Donald Trump sides with Big Tech on media code

The Trump administration has called on the Morrison government to drop its plans to force Google and Facebook to pay for news.

US government trade officials urging Australia to abandon the mandatory media bargaining code and instead develop a voluntary code of conduct. Picture: AFP)

The Trump administration has called on the Morrison government to drop its plans to force Google and Facebook to pay for news, with US government trade officials urging Australia to abandon the mandatory media bargaining code and instead develop a voluntary code of conduct.

In a letter to the Senate committee chair, Labor senator Alex Gallacher, under a letterhead from the Executive Office of the President, US assistant trade representatives Daniel Bahar and Karl Ehlers describe Australia’s draft legislation as “vaguely drafted and confusing” and state that, if implemented, the code could lead to “negative consequences for US and Australian firms, as well as Australian consumers”.

The Office of the United States Trade Representative runs trade negotiations on behalf of the President and recommends trade policy. “The United States respectfully requests Australia suspend plans to finalise this legis­lative proposal,” the letter reads.

“Broad reform calling for government intervention in the markets is a significant step. While it may be appropriate to investigate large technology platforms for specific violations of the law — ­including the antitrust and consumer protection laws — such a sweeping regulatory change seems premature without further study and input.

“Australia should again consider promoting a voluntary code of conduct supported by, as appropriate, targeted regulations developed in an open and transparent process, allowing participation by all relevant stakeholders.”

In a statement on Monday night, Josh Frydenberg said the ­Morrison ­government was “committed to proceeding with a mandatory code that is fit for ­purpose and which will achieve its intended objectives of addressing the bargaining power imbalances with digital platforms and media companies.

“This code, a world first, is the culmination of an 18-month review by the ACCC, as well as ­extensive consultation which canvassed a range of views and different approaches, including from Google and Facebook,” he told The Australian.

The letter follows intense private lobbying of the federal government from both Google and Facebook, which are both vehemently against the code. Google has threatened to exit Australia if the laws pass, while Facebook has warned it would ban the sharing of news on its platform. Top executives from both companies have met with Scott Morrison and the Treasurer in recent months.

The US agency had previously written to the Australian Competition & Consumer Commission detailing its list of concerns, and said recent amendments failed to adequately address them.

The world-first media bargaining legislation would force the tech giants into mediation with publishers over the value of their news, and hit them with fines of up to $10m if they ­fail to comply. The laws currently have broad support across Australia’s political spectrum.

As first reported by The Australian, executives from Google and Facebook are set to appear alongside news executives before a Senate committee to discuss the laws on Friday.

Mr Bahar and Mr Ehlers said in their letter that they had serious concerns with both Australia’s regulatory process and the substance relating to the code.

“(The code) still grants the responsible minister broad discretion to designate a company, and specific services that the company offers, as being subject to a highly prescriptive, burdensome code without having first established a violation of existing Australian law or a market failure, and is designed to exclusively target (as an initial matter) two US companies,” their letter reads.

They said they were “taken by surprise” by the ACCC’s abandonment of a mooted voluntary code, which was ditched after failed talks with the tech giants.

The ACCC was contacted for comment.