Google, Facebook and other digital platforms could be forced to pay hundreds of millions of dollars in fines if they fail to comply with a news media bargaining code released by Australia’s competition regulator on Friday.
The Australian Competition and Consumer Commission was asked to develop the mandatory code in April by the treasurer, Josh Frydenberg, after negotiations between the digital platforms, the ACCC and media companies stalled, and media companies experienced a sharp fall in ad revenue due to Covid-19.
Dozens of newspapers have shut since the pandemic began, and hundreds of journalists have been furloughed or made redundant in what has been an acceleration of the crisis facing the news industry.
Frydenberg said on Friday it became apparent to the government that progress wasn’t being made in negotiations between the parties on payment for content.
He said the code wasn’t about protecting news media from competition or disruption, but creating a level playing field and ensuring a fair go.
“We want Google and Facebook to continue to provide these services to the Australia community … 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.”
The treasurer will decide which companies will be required to comply with the code, but it will start with Google and Facebook. The Australian Communications and Media Authority (Acma) will determine the eligibility of media companies.
The definition in the draft code states they must predominantly create and publish news in Australia, serving an Australian audience, subject to professional editorial standards, and editorial independence from the subject of the news coverage, with revenue exceeding $150,000 per year.
The code would require the tech giants to negotiate in good faith to pay news media for use of their content, and media companies would be able to negotiate as a group with Facebook and Google.
Public broadcasters ABC and SBS are excluded from receiving payments through the code but would benefit from its non-remuneration aspects, Frydenberg said.
If an agreement on payments cannot be reached within three months of negotiation, it can go to arbitration, with a decision needing to be made in 45 days. If the parties do not agree on arbitrators, the arbitration panel appointed by Acma from a list overseen by the regulator will make decisions on payments based on submissions from each party.
The code also imposes a range of minimum obligations on digital platforms. These include providing news media businesses with information about news-related data, providing advance notice of at least 28 days of algorithm changes affecting news ranking – the display of news content and advertising with news content.
The code would also prohibit platforms from discriminating against Australian media outlets covered by the code.
The ACCC would be able to issue infringement notices for minor code breaches, but for larger breaches, there are fines of up to $10m per breach, three times the benefit obtained, or 10% of annual turnover, whichever is greater.
The chair of the ACCC, Rod Sims, told reporters on Friday that given Facebook and Google between them had billions in revenue in Australia the penalties could be “up to hundreds of millions”.
Sims said even if Google turned off Google News in Australia, as it did in Spain, it would still be caught by the code by virtue of the fact that it served news through search results, or on YouTube.
Google Australia said it is deeply disappointed by the code, calling it a “heavy-handed intervention” which will impede the digital economy.
The search giant said the code is not grounded in commercial reality and would benefit large publishers over smaller ones.
“Our hope was that the code would be forward thinking and the process would create incentives for both publishers and digital platforms to negotiate and innovate for a better future – so we are deeply disappointed and concerned the draft code does not achieve this,” the managing director for Australian and New Zealand Mel Silva said. “Instead, the government’s heavy handed intervention threatens to impede Australia’s digital economy and impacts the services we can deliver to Australians.”
“The code discounts the already significant value Google provides to news publishers across the board – including sending billions of clicks to Australian news publishers for free every year worth $218m.”
But large publishers of Australia’s major newspapers and websites were effusive in their praise for the code, which could mean a great deal to their bottom line.
News Corp Australia said the unveiling of the mandatory code is a “watershed moment to benefit all Australians”.
“The tech platforms’ days of free-riding on other peoples’ content are ending,” executive chairman Michael Miller said. “They derive immense benefit from using news content created by others and it is time for them to stop denying this fundamental truth.”
Nine Entertainment, which owns the former Fairfax papers including the Sydney Morning Herald and the Age, welcomed the recognition of the bargaining imbalances that exist between Australian media and the dominant global digital platforms.
“We are confident that following this important step in the process we are positioned to achieve an outcome which will ensure significant long term benefits to our news organisation,” Nine said.
The Media Entertainment and Arts Alliance was more cautious in welcoming the development, saying regional journalists may miss out.
“We are concerned, for instance, that many of the new regional media outlets formed this year during the Covid-19 crisis could be excluded – and these innovative outlets are the organisations that need the most support,” Marcus Strom said.
The Greens criticised the decision to exclude the public broadcasters from the bargaining table.
“It seems it’s okay for tech giants to rip journalism from the ABC and SBS for free, but if it’s Murdoch’s content then they have to pay,” Sarah Hanson-Young said.
The government’s rationale for excluding the ABC and SBS was they have secure government funding unlike advertiser-funded media organisations which have to compete with Google and Facebook.
The ABC told the ACCC it should be included because if the platforms were deriving value from their content taxpayers could expect a portion of that revenue to be shared. Any revenue would be funnelled back into regional and local journalism.
Sims said Australia’s code would be more successful than other countries’ attempts at getting money for publishers because the forced arbitration would set down a final decision if parties couldn’t negotiate, and also prevented Facebook and Google from discriminating against news publishers for participating in the code.
Sims said the $150,000 threshold for publishers was open to feedback as part of the exposure draft process, but he didn’t believe the code would entrench larger players like News Corp and Nine at the expense of smaller media companies.
“This has got to be set up so that the smaller players not only benefit appropriately, have the ability to grow and prosper and just get bigger and bigger,” he said.
Facebook declined to comment following the release of the code, but told the ACCC in its submission that there would not be a significant impact on its own business if it stopped its users sharing news content in Australia, while stating that the 2.3bn clicks it sent to Australian news sites between January and May were worth close to $200m to the news publishers.
The company argued that both it and Google had been unfairly singled out in the process.
The ACCC will seek feedback on an exposure draft of the legislation, with comment due back by the end of August. Frydenberg said on Friday that the legislation would be introduced into parliament shortly after.
Sims said he would expect to see payments flowing to news companies within six months of legislation passing.