Australia is all set to introduce a law that would force companies like Google and Facebook to pay media companies for their news content. As chairman of the Australian Competition and Consumer Commission noted — “There is a fundamental bargaining power imbalance between news media businesses and the major digital platforms, partly because news businesses have no option but to deal with the platforms, and have had little ability to negotiate over payment for their content or other issues. We wanted a model that would address this bargaining power imbalance and result in fair payment for content, which avoided unproductive and drawn-out negotiations, and wouldn’t reduce the availability of Australian news on Google and Facebook.”

And while there is considerable euphoria surrounding this bill, there is also good reason to exercise caution. So we thought we could look at this more closely and see how it might impact the media ecosystem in Australia. Possibly even the world?


The News Media and Digital Platforms Mandatory Bargaining Code

So right now the code mandates both Google and News Publishers to negotiate the terms of payment. And in the event, they can’t reach an agreement within three months, both parties submit a single final offer and an arbitrator appointed by the Australian Communications and Media Authority (ACMA) picks the offer closest to its estimate of fair value.

However, as Google notes — “With the media code, some of the amounts being suggested by news businesses about how much we should pay to provide links to their stories defy commercial reality. One news business has already claimed digital platforms should pay $1 billion every year, despite the fact that only 1 percent of all searches by Australians last year were seeking news — equating to around $10 million dollars in revenue (not profit). Clearly, both sides have very different ideas of what the prices should be — and asking the arbitrator to pick a ‘final offer’ is an extreme way of resolving that.”

Besides, arbitrators are likely to be sympathetic to media organizations. And we are saying this because there seems to be no real attempt to quantify the benefits Google adds to new organizations. Currently, the company sends traffic to news websites for free and while nobody in their right mind would suggest that news publishers pay to be featured on Google, it does seem a bit weird that there is absolutely nothing in the document that suggests Google does add some monetary value.

So what’s the recourse here?

Well, back in 2014, when Spain introduced a law that forced news aggregators like Google to pay for headlines and news snippets featured on its website, the company simply removed Google News from the country and pulled all content from Spanish publishers off their news services globally. So technically one might be inclined to think Google can simply walk away from their obligations by pulling all Australian news publishers from the site.

Drop their content and refuse to pay — That’s the mantra.

However, Australian lawmakers had anticipated such an eventuality.

As it stands, if Google and Facebook show any content from any “news publisher” in the world, then the code mandates them to show all news content of businesses included in the code (primarily news websites operating in Australia serving the Australian audience).

It’s confusing, we know. But read that once again.

It says — If Google were to show the Australian public a single article from Finshots, for instance, then they must not discriminate against other Australian news businesses included in the code. And that means if Google refuses to pay these news websites by dropping them from the search results, then they must also drop all content from all news publishers anywhere in the world whilst catering to the Australian public. As Google puts it — “That means we’d have to undertake a mass cull of content globally to stop them being visible to Australians — we’d have to remove all foreign newspapers, bloggers, YouTube citizen reporters, but also sports reporting, discussions of global health issues, tweets about current events, and literally endless other types of content from all sources around the world.”

More importantly, there is the more pressing matter of who benefits from these regulations. Currently, you’ll only be eligible to claim benefits under the code, if you predominantly produce ‘core news’ and you have annual revenues of at least $150,000 in the last financial year or three of the last five. So if you’re an up and coming news website trying to disrupt the status quo, you won’t be inducted into the code.

Also, note that in addition to the compensation, the regulator has also mandated Google to share sensitive information about “changes to their search algorithms” 28 days in advance. And I am pretty sure you can see how that might affect an independent journalist sitting somewhere in the outback. As Google notes 

“If we are required to give one group special advice about how to get a higher ranking, they’d be able to game the system at the expense of other website owners, businesses and creators, even if that doesn’t provide the best result to you. If we want to keep our algorithms fair for everyone, we would have to stop making any changes in Australia.”

And look, once again, this is not to suggest that Australia shouldn’t be helping news media organizations in the country. Any functioning democracy needs independent journalists and the government should do everything in its power to assist them in these tough times. But forcing Google and Facebook to abide by a lopsided code might not achieve this objective. It might, in fact, exacerbate the problem if Google simply ceases to offer its services. Hell, any potential benefits will probably come at the cost of inconvenienced Australian consumers, who would be forced to settle for suboptimal search results.

So while there is some merit in asking Google to pay publishers, it might not always be prudent to corner them into accepting the terms of a lopsided arrangement.

What do you think? Should Australia go ahead with this code?

Or should they exercise restraint?

Let us know your thoughts on Twitter.

Share this Finshots on WhatsApp, Twitter, or LinkedIn.