The Australian Competition & Consumer Commission will take note of a submission from the US Trade Representative on its media bargaining code, but the source of the comments will carry less weight than if it came from an actual competition policy regulator. The USTR is akin to Austrade, with a stated mandate to support US companies offshore, and any concerns will be read in that light.
While the USTR represents the US government, the submission does not carry the same weight as, say, a US Justice Department or International Trade Commission submission.
These two organisations are fellow competition regulators and the ACCC has a close working relationship with them.
They handle US-based Section 155 discovery notices for the ACCC and conduct any interviews necessary for any competition breach investigations.
Their views on the code would carry some weight, but the USTR is seen more as a trade lobby service than a hard-nosed competition regulator.
The US Justice Department, along with other foreign governments like France, are also working on its competition breach cases against Google, as are several US state governments.
The state of Arizona has filed an action against Google mirroring the location data action taken by the ACCC and alleging misleading conduct.
The ACCC is reviewing all comments on its draft code as it prepares for the final version which is due to be tabled in parliament next month.
The USTR submission will be considered in this context but is viewed more as lobbying from the platforms than pivotal legal views.
The global head of Google, Sundar Pichai, has recently spoken to Prime Minister Scott Morrison to express his concerns, as has Facebook’s Joel Kaplan with Treasurer Josh Frydenberg.
The digital platform behemoths are concerned about the federal government’s platform code in part because it could serve as the basis for international codes governing compensation for media content the platforms use.
The content helps drive traffic on the sites and also reader data which the platforms use as part of their lucrative digital advertising businesses.
US platform giants Google and Facebook have both threatened to drop news services from their platforms if the government proceeds with the digital platform code. These threats were dismissed by Treasurer Josh Frydenberg.
The platforms’ main issues with the code are with the mandatory 28-day notice period to any changes to their algorithms which affect Australian media, and the wording of the rules around arbitration.
Facebook claims it redirects readers to newspapers from its platform to Australian media sites and these referrals are worth $200m a year. It wants the arbitrator to take this into account when working out what compensation if any is paid to the news organisations for their content used on the platform.
The ACCC is considering changing the code to meet this concern on two-way flows.
Google has a market value of $1.5 trillion and Facebook $1.2 trillion, which compares with the entire value of the Australian Stock Exchange at $2 trillion and Australia’s GDP, measuring changes in economic value, which is also $2 trillion.
Threats to not use Australian news services do two things: they highlight the value of news to the platforms; and are ultimately self-defeating because less traffic and data means their digital advertising will be less compelling. Google and Facebook control over 60 per cent of global digital advertising.
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