The Federal Government is set for a collision course with tech giants like Facebook and Google over the future of access to news content online. Australia is leading the way as one of the first democratic governments in the world to move to regulate these powerful companies and force them to negotiate payment for content produced by domestic media outlets. Knowing the history and politics surrounding this issue is critical to understanding why such a bold move was made.

Over the past decade, digital platforms have fundamentally changed the way Australians access and consume media.

Gone are the days of waiting for the morning news for breaking stories or reading gossip magazines for the latest celebrity dirt. We now have all the information we need at the touch of an app and most people now get their news information online, specifically from social media.

According to research completed by Roy Morgan, the internet has well and truly overtaken TV as Australia’s main source of news, with 61 per cent using it as a primary source of news in 2020. Within this, 38 per cent specifically nominated social media platforms, and 17 per cent used news feed sites such as Google News and Apple News.

However, social platforms have control over what news and information we see. Our social media friends have become the “managing editors” deciding what we see. An article needs to be liked and shared multiple times before many people see it in their feed.

It’s not surprising then that the stories in our feeds are usually free to access, meaning the media outlets that produce it remain unremunerated while social and digital platforms profit from advertising as users skate through each piece of content.

A mandatory code

Australia’s independent competition and consumer regulator, the ACCC, identified these issues and conducted an 18-month-long Digital Platforms Inquiry. Following this, the Australian Government asked the ACCC to develop a mandatory code of conduct to ensure tech giants like Google and Facebook negotiate access to content with its owners.

After extensive public consultation, the Australian Government introduced the News Media and Digital Platforms Mandatory Bargaining Code legislation to Parliament in December 2020. The code, which is designed to address the bargaining power imbalance between news media businesses and digital platforms, is supported by both the Labor opposition and the Greens.

The code uses the threat of mandatory arbitration to force the digital platforms to broker commercial deals with Australian media companies for the value they obtain from having news content in newsfeeds and search results. If they refuse, they face fines of up to 10 per cent of annual revenues.

Facebook and Google respond

Google and Facebook have indicated publicly that they are willing to comply with a code of conduct and are willing to pay for news content but argue the code in its current form is unworkable and exposes them to an unknowable financial risk.

At a Senate inquiry set up to scrutinise the proposed laws, Google Australia managing director Mel Silva said the code would “break” the company’s business model by forcing it to pay news outlets for featuring links and snippets of their content in search results.

Over the past few weeks, Google and Facebook have used their significant resources in an attempt to undermine the proposed code. This included advertising campaigns, political lobbying and even threats to pull services from Australia. Facebook and Google have recruited no less than five lobbying firms, according to the Australian Government Register of Lobbyists. Facebook’s chief executive Mark Zuckerberg has personally appealed to the Treasurer and Communications Minister, while the global head of Google, Sundar Pichai, has had “constructive” conversations with our Prime Minister.

Despite the high-level engagement, it's hard to imagine Google following through with their threats to withdraw their search engine – a service they make billions of dollars on every year. Facebook too have suggested they’ll pull all news from their feeds, despite news and opinion shared and debated on their platforms more than ever before.

The overseas experience

What Google and Facebook are perhaps most concerned about is a precedent in paying for content that would encourage other countries to do the same.

In 2020, French readers saw news snippet and extract results from European publishers pulled from search engines in response to a copyright law that was passed. In October, Google announced that they were investing $1 billion over three years to pay publishers for content showcased on Google News Showcase. The agreement with France allows Google to negotiate individual licences whereby payment will be based on specific and measurable metrics.

Interestingly, Google launched the same product in Australia only this month – a move that signals a major softening of its position. The initial deals cover 25 mastheads, including the Canberra Times, the Illawarra Mercury, the Saturday Paper and Crikey. No deals were made with Australia’s major news outlets including Seven West, Nine, News Corp and the ABC.

Showcase puts publishers’ content in panels providing more information and content from news websites than is found in search results or snippets in Google News. This includes Google paying on behalf of the reader for any content published behind paywalls, allowing users access to content they wouldn’t be able to see unless they made a payment.

However, Google News Showcase doesn’t address the issue of users downloading content using a search engine. This is the major sticking point, with Google arguing organic search should remain a free commodity.

What’s next?

The Senate Economics Legislation Committee are expected to complete their inquiry and report back to Parliament this week. And with the Australian Government, and every major party, supportive of the Code, it is expected the legislation will continue through parliament in the coming months.

Despite the power of these digital behemoths, it is difficult to argue against policy that ensures news media businesses are fairly remunerated for the content they generate and helps to sustain public interest journalism in Australia.

The rest of the world will be watching.

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