Tech giants forced into media deal
Josh Frydenberg says news media bargaining code will ensure ‘rules of digital world mirror the rules of physical world’.
Google and Facebook will be forced to pay for news content and share data collection methods with media companies and public broadcasters, under world-first laws that will deliver funding lifelines for community, regional and national outlets.
Josh Frydenberg said the government’s mandatory news media bargaining code was designed to level the playing field and ensure the “rules of the digital world mirror the rules of the physical world”.
The Treasurer, who will put legislation into parliament on Wednesday giving him the authority to designate other companies under the code, including YouTube and Instagram, warned of the need to arrest a free-fall in traditional advertising revenue sparked by digital disruption.
Mr Frydenberg said for every $100 of online advertising spend, $53 went to Google, $28 to Facebook and $19 to other participants. “This is a huge reform. This is a world first and the world is watching what happens here in Australia,” the Treasurer said.
“Our legislation will help ensure that the rules of the digital world mirror the rules of the physical world.
“That has been our intention all along … to sustain our media landscape here in Australia.”
After attacking the draft code Mr Frydenberg released in July, Google and Facebook secured concessions in the legislation. The government inserted a “two-way value exchange” clause factoring-in benefits media companies gained from “having eyeballs on their product”.
News Corp Australia, which publishes The Australian, said the code was a “significant step forward in the decade-long campaign to achieve fairness”.
News Corp Australasia executive chairman Michael Miller said he was more “focused on the outcome of negotiations than the code itself”. He added that the two-way value exchange was a concession.
“I dare say we have differing views of that value," Mr Miller said. “They do push traffic to our sites, but it’s our content which drives people to their sites. In many ways, it’s a co-dependency.”
A Nine Network spokeswoman said: “The continued concessions to the digital platforms only entrench both their monopoly power and the significantly unfair imbalance in regulation.
“These companies pay little or no tax, contribute little and often negatively to our culture, and employ no creative teams.”
Communications Minister Paul Fletcher said the ABC had pledged to redistribute revenue raised from commercial deals with Google and Facebook into its regional journalism operations.
“ABC and SBS are included,” Mr Fletcher said. “That’s so they have the benefit of the remuneration provisions of the code. I should add that the ABC has given the commitment that revenue it earns under the code, it will dedicate to increased regional journalism.”
After the government released the draft code in July, Google Australia managing director Mel Silva criticised it as a “heavy-handed intervention” that threatened to hurt services “we can deliver to Australians”. Facebook said the code could reduce its “investment in the news ecosystem in Australia”.
A Google spokesman said on Tuesday the company had not “seen the revised code yet”.
Facebook Australia managing director Will Easton said the company would review the legislation when it was released on Wednesday.
The enforcement regime, which has received in-principle support from Labor and will initially apply to Facebook News Feed and Google Search, is the result of three years of work by the Australian Competition & Consumer Commission and Treasury.
Mr Frydenberg, who will review the code after one year of operation, said that, if the digital platforms were unable or unwilling to reach a commercial agreement, a final offer arbitration model, led by a panel of up to three, would kick in.
“This final-offer arbitration model will allow for what is called two-way value exchange,” the Treasurer said. “The money can only go one way: the money can only go from the digital platforms to the traditional news media businesses. But the arbiters need to take into account the benefits that traditional news media businesses get by having eyeballs on their product.”
Mr Frydenberg and Mr Fletcher called on media and tech companies to finalise deals outside the mandatory bargaining code and flagged that deals were already close to being struck.
Under the proposed laws, which will be referred to a Senate committee, two parties that reach agreement outside the code can “turn off” key elements of the governing rules. Google and Facebook must meet minimum standards including giving 14 days’ notice to news businesses of algorithm changes and explain the types of data provided to media companies.
Mr Fletcher said that, following discussions with the tech giants, the government had agreed to change the period of notice of algorithm changes from 28 to 14 days.
The code imposes obligations on Google and Facebook to ensure they cannot retaliate against media businesses or disadvantage content by favouring one company over another.
Mr Fletcher said the intention of the code was to support the long-term diversity of Australian media and address a “fundamental imbalance” in bargaining power.
Opposition treasury spokesman Jim Chalmers said Labor was prepared to “support, in principle, efforts to ensure that the playing field is levelled between the tech platforms and the news media organisations”.
ADDITIONAL REPORTING: DAVID SWAN
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