Government Reveals Its Plan To Make Facebook And Google Pay For News

Facebook and Google will have to negotiate payments to Australian media businesses “in good faith” under the draft of the new mandatory bargaining code.

Note: This story has been updated to include responses from Nine, News Corp and Google.

Treasurer Josh Frydenberg [feature image] unveiled the new code on Friday morning, which includes the new remuneration scheme and additional protections for local media businesses.

“There is a very unequal bargaining position between Australian news media businesses that produce original content and digital platforms,” said Frydenberg. 

“What we have sought to do this to create a level playing field. To ensure for Australian news media businesses, and that when they create original content that they are fairly paid for it.”

Under the draft code, news businesses and digital platforms will be given three months to strike a deal through formal negotiations.

If the parties cannot come to a decision within this three month period, an independent arbitrator will be called upon to reach a decision.

This will be done within 45 days.

There is also significant punishments is these companies fail to comply with the proposed legislation.

Infringement notices will be handed out by the ACCC for breaches to the code, with maximum penalties up to $10 million per breach, or three times the benefit obtained, or 10 per cent of annual turnover -whichever is greater.

The code follows the ACCC’s Digital Platforms Inquiry, which recommended Google and Facebook should be made to pay media businesses for news content.

“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,” ACCC Chair Rod Sims said.

“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.”

The legislation is expected to be introduced to parliament this year.

Beyond the new payment scheme, the code also includes new protections for media businesses.

Google and Facebook will now have to notify media businesses of any algorithm changes that could impact how content is distributed within 28 days.

Public broadcasters, such as the ABC, will not be included in the payments, although Frydenberg said these businesses would “benefit from the non-payment aspects of this code”.

“A watershed moment”

News Corp – which has been particularly vocal about the need for tech giants to pay for news content – congratulated the government on the action.

“While other countries are talking about the tech giants’ unfair and damaging behaviour, the Australian Government and the ACCC are taking world-first action. I congratulate them for their leadership,” said News Corp Australasia executive chairman Michael Miller.

“The tech platforms’ days of free-riding on other peoples’ content are ending. They derive immense benefit from using news content created by others and it is time for them to stop denying this fundamental truth.

“The ACCC’s draft Code of Conduct is a watershed moment; it can force the platforms to play by the same rules other companies willingly follow and it ultimately means they will no longer be able to use their power to walk away from negotiations with news creators.”

Nine – which has previously suggested Facebook and Google should be forced to pay around $600 million a year to media companies – also welcomed the proposed changes.

“Nine welcomes the fact that the ACCC and the Government continue to push the agenda forward by recognising the importance of the regulatory and bargaining imbalances that exist between Australian media organisations and the dominate global digital platforms,” a company spokesperson said.

“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.”

Google hits back

While Nine and News Corp were satisfied with the government’s announcement, Google shared its disappointment in the outcome.

“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,” said Google Australia and New Zealand managing director Mel Silva.

“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 $218 million.

“It sends a concerning message to businesses and investors that the Australian Government will intervene instead of letting the market work, and undermines Australia’s ambition to become a leading digital economy by 2030. It sets up a perverse disincentive to innovate in the media sector and does nothing to solve the fundamental challenges of creating a business model fit for the digital age.”