Media bargaining code will protect journalism

Will the code result in differential treatment of Australian media companies by Google? Picture: AFP

Google Australia recently released its update to its controversial “open letter to Australians”. While appearing to strike a more conciliatory tone, it is important to revisit why the Australian government, on the recommendation of the Australian Competition & Consumer Commission (ACCC), has proposed the Mandatory News Media Bargaining Code.

The coronavirus pandemic highlights the need for Australians to be able to access Australian news content from journalists that is factual and promotes legitimate and sensible consideration of important issues for all Australians. The government is right to seek to ensure that media advertising revenues support quality journalism and not fake news.

There is no doubt that the ACCC’s proposed mandatory bargaining code for Australian media companies and the digital platforms Google and Facebook has attracted significant attention around the world. Those in favour speak equally as passionately as those who do not support the code.

But before looking at any particular provisions of the code, each discussion needs to start with considering why it is needed. In its groundbreaking digital platforms inquiry the ACCC found that there is a serious and systemic bargaining power imbalance between Australian media companies and the digital platforms, Google and Facebook. The bargaining power imbalance has significantly contributed to the fall in advertising revenues of traditional media businesses, as those revenues have been diverted to the platforms themselves. In other words, this bargaining imbalance has created a market failure.

Why should this matter? In other words, why is the proposed regulatory intervention both necessary and appropriate? It is not the business of government to intervene to prop up struggling businesses that do not adapt to changing conditions.

However, it matters here because, as the revenues of traditional media businesses have fallen, this has affected their ability to provide news and journalism to Australians. New digital-only publications have not arisen to fill this void — and this is certainly not a void filled by either Google or Facebook themselves.

The provision of quality news and journalism is a necessary ingredient for healthy public debate and for shining a light on issues of public concern. Public debate and public scrutiny in turn is a necessary ingredient in ensuring that we have a healthy and effective democracy in Australia.

Looking at the code from this perspective, it is very clear it is needed. The platforms cannot seriously argue that a voluntary code is more appropriate — neither Google nor Facebook was prepared to negotiate such codes here, which is why the government has moved to a mandatory code.

International examples also demonstrate the poor track record of the platforms in this regard. In France, where Google has been ordered to negotiate with French media companies, negotiations continue to drag on with no resolution in sight. As a consequence, those media companies are also looking to regulatory intervention to ensure that Google is required to participate in mediation or arbitration.

Google has made much of the disparity between its views on what value it provides to news publishers and the views of those news publishers. However, there is nothing in the code which prevents Google making submissions as to what media companies should appropriately be paid, nor the publishers providing their contrary view.

It is a question for the arbitrator to determine which is the more reasoned and appropriate value proposition, having regard to the requirements of the code. The stark choice that is provided is intended to ensure that the proposals are well reasoned and supported by facts.

The code appropriately recognises that Google does not need to provide details of its algorithms to media companies. Nonetheless, Google has protested that advance warning of the impact of changes to its algorithms would unfairly advantage large news corporations by giving them notice how they may provide content to achieve better rankings.

The ACCC has already recognised this, but there is nothing to stop Google from providing such advance warning to large and small businesses alike, thus satisfying its code obligations but also addressing this perceived harm.

In relation to Google’s latest open letter, Google has said “(We) know how important it is that your data is safe.” Most Australians, and the ACCC, couldn’t agree more. That is why the ACCC has commenced not one, but two, cases against Google alleging it has engaged in misleading and deceptive conduct in relation to how it collects the data of Australians.

Google has protested strongly against the provisions of the code which would require Google to tell news businesses, in the words of Google, “how they can gain access” to the data of Australians.

What the code will in fact require is that Google tell media companies about how it actually already gains access to the data of Australians. That transparency matters — both media companies and individuals should be entitled to know how Google collects even more personal information though interaction with the news content of Australian media companies.

In conclusion, will the code result in differential treatment of Australian media companies by Google? Yes, it will. But the more important question is whether such differential treatment is appropriate because it promotes the production of Australian journalism and quality news content. The answer to that question is a resounding yes.

Dave Poddar is a partner and head of antitrust with Clifford Chance.