Australia’s proposed legislation that will make tech giants pay local media firms for news has not yet become law. But already it is sparking historic – and contrasting – reactions from Google and Facebook, the world’s two largest vectors for digital advertising.
The proposed News Media Bargaining Code was born of a study from the Australian Competition and Consumer Commission in April last year. It concluded that the tech giants should pay for the links to news and news stories that they carry. Since then, the idea has been rumbling towards legislation through consultations and feisty hearings. Australia’s lower house of parliament, The House of Representatives, approved the latest draft on Wednesday. The upper house, the Senate, will consider it in the coming days.
With the legislators in Canberra having shrugged off threats – earlier this month Google said it would withdraw search functions in Australia – and the bill’s passage into law now seemingly inevitable, the various different players are making their moves.
Throughout this week, it has emerged that Google has been signing deals under which it will make lump sum payments to Australian media organizations. It unveiled similar deals in France in recent weeks. The Down Under deals include ones with heavyweight Seven West Media and, on Wednesday night, News Corp.
The Rupert Murdoch-headed company, which is Australia’s largest publisher and also controls The Wall Street Journal, said that it had agreed a wide-ranging three-year deal with Google.
Other Google deals with Nine Entertainment (which gobbled up newspaper publisher Fairfax two years ago) and the state-owned Australian Broadcasting Corporation are also being negotiated.
Only hours later, Facebook headed off in the other direction. This despite a recent mano-a-mano conversation between Facebook’s Mark Zuckerberg and Australian finance minister Josh Frydenberg.
Overnight, Facebook announced that it “will restrict publishers and people in Australia from sharing or viewing Australian and international news content.”
That quickly earned it another rebuke from Prime Minister Scott Morrison. “Facebook’s actions to unfriend Australia today, cutting off essential information services on health and emergency services, were as arrogant as they were disappointing,” Morrison said in a Facebook posting. “These actions will only confirm the concerns that an increasing number of countries are expressing about the behavior of BigTech companies who think they are bigger than governments and that the rules should not apply to them.”
“The proposed law in Australia forcing Facebook and Google to pay local media firms for news content is a perfect example of how the wishes of big web companies are increasingly being pitted against those of national governments. It is hard to predict the outcome in any specific country, but it is clear that governments will see it as their sovereign right to make decisions about the laws they pass,” said Martin Garner, COO at U.K.-based tech consultancy CCS Insight.
“Australia’s move will be watched keenly by countries around the world. In making decisions about regulating major web players, governments have to balance their policies against the possibility that the companies could ultimately pull out of that country. But pulling out would be a bad outcome for both sides: if Facebook blocks news in Australia, it will also reflect badly on Facebook.”
Will it really come to that? The details, however, suggest that both the tech giants’ positions are more nuanced than their latest moves would indicate. There is still more wrangling to come. And the announced deals could yet fall apart.
Both Google and Facebook have argued that the draft code is unworkable. Facebook in its farewell statement said that the proposed law “fundamentally misunderstands the relationship (between) our platform and the publishers who use it.”
Facebook’s MD in Australia William Easton tries to make a distinction between the two firms’ activities. The legislation “seeks to penalize Facebook for content it didn’t take or ask for,” he said in a recent posting that argued that publishers seek out its services and post on the social media site in order to boost their audience. Google’s role, in contrast, is indexing online content and serving up news as part of users’ general searches.
Third party news publishers say that some of revenues they should earn from readership of their content is instead being earned by the platforms. This is killing journalism, say trades unions. That in turn has wider implications for civil society, say democracy advocates. Google’s response is that by driving traffic to the publishers’ websites it is enabling the publishers to replace lost advertising income with subscription sales instead.
In fact, neither company’s position in Australia is entirely clear cut.
Facebook says it may still be willing to pay. “We were prepared to launch Facebook News in Australia and significantly increase our investments with local publishers, however, we were only prepared to do this with the right rules in place,” said Easton.
Google, in striking deals, is also elevating its own product, News Showcase, which allows publishers to choose which content is promoted on Google apps and in searches. By agreeing lump sum or flat fee deals, Google also avoids being compelled under the draft law to pay Australian publishers for those links that simply show up in a user’s regular search.
There is a hypocritical ring to that outcome. While claiming to be the even-handed guardian of the global internet – “the (Australian) law would unfairly require unknown payments for simply showing links to news businesses, while giving, to a favored few, special previews of search ranking,” said Google policy executive Kent Walker, last week – Google’s News Showcase appears to create a two-speed internet world.
Tim Berners-Lee, the scientist credited as creating the World Wide Web, warned the Australian Senate committee last month that he thought the draft code would do that anyway. “Specifically, I am concerned that that code risks breaching a fundamental principle of the web by requiring payment for linking between certain content online,” Berners-Lee said.
Perhaps the aspect of the draft law that both tech giants dislike the most is its creation of an arbitration panel. The government sees the panel as a way of preventing the platforms from abusing their negotiating position. If a mutually acceptable deal cannot be agreed between platform and publisher, the panel can set take-it or leave-it terms.
The latest maneuvers are the two companies’ responses to the imminent arrival of that scenario. Google has taken its chance to settle some things on its own terms. Facebook appears to be suggesting that it will leave.
Whether those positions hold for long will be watched by governments around the world. Liberal and illiberal regimes have other urgent issues they wish to take up with the platforms, such as local taxation, data protection and privacy, and the platforms’ compliance with censorship and “fake news” laws.