Here’s some news, Meta – you’re defying Australian law

Last week, Meta announced that it will not do further deals with Australian media businesses. Meta is in effect saying: We want to do business in Australia but we do not want to comply with the law of Australia.

That law, of course, is the News Media Bargaining Code – a detailed series of provisions added to the Competition and Consumer Act by the Morrison government in 2021. We took this action to deal with the problem of digital platforms such as Facebook (owned by Meta) and Google (owned by Alphabet) using content generated and paid for by Australian news media businesses, without paying for that content.

All the news that’s fit for Facebook: Meta is opting out of doing deals with Australian news media businesses. Credit: .

Our action produced the desired result. Both companies entered into commercial deals with Australian news media businesses; by October 2022, Meta had done 13 and Alphabet 23. Under these deals, an estimated $200 million will be paid to Australian news media businesses; many have employed additional journalists as a result.

But despite the success we had, it is not at all surprising that Meta is once again seeking to throw its weight around. There has been a consistent pattern of such behaviour from these global digital platforms.

Spain, for example, passed a law in 2014 compelling Google to pay local publishers for content. Google responded by shutting down Google News in Spain.

So when the Morrison government announced, in April 2020, that we intended to legislate a mandatory code to deal with these issues, we knew there was a rocky road ahead.

And so it proved to be. Google threatened to withdraw its search service from Australia. And Facebook, notoriously, shut down the Facebook pages of many Australian news media businesses on February 18, 2021.

But through all of this the Morrison government stood firm – and we carefully designed and legislated a code which has real teeth.

We did so to address three problems. First, it is a competition policy problem that Facebook and Google have so much market power in the contest for digital advertising. When a video clip from a television news service like Nine News appears in a Facebook feed, or a Google search leads to an article in The West Australian newspaper, that content is helping Facebook and Google to attract people to their platforms. But before the code took effect, Facebook and Google simply refused to pay for this content.

Second, it is a problem of media policy. If incumbent news media businesses are losing eyeballs and in turn advertising revenue to Facebook and Google, then they become weaker financially, they employ fewer journalists, stories become shorter and less detailed, investigative journalism is harder to fund, and media outlets start to go out of business.

Third, then, it is a problem for our democracy, because of the vital role played by a diverse and independent media sector in a liberal democracy.

It is important to understand how the code works – and why Meta is subject to the code as long as it chooses to do business in Australia and collect advertising revenue from Australian advertisers.

Under the code, if you are a designated digital platform and you receive a request from a registered news media business to commence negotiation, you must comply. (To date, more than 30 businesses have been granted the status of “registered news media business” by the regulator, Australian Communications and Media Authority.)

If a news media business is not satisfied with the outcome of the negotiations, the next step is mediation. But if that still does not produce an outcome, then the registered news media business can initiate a compulsory arbitration process to determine the amount of remuneration that designated digital platforms must pay them.

To date, neither Facebook nor Google have been “designated” under the code. Designation is a decision made by the treasurer, on the basis of advice from the ACCC, applying specified criteria. The first criterion will be easy to establish: is there a significant bargaining power imbalance between the digital platform and Australian news businesses?

The second criterion is whether the digital platform has done deals with news media businesses, in turn helping keep the Australian media sector sustainable. If a platform does not do deals, then the treasurer has the power to designate it – meaning Australian news media businesses can then require negotiation and, ultimately, arbitration.

We designed the code this way to give Meta and Alphabet a strong commercial incentive to do deals – and so far they have. But we also designed it so that if they do not do deals, the strong powers in the code can be activated.

It is clear, then, that the code gives the Albanese government the tools it needs to deal with this problem.

Meta’s announcement was predictable given similar announcements in the UK, France and Germany in September last year. The Albanese government will need to respond in a focused and decisive fashion.

The code contains the tools needed to maintain a diverse and vibrant media sector. The sustainability of Australia’s media sector will depend in significant measure on the preparedness of the government and sector participants to use those tools.

Liberal MP Paul Fletcher was communications minister in the last government; he worked with treasurer Josh Frydenberg and prime minister Scott Morrison to develop the News Media Bargaining Code.