Google hits out at Australian media code as US reviews laws

Search advertising giant Google has hit out at Australia’s media bargaining laws, telling a US government department the legislation would be unworkable and harm democracy in the world’s largest economy.

Australia’s news media bargaining code came into effect last February. Google initially fiercely opposed the code, but it eventually relented with chief executive Sundar Pichai describing the laws to this masthead as “the right construct” allowing it to support news publishers.

However, in a submission to the US Copyright Office, which is reviewing the country’s media laws, the search giant indicated it is still strongly opposed to the framework of paying publishers for the ability to link to their news stories.

Google says the news media bargaining code should not be replicated in the US.Credit: Bloomberg

“While no digital platform has been designated under the code at this stage, we believe that it should not be replicated,” the submission says.

“The ability to link freely is a key feature of the free and open web. Changing that would not only negatively impact the economic model that stems from it, it would force information to be consumed in a particular manner, favouring a narrow range of sources for the diffusion of knowledge, and thereby undermining democratic discourse and media diversity.

“In addition, the primary benefactors of such a code would be a small number of incumbent media providers - stifling further media diversity.”

Facebook’s submission to the US Copyright Centre also indicated an unwillingness to introduce the legislation outside of Australia.

“News publishers are in control over what to post on their Facebook Pages, and choose how to leverage Facebook services based on their specific business needs,” it said.

“Many established and small media operators use Facebook as a free means to reach an existing audience or an audience that they may previously not have had access to.”

The media bargaining code was legislated in an effort to force Google and Facebook to pay eligible large and small news publishers to display articles in the search engine and “newsfeed”. It was introduced after the competition regulator found there was an imbalance of bargaining power between media companies and the digital platforms.

Facebook was so concerned with the introduction of the code that it withdrew all news from its platform in Australia, while Google threatened to withdraw its search engine from the market. The main concern was that the new laws would set a precedent and potentially force Google and Facebook to pay millions of dollars to publishers all over the world.

But after high-level negotiations between Mr Pichai, Facebook CEO Mark Zuckerberg and the federal government, both tech platforms agreed to operate in Australia and strike deals with news outlets.

The loophole was that the new laws would not apply - or ‘be designated’ - to either Google or Facebook as long as they went to the effort to negotiate commercial deals with local news publishers for use of their content. Being designated under the code means Google or Facebook would be legally required to enter negotiations with eligible publishers or risk fines of up to 10 per cent of Australian revenue.

Treasury will review in March whether Facebook and search giant Google have struck enough agreements and, if not, implement legal measures to force the companies to co-operate.

Google has signed deals with news outlets including News Corp Australia, publisher of The Australian, The Daily Telegraph and The Herald Sun, Nine Entertainment Co, publisher of this masthead and The Australian Financial Review, Seven West Media, Guardian Australia, national broadcasters the ABC and SBS and small news outlets such as Junkee Media and The Saturday Paper.

Facebook has signed deals with most of these media companies, but is refusing to engage with SBS or not-for-profit organisation The Conversation.

Some small news outlets are still concerned that Google and Facebook have only struck deals with major or notable outlets to avoid designation. This was exemplified in a submission made by a small group of independent publishers to a government inquiry into regional newspapers.

The Public Interest Publishers Alliance (PIPA) - which includes the Naracoorte News, The Star Observer, City Hub Sydney, The Australian Jewish News, Time Out and The Greek Herald - said they are struggling to do deals with the tech platforms despite being eligible under the laws.

They said that without designation of Google and Facebook, there was no way to secure payment. “Our status as an eligible news business, determined by the regulator applying the law in the Code, does not hold any sway when it comes to our collective bargaining negotiations with Facebook or Google,” the submission said.

Google and Facebook were approached for comment.

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