Media bargaining code: It’s time to talk as government meets Google’s demands

The federal government has met Google’s three intial demands to the ACCC. Picture: AFP

The federal government has acceded to the three demands Google lodged when the ACCC first released its draft media bargaining code in July, which means any further arguments are simply game-playing by the behemoth.

Back in July Google wanted recognition that it referred readers back to media companies, limits on the notification over algorithm changes and clarification that it doesn’t have to hand over data to the media companies.

On advice from the ACCC, as previously reported here, federal Treasurer Josh Frydenberg has agreed to all three suggestions, which arguably should satisfy the digital behemoths.

Frydenberg will table the code in parliament on Wednesday, clearing the way for it to pass into law in the first quarter of next year.

The inclusion of the ABC and SBS in the code should ensure the Greens and crossbenchers support the code, which opens the way for the behemoths to start negotiating with the media companies.

The bargaining code was only ever intended as a backstop to support the media companies, who go into the talks in a weaker negotiating position in arguments over compensation for the news content the behemoths use.

Along the way the behemoths have underlined their market power with threats to withdraw services from the Australian market or downgrade them, which simply proves the point.

Frydenberg has ignored the threats and stuck to a set of principles which on Australia’s lead are now being played out around the world.

The best outcome for the government, media companies and the behemoths is for commercial settlements to be reached but once the code becomes law there is now a backstop.

By way of background, the market value of all listed companies on the ASX is around $2 trillion, Australia’s annual GDP is $2 trillion, Google’s market value in Australian dollars is $1.6 trillion and Facebook’s is $1.1 trillion.

Google has reportedly opened talks with News Corp — publisher of The Australian — on a global basis but they have not progressed very far.

Now the ground rules are set, may the talks begin.

Cartel case continues

Over the past two and half years lawyers for ANZ, Citi and Deutsche have attempted to thwart the ACCC’s criminal cartel case against the banks, but it will now move to its rightful place in the Federal Court next year.

All going to plan, the longshot case launched at the height of anti-bank sentiment in Canberra will be heard in 2021, after kicking off in June 2018 with the Sydney magistrates court finding the evidence is capable of satisfying a jury beyond reasonable doubt.

The initial threshold is low and the real test comes now, with the ACCC trying to argue the joint venture exemption on the equity raising in question is not applicable.

Separately, as expected the High Court refused to hear the ACCC’s appeal against a full Federal Court ruling in favour of Aurizon’s sale of its east coast rail business to rival Pacific National, which means the latter now dominates national rail freight in Australia.

Qube had attempted to buy the asset but Aurizon went with the highest bidder, as you would expect.

Epic battle

Federal Court judge Justice Nye Perram has deferred a decision on the Apple-Epic Games case to hear Apple’s argument there is no jurisdiction in Australia because the contract between the two was signed in the US.

In Tuesday’s hearings Justice Perram made clear if Apple conducts business in Australia then Australian competition rules apply to its operations. This suggests Apple has a battle ahead of it to get this one thrown out before the abuse of the market power case is considered on its merit.

Epic boss Tim Sweeney is fighting Apple’s 30 per cent cut of app supplier revenues; his action prompted Apple to slash its fees to 15 per cent for small businesses.

The move affected 98 percent of app suppliers but just 5 per cent of Apple’s revenues.

Fond farewell

Timing is everything in business and sadly for Peter Coleman his close to a decade at Woodside came when the oil price slumped 70 per cent and consequently the company’s stock price has underperformed the market by 150 per cent. To put that in context, over the same period in total return terms Santos underperformed by 180 per cent and Oil Search by 184 per cent.

Coleman has not done so badly personally, having walked away with around $50m in compensation, including last year’s take of $5.5m.

The internal favourite to take his place when he leaves next year is chief operating officer Meg O’Neill, who is another Exxon alumni. Chairman Richard Goyder said the board would conduct a global search, which in his case involved looking all the way from City Beach to Peppermint Grove to Mosman Park in Perth’s western suburbs.

O’Neil lives within the precinct, so the only remaining question is her ability to match Coleman’s strength in dealing with Big Oil globally.

Goyder actually took the issue a bit further, saying the board was looking for someone approaching “Jesus Christ” who would create value for all stakeholders.

Big Oil means decisions take a long time and when COVID hit Coleman put a number of development decisions on hold, including the $17bn Scarborough project which is now timed for final investment decision (FID) in the second half of next year when the new boss will be in the chair.

The process is exhaustive, including detailed cost estimates and likely revenue from multi-year contracts, and it costs several hundred million dollars just to get to the FID stage.

Coleman will quit in the second half of next year when he would have served 10 years in the job which, he rightly said, was long enough.

His next post is more likely to be a non-executive one.

He followed the voluble Don Voelte into the job, and in his own words this meant something of an internal revolution was needed to break down the silos created by his predecessor and create a single company.

He has proved an excellent ambassador for the industry who isn’t afraid to speak his mind on issues like climate change where he wants more action.

The purists would say that’s fine for him to say, given gas is considered toxic in green circles.

Coleman has searched the globe looking for deals, but the reality is while no one would fault him for lack of action, the projects he is still preparing for FID are basically those uncovered before he arrived in the joint.

That said, Woodside is a better company than when he arrived with multiple growth platforms. All that is needed now is a rally in global oil prices.