which they distribute information which has a big impact on our democracies.
What does the regulation include?
Although media companies are encouraged to negotiate independently with Google and Facebook, the law includes an independent arbitration mechanism that will set the price platforms must pay domestic media in case negotiations break down. News providers are also encouraged to bargain collectively. Moreover, the code obliges tech giants to inform publishers 14 days in advance about changes in their algorithms that might influence the distribution of their news stories. The code may affect other platforms but so far only Google and Facebook are directly concerned. The code has some anti-discrimination clauses to protect publishers, especially smaller ones with less negotiating capabilities. Lastly, there are stiff penalties of $10m or 10% of the platform’s annual Australian turnover for serious breaches of the code.
Facebook ferociously negotiated with regulators after it banned the sharing of news on its platform (see below). The company managed to include an exemption to comply with the law if the giants are deemed to be significantly contributing to the media industry by reaching agreements with publishers. This is seen by some critics as an opportunity to bargain with the most powerful media whilst sacrificing smaller ones who would have benefited from the negotiations undertaken by their larger colleagues.
What happened between the first announcement of the bill and its implementation?
When the legislation was first announced, the two targeted companies reacted very differently. Google initially threatened to shut its search engine in the country but then quickly entered a deal with Rupert Murdoch’s News Corp, one of the most important news providers in Australia. Facebook on the other hand restricted the sharing of news content on its platform for Australians and the access to news from Australian outlets for everyone, while it negotiated with regulators. It has since negotiated the final amendments with the Australian Treasury, subsequently lifting the ban last week. In the meantime, Google had already struck deals with major Australian news businesses.
Not being able to share news on its platform would have actually been a blow to Facebook’s credibility. It would have meant that the information shared does not come from journalistic organisations with fact-checking capabilities. The ban also significantly disrupted the daily activities of users on the platform, including access to some government public health advice. Both firms have now committed to spending at least $1 billion over the next 3 years to comply with the new regulation.
What are some issues with the regulation?
First of all, the foundations of this law have been contested. Google and Facebook have argued that the bill assumes that they greatly benefit from the free use of publishers’ content. Instead, they claim, it is the publishers who benefit from the traffic that Google and Facebook redirect to their sites. Facebook said that this free traffic was worth A$450m (US$350m) last year in Australia alone.
Secondly, the law is likely to protect the interests of large news providers but it may disadvantage smaller ones. Country Press Australia, which represents 161 regional newspapers across the country, has raised concerns that tiny publications outside large cities might miss out because the traffic they create is not significant enough in the eyes of Google and Facebook and because these publishers do not have negotiating capabilities. The power of big media outlets and of tech giants may be rebalanced but smaller publishers will be the overall losers of the code. The bill has thus been criticised for aligning the interests of powerful companies with powerful news providers.
Is Australia leading the world on big tech regulation?
The code was welcomed by the international media industry and competition authorities worldwide. The EU has expressed an interest in following the Australian approach. Its new copyrights directive may even include elements inspired from the Australian bill. France has already set a framework according to which 120 news publishers have secured €90m over three years from Google. Facebook is also to pay millions to UK news creators in compensation for the lost advertising revenue. Many other countries are closely watching developments in Australia. Finally, this law is likely to weaken the giants’ hand in the long run especially alongside the worldwide antitrust and data protection investigations.