“Indirect Value” The Focus For ACCC As It Prepares To Charge Google And Facebook For News

“Indirect Value” The Focus For ACCC As It Prepares To Charge Google And Facebook For News
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Australia is one step closer to enacting a world-first bargaining code between tech giants and media businesses, which will see the likes of Google and Facebook ‘pay for news’.

The ACCC yesterday released an options paper outlining different ways the mandatory code could work.

It came less than a month after the Federal Government announced it was stepping in to enforce the agreement, after negotiations for a voluntary code were deemed to have fallen short.

The consultation period will take place between 19 May to 5 June 2020.

“The proposed bargaining code is intended to address bargaining power imbalances between Australian news media businesses and digital platforms in order to ensure that commercial arrangements between these parties do not undermine the ability and incentives for news media businesses to produce news for Australians,” the paper suggests.

While the paper acknowledges this ‘imbalance’, it is likely there will be some disagreement as to what this actually entails.

Google has repeatedly pointed to the fact it does not make any money when a user clicks on a news search result, rather only when that user clicks on an ad.

The tech giant also does not serve ads on news.google.com or the news results tab on the search page, with the majority of its ad revenue – which was $4.3bn in Australia in 2019 – coming from search.

However, ACCC chair Rod Sims insisted Google still gains monetary value from its display of news content.

“Clearly the biggest benefit is not the direct benefit which is the ads shown against news items. That’s the really, really small benefit,” Sims said in comments published by the Herald.

“The indirect value that Google and Facebook gain from having news on their platform. I’m not going to give numbers now, that is something we will come to later.”

Sims also suggested sharing news content boosts the overall value of platforms like Facebook and Google.

“But there’s other benefits from having news media. One is that you get better content. It’s in the platform’s commercial interest to have quality,” he said.

How much will Google and facebook pay?

With “indirect value” a focus for the ACCC, there are now seemingly questions over how it will formulate a monetary value for Facebook and Google to pay Australian media companies.

The options paper outlines four potential payment models, including an option for individual negotiation, a collective bargaining agreement, a collective boycott or ‘all in/none in’ approach or a collective licensing approach.

“The mandatory bargaining code could include mechanisms requiring parties to take certain prescribed factors into account when conducting negotiations regarding remuneration,” the ACCC says in the paper.

Again, the notion of indirect value looks set to create some murkiness when it comes to the negotiations.

“The ACCC notes that the estimation of the indirect value of news by any party is likely to be highly complex and contestable, due to the difficulty of accurately quantifying the increased use of services offered by each of Google and Facebook resulting from the availability of news content,” says the ACCC.

“Nonetheless, it will be important that consideration of the value news provides to each of Google and Facebook does not neglect indirect value, particularly as indirect value may greatly outweigh direct value on some of the services of these digital platforms.”

 

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