Australia Set to Force Google, Facebook to Pay for News Content

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The country's news media is dominated by Rupert Murdoch’s News Corp, Nine and Seven West Media, but U.S. tech giants take 76 percent of the digital advertising revenue generated there.

Tech giants Google and Facebook will be required to pay Australian media outlets for the news stories they publish under a new mandatory code of conduct on digital platforms to be implemented from July, the Australian government announced Monday.

If successful, Australia will be the first market in the world to force the tech companies to pay for locally generated content.

The development of a code of conduct is part of the Australian Government’s response to its Digital Platforms Inquiry report by anti-trust regulator the Australian Competition and Consumer Commission. The ACCC identified that Facebook and Google have each become “unavoidable trading partners for Australian news media businesses in reaching audiences online, resulting in an imbalance in bargaining power”.

The outbreak of COVID-19 and a subsequent collapse in revenues in Australian media, as well as a stalemate in negotiations between Google, Facebook and Australian media companies means the government has moved from requiring a voluntary code on the digital platforms to a mandatory code.

The Australian news media, worth $5.7 billion (AUS$9 billion) a year, is dominated by Rupert Murdoch’s News Corp, Nine and Seven West Media, but Google and Facebook account for 76 percent of digital advertising revenue generated in the country.

Writing in News Corp broadsheet The Australian, treasurer Josh Frydenberg said, “It is only fair that the search ­engines and social media giants pay for the original news content that they use to drive traffic to their sites.”

"We are very conscious of the challenges we face and that we are dealing with some of the most valuable and powerful companies in the world," Frydenberg added. "In France and in Spain and in other countries where they have tried to bring these tech titans to the table to pay for content, they haven't been successful."

"We believe this is a battle worth fighting. We believe this is critical for the future viability of our media sector and it's all about competition and creating a level playing field," he said.

“We are not seeking to protect traditional media companies from the rigor of competition or technological disruption. Rather, to create a level playing field where market power is not misused, companies get a fair go and there is appropriate compensation for the production of original news content”.

Nine CEO Hugh Marks said: “Now more than ever, it’s important the global technology companies take some responsibility for contributing to our society through financially supporting the creation of quality Australian content”.

The code, a draft of which should be ready for comment by the end of July, with legislation to follow, will address revenue sharing, the transparency of ranking algorithms, access to user data, presentation of news and penalties for noncompliance.

Facebook said it was “disappointed” with the decision.

“COVID-19 has impacted every business and industry across the country, including publishers, which is why we announced a new global investment to support news organizations at a time when advertising revenue is declining,” Will Easton, managing director of Facebook Australia and New Zealand said.

“We believe that strong innovation and more transparency around the distribution of news content is critical to building a sustainable news ecosystem. We’ve invested millions of dollars locally to support Australian publishers through content arrangements, partnerships and training for the industry and hope the code will protect the interests of millions of Australians and small businesses that use our services every day.”

News Corp Australia chairman Michael Miller said, “For two decades, Google and Facebook have built trillion-dollar businesses by using other people’s content and refusing to pay for it. Their massive failure to recognize and remunerate creators and copyright owners has put at risk the original reporting that keeps communities informed.”

“The decisive move by the Australian Government to go directly to a mandatory code of conduct between the international tech giants and Australian news media companies is a vital step that can help secure the future of Australian journalism,” he added.