$1b for journalism at risk in new warning over Google, Facebook

Former competition boss Rod Sims has warned of a $1 billion blow to journalism if Google and Facebook spurn the federal code that requires them to pay for Australian media content, amid fears that some digital giants want to abandon the scheme.

Three years after the landmark code was put in place, former treasurer Josh Frydenberg also backed the policy as a “blueprint for future negotiations” on commercial deals to invest in public interest journalism.

Josh Frydenberg (left) and Rod Sims. Credit: Wolter Peeters

The federal government is seeking new commitments from the digital giants to negotiate with Australian media companies on a second round of funding deals, while also bringing TikTok into the scheme because of its growing social media power.

But Facebook and its parent company, Meta Platforms, have clashed with Canadian authorities over a similar code and blocked news content in that country, which has fuelled concerns they will refuse to engage with the government and industry on the Australian code.

Sims said the news media bargaining code had to impose obligations on the digital giants because Google held monopoly power in search and Facebook was “extremely dominant” in social media, which highlights the need for the next round of deals to compensate Australian news providers.

“I expect the deals will get rolled over and I can’t see why they wouldn’t be,” said Sims.

“But if they’re not, then that’s a great loss to journalism in Australia. We need that model to continue so that journalism gets a fair payment for the content that is of enormous benefit to Facebook and Google.”

Frydenberg put the news media bargaining code in place three years ago after tense talks with Meta founder Mark Zuckerberg and Google chief Sundar Pichai, who both resisted the framework proposed by Sims in his then role as head of the Australian Competition and Consumer Commission (ACCC).

The law encourages Google and Meta to negotiate with Australian media companies to pay them for news content, but it gives the federal government the power to “designate” the digital giants and impose an outcome if they refuse to negotiate.

Sims estimated the commercial deals were worth $1 billion over four years to media outlets including the ABC, Guardian Australia, NewsCorp Australia, Seven West Media and Nine Entertainment, the owner of this masthead.

Frydenberg finalised the law after smoothing over concerns with Zuckerberg in talks in February 2021, days after Facebook blocked Australian news content and provoked a backlash from users who could not find updates about the pandemic or natural disasters.

“With the help of the ACCC we succeeded where others failed, delivering a significant economic reform and pumping millions of dollars into public interest journalism in our country,” Frydenberg told this masthead.

“When Australian Facebook sites were suddenly shut down one day, we were really out on a limb. But we held our ground, despite the threats, and won the day.

“In the end we achieved a commercial outcome that was a win-win, providing both a precedent and a blueprint for future negotiations.

“It’s vital for Australian journalism these deals are kept in place.”

Google and Meta signed a series of deals with media companies in 2021 to pay about $250 million a year for their content, but many of the agreements are due for renewal and the news providers want the government to maintain pressure for a commercial outcome.

Assistant Treasurer Stephen Jones, who has carriage of the issue, has made it clear he wants TikTok to be added to the scheme because of its growing influence. (Treasurer Jim Chalmers has recused himself from decisions on the code because his wife, Laura, is a journalist.)

If those deals are not renewed, the government would have to enforce the code by “designating” the social media companies and requiring them to pay for the content, but this could be subject to legal appeals that would delay an outcome. The code has not been tested in the courts.

Some media outlets are concerned that Meta executives are not engaging on future commercial deals and Facebook is “throttling back” the amount of news content on its platform, which means fewer click-throughs to Australian sites.

NewsCorp chairman Lachlan Murdoch and chief executive Robert Thomson have been in Sydney recently, heightening the company’s focus on Australian government regulation.

Meta responded to a request for comment by saying it did not have any updates on the code. It has agreements that expire toward the end of 2024 and said last year it would continue to engage on the issue.

Google has started talks with media companies on new deals after signing 70 agreements across 200 media outlets.

“We’ve been partnering with Australian news companies to strengthen quality journalism for two decades through our products, programs and commercial partnerships,” said Google government affairs director Lucinda Longcroft.

ABC managing director David Anderson emphasised the need to continue the agreements to fund journalism, saying the national broadcaster had hired 60 journalists in regional Australia from the funds that flowed from the digital platforms.

Assistant Treasurer Stephen Jones is leading the renegotiating of media deals with the social media giants.Credit: Steven Siewert

“That’s what’s at stake – I’m not saying that we’d pull the journalists out, but that’s what we did with the revenue and we’re very proud of having done that,” he said on Friday.

“For us, if that revenue was to disappear, it just creates a problem.”

Jones told this masthead he wants the digital companies to engage in new deals with the Australian industry.

“If anyone thinks that the government lacks resolve to back the code in, then they’re mistaken,” he said.

Meta chief executive Mark Zuckerberg resisted proposed framework on the media deal before the agreement was signed.Credit: AP

“We want to see a commercial negotiation, but we will use the powers that we have available to us if we need to. That’s not our preference but we are absolutely prepared to do that.”

Jones said social media companies had to accept the “social licence” to operate in Australia as good corporate citizens.

“These platforms are now an integrated part of the way people do their lives, their businesses, and the way Australians consume news and other media,” he said.

“It’s pretty simple proposition. If you’re using content you should make a contribution to the cost of producing it.”

Jones would not speculate on whether Meta would use the approach it is taking in Canada and try to shut down news on its platform in Australia.

“I don’t want to start speculating on what might happen. The government backs the code wants to work and will use the powers under the code if we need to.”

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