News key for tech titans: ‘so pay up’, says Rod Sims

Rod Sims has made it clear Google and Facebook profit from original journalism.

Australian Competition & Consumer Commission chairman Rod Sims. Picture: Zak Simmonds

Rod Sims has made it clear Google and Facebook profit from original journalism, dismissing the tech ­titans’ claims they struggle to make money from media content, as he outlined details of a new compulsory code.

The Australian Competition & Consumer Commission chairman on Tuesday released a “concepts paper” for the new bargaining code between news media companies and Google and Facebook that would force the tech giants to pay for original news content.

Crucially, Mr Sims, who led a year-long review into the digital platforms’ impact on other media, said he was of the view there was “clearly value” in news for Google and Facebook.

He said this value went ­beyond revenue from advertising placed near news stories.

“Clearly the biggest benefit is not the direct benefit, which is the ads shown against news items. That’s the really, really small benefit,” Mr Sims said.

“The bigger benefit is the indirect value that Google and Facebook gain from having news on their platform.”

Last month Treasurer Josh Frydenberg instructed the ACCC to draw up a compulsory code of conduct to regulate payments ­between Google and Facebook and media for use of content.

News Corp Australasia chairman Michael Miller last week said that expert estimates on the amount of revenue owed to news organisations could be as high $1bn, while Nine Entertainment chairman Peter Costello estimated it could be $600m.

Mr Sims said he could not “quantify precisely” how much news could be worth but made it clear the value went beyond immediate advertising revenue.

“A bigger benefit is the indirect value that Google and Facebook gain from having news on their platform. You can calculate that in a range of ways by saying, look, we know it’s more than zero, but we don’t think it’s any more than another number.”

Google Australia managing director Mel Silva recently claimed that company “doesn’t make any money when a user clicks on a news search result”. He said news.google.com had no ads, nor did the news results tab on the search page.

In the same statement Google compared itself to a newsagent, a claim that was rubbished by NewsMediaWorks CEO Peter Miller, who pointed out that newsagents paid for content.

Google recently reported ­advertising revenue of $4.3bn from the Australian market alone, up from $3.7bn a year ago.

Mr Sims said there could be several models for payments to media companies, including a per-click model, but he indicated “that would be tricky”.

“The other way to look at it, which is also a legitimate way … just working out what’s the cost of journalism and what that cost should be relevant to the digital platform,” Mr Sims said.

The options paper says the mandatory code will apply at least to Facebook’s News Feed and Google Search. It could be ­extended to cover Instagram and WhatsApp — both owned by Facebook — as well as hardware services such as ­Google Assistant and ­Android TV.

Publishers could negotiate individually with the tech giants, or bargain collectively to reach a more favourable outcome.

The media companies could also join a collective boycott and ditch Facebook and Google, though the paper says such a move would “damage news businesses and harm users”.

Mr Sims said Google and Facebook had the ability to pit media companies against each other, meaning some could be blocked from the platforms, causing “a real market failure issue that could do great damage to journalism”.

A spokesman for News Corp, publisher of The Australian, welcomed the ACCC paper and Mr Sims’ words, saying: “In particular, we welcome the focus on the two key issues for the code, ensuring payment for news media content and addressing the imbalance in bargaining power. We look forward to continuing our active participation in these consultations to address this imbalance between the digital platforms and news media.”