Consumers the winners in big tech media payment laws

Australian consumers will benefit most from planned new laws to make Big Tech pay a fair price to use content produced by major media organisations. The proposed legislation announced yesterday by the federal government has made some significant concessions to Google and Facebook. But it has maintained the final offer arbitration model recommended by the world-leading report by the Australian Competition & Consumer Commission.

The laws forcing digital companies to negotiate terms for content will extend to public broadcasters. The draft code now will be considered by a Senate committee before it goes to a vote. Digital groups have signalled they will continue to lobby for changes but there has been bipartisan support for new laws to safeguard the production of quality journalism in Australia. The federal government says the code will support a diverse and sustainable Australian news media sector by encouraging the parties to undertake commercial negotiations outside the code.

Digital platforms will be encouraged to publish standard offers to provide smaller news media businesses with an efficient pathway to finalising agreements. A negotiation framework will be established under the code to allow the digital and media companies to bargain in good faith to reach binding agreements. If parties are unable to reach agreement an independent arbiter will be able to determine the level of remuneration that should be paid under a fair and balanced final offer arbitration model. During any arbitration, arbiters must consider the benefits for both parties from having Australian news content available on digital platforms. They also must take into account the cost of producing news content and whether any final decision places an undue burden on the digital platforms.

While the arbitration framework must consider two-way value exchange between the parties, payment can flow only from digital platforms to news media businesses. The code also imposes obligations on digital platforms to ensure that they cannot seek to avoid the code or retaliate against news media businesses. It will be illegal for digital platforms to disadvantage news content by altering the way they index or distribute available news to favour one news media over another. Digital platforms will be required to give publishers 14 days’ advance notice of deliberate algorithm changes that affect news media businesses. The proposed legislation includes stiff penalties for failing to negotiate in good faith, failing to comply with arbitration or engaging in retaliatory action against news media companies. The maximum penalty is the greater of 10 per cent of annual Australian turnover, $10m or three times the benefit obtained. The proposed new laws have been toughly fought by the digital giants, which are under increasing pressure from legislators around the world. They have had partial success in watering down what had been initially proposed. The scope of the new laws will be limited in terms of which products offered by the digital giants it will apply to.

The new laws represent a breakthrough in forcing digital companies to pay for news content they distribute and will have global implications. Regulators have been co-operating across jurisdictions to combat what has been perceived as an unhealthy market dominance. In the US, the tech giants have been the target of an antitrust investigation and are facing a raft of class actions for uncompetitive behaviour. The ACCC recommendations that Facebook and Google pay publishers for content is seen as a template for what may happen in other countries. The ACCC’s digital platforms inquiry was a world-leading report covering privacy, media regulation and merger laws. The final report included 23 recommendations that addressed competition and consumer protection issues, media regulatory reforms and privacy. Both the ACCC report and the feedback from the consultation process emphasised the need for reform to better protect consumers, improve transparency, address power imbalances and ensure that substantial market power is not used to lessen competition in media and advertising services markets. The ACCC identified a bargaining power imbalance between news media organisations and certain large digital platforms, and made a recommendation that codes of conduct be negotiated between news media businesses and designated digital platforms.

Communications Minister Paul Fletcher says the relationship between Big Tech and the media is a competition policy issue and a media policy issue. “If the enormous market power of the digital platforms were to drive media businesses out of operation and in turn compromise the diversity and sustainability of the Australian media sector, that would be a bad outcome for our nation and our democracy,” Mr Fletcher said. The bottom line is that Australian consumers are the ones who stand to benefit most. During the past 12 months we have seen Australians turning in record numbers to news sources they know and trust from a range of media outlets. Because of this, it’s important for consumers that the major tech platforms come to the negotiating table to reach agreements with verified and trusted news publishers. This will benefit Australians by sustaining strong and vibrant local journalism.