Google, Facebook profits won't be wiped out by publishers' payments: ACCC

Australian Competition and Consumer Commission boss Rod Sims has said the amount publishers will receive from Google and Facebook will not completely wipe out the tech giants' profits, but will take into account how much journalism costs to produce.

Local media companies have been searching for a ball-park figure that could give them guidance on how much they can expect to receive from the tech titans for use of their news content under a new code of conduct announced by Mr Sims one week ago.

The ACCC wants Google and Facebook to pay up. Credit: Paul Rovere

Nine Entertainment Co chairman Peter Costello and News Corp executive chairman Michael Miller have previously said publicly they expect somewhere between $600 million and $1 billion, but negotiations taking place overseas between the platforms and publishers would indicate that if the tech giants have their way, the figure will be significantly smaller. Nine is the owner of this masthead.

Media consultant Didier Guerin, who is familiar with the negotiations taking place in France, said Google had offered more than 300 publishers just 30 million euros ($49.2 million). In France, Google, Facebook and Twitter must remunerate publishers of online sites for use of articles and photos.

"Google said that the amount of content that it uses from publishers generates about 20 million euros in revenue," Mr Guerin said. "They went into negotiations and said 'we want to be fair' and offered €30 million to the entire industry. The publishers (about 300) were very unhappy. They came back with a figure of €120 million."

Under the ACCC's proposed code Google and Facebook will have three months to negotiate revenue-sharing deals with media companies before an independent arbitrator is called in to impose a compulsory arrangement. Publishers will be able to negotiate directly with the tech giants or work together in groups to receive payment, but Mr Sims and Communications Minister Paul Fletcher have not put a dollar figure on the total amount Google and Facebook are likely to pay.

However, Mr Sims said it would not wipe out the tech giants' profits. Google Australia posted a 2019 a pre-tax profit of $134 million while Facebook Australia's profit was $22.7 million in 2019.

"When it goes to arbitration, there's three things the arbitrator takes into account," Mr Sims said. "One is the direct, but much more importantly, the indirect value of media on the platforms and I realise that is complex. Secondly, the cost of journalism, the cost to produce the media content. And thirdly, don't put an undue burden on the platforms.

"The news media businesses shouldn't be asking for Google and Facebook to cover all their costs. Google and Facebook shouldn't be insisting they cover none of the costs, so it is something in the middle. Likewise, you shouldn't be asking Google and Facebook to pay something that completely wipes out all of their profit."

Communications Minister Paul Fletcher has brushed off suggestions the tech giants will leave the market and expects them to "comply" with the law. In some countries where legislation has been introduced, Google has retaliated by removing the 'News' function from its service or has stopped publishing small excerpts of press articles below web links, also called snippets.

"Having worked on a number of issues where we have sought to establish a legal framework, which digital platforms operating in Australia are required to comply with, the result has been that those companies comply with the law in operating in Australia," Mr Fletcher said. "Things get said from time to time during the process but when a law is passed the experience has been they comply with the law.

"So examples like Spain and Germany where essentially Google ceased providing click through to particular publishers because it did not accept the legal consequence under laws that have been made in those countries that there should be a payment ... the ACCC has extensively considered how the market behaviour these issues have generated in other markets and its advice to the government is that this is a model which it believes will work."