Brave attempt to stop tech parasites destroying news

The Morrison government, on the advice of the Australian Competition & Consumer Commission, finally has taken decisive action to make Google and Facebook pay for the content they now steal from news organisations. The move will see Australia become the first jurisdiction to impose a legal regime, including financial penalties, around the wanton behaviour of these digital superpowers. The vast platforms have cannibalised and made stupendous profits from content produced by the news media. It has been a long haul to reform, following a landmark 18-month ACCC investigation. But the bad faith shown by amoral global tech giants in negotiations on a voluntary code of conduct with publishers, including our parent, News Corp Australia, was an open scandal. It was clear to ACCC chief Rod Sims a deal on payment for content, the fundamental issue, was not going to happen by the November deadline, nor was there any chance of meaningful progress at all.

The mandatory code, which will be legislated after a July deadline for the ACCC design process, would reverse the power imbalance and force the big tech companies to pay for the content, share their consumer data and be subject to rules on the rankings of news on their platforms. Writing in our commentary section on Monday, Josh Frydenberg diplomatically described the move as seeking to “create a level playing field where market power is not misused, companies get a fair go and there is appropriate compensation for the production of original news content”. We see it as restoring a semblance of the rule of law to the digital jungle, where the tech monsters prowl at every level — as apex predators, virtually owning the internet, as well as parasites invading the central nervous systems of creators in the content kingdom.

As the Treasurer noted, for every $100 spent by advertisers in Australia on online advertising, excluding classifieds, $47 goes to Google, $24 to Facebook and $29 to other participants. In Australia, this market is worth $9bn a year and has grown more than eightfold since 2005. In its historic report, the ACCC found more than 98 per cent of online searches on mobile devices are with Google, while Facebook has 17 million users who are connected to its platform for at least a half-hour a day. These untamed beasts, respectfully, have simply become too big to flail. What is their modus operandi, apart from inserting themselves between two consenting parties? Last year Mr Sims told this newspaper: “The business models of Google and Facebook rely on customers not actually understanding what data is being collected from them or how that data is being used. This problem needs to be comprehended and then it needs to be fixed.”

Are traditional news outlets, allegedly outsmarted and disrupted, simply having a sook? Hardly. The coronavirus pandemic and ensuing economic calamity have been mega-stories for media outlets. Australians are hungry for news, which is a boon for every trusted organisation in our industry, regardless of world view or funding. Our newspaper’s digital audience more than doubled from February to last month; with 4.9 million readers, our readership grew by 110 per cent over the year. Yet the business model for news is precarious. Readers pay for our content, but more generally news organisations depend on advertising in a variety of formats. Putting the economy in an induced coma to suppress COVID-19 has had a devastating effect on almost every business. But the pernicious threat to our industry from the monopoly power of global tech thieves put us in an unsafe position before the health and economic crises reached our shores.

The news business is at a tipping point, a fact the Morrison government almost became blase about. Perhaps it was immobilised by the sheer wizardry of the algorithms and slick corporate potency of foreign brigands. More likely, both sides of politics placed too much trust in the tech titans and their paid lobbyists. The giants would do the right thing, they promised, by throwing traditional media players some scraps. It was flagrantly patronising and dishonest. Canberra, armed with ACCC analysis, finally twigged and took a brave policy leap into the unknown and untried. As Mr Frydenberg concedes, it won’t be easy to make Google and Facebook pony up. In 2014, Spain passed laws requiring Google to pay news outlets for article extracts; Google duly closed Google News. Last year, France tried to protect copyright of news content by requiring permission and compensation for material reproduced online; Google refused to pay and now will not display French news media unless able to do so for free.

The Morrison government is now demanding the giants behave ethically and recognise and remunerate creators and copyright holders. Why is this so novel? Google and Facebook will be directed to share data, properly display news content and pay a fair price for it. While it’s better late than never, there’s no time to waste because news outlets are distressed and disappearing. The ACCC is charged with designing a formula and mechanism to calculate value and a process for arbitration in the case of stalemate. Yes, the new code will have enforcement and penalty provisions, as Mr Sims suggests. But the size of the revenue share is pivotal. As executive chairman of News Corp Australasia Michael Miller argues, the price for content must not only be fair it should be “very significant”. The digital monopolists didn’t become trillion-dollar titans by playing nice. Until they pay for news content, they imperil the entire ecosystem that keeps Australians properly informed, in crisis or in clover.