World-first code on digital news

Reporting and presenting news is an exacting and costly exercise, which is why the Morrison government and the Australian Competition & Consumer Commission have notched up an important world first in forcing tech giants to pay for the news content they lift and profit from, after years of pilfering it. Under a new mandatory code of conduct Josh Frydenberg unveiled on Friday, behemoths Google and Facebook will be forced to negotiate with media companies and pay a fair price for the content they use. Facebook and Google generate their advertising revenue by disseminating content produced by other news outlets. After the legislation is enacted later this year, the tech giants will be fined up to 10 per cent of their revenue, potentially amounting to billions of dollars, if they break the rules.

The code is a “watershed moment”, as News Corp Australasia executive chairman Michael Miller says. The digital platforms’ “days of free-riding are ending”. They derive vast benefit from using news content created by others and “it is time for them to stop denying this fundamental truth”.

Such behaviour has cost thousands of journalists their jobs, leaving the public less well-informed about events that shape their lives. As ACCC chairman, and the new code’s architect, Rod Sims points out, digital platforms need to mature as businesses and realise they cannot continue taking advantage of free content. The code will ensure the digital platforms play by the same rules other companies follow in doing business.

For every $100 spent on online advertising in Australia’s $9bn-a-year market, $47 goes to Google, $24 to Facebook and $29 to other participants. These include newspapers and broadcast companies that generate content. The code excludes the ABC and SBS, which are taxpayer-funded.

While other countries are talking about the tech giants’ damaging behaviour, Australia has acted. Britain and the US are pursuing similar models. Big Tech’s market power was under the spotlight in the US this week when the chief executives of Google, Facebook, Apple and Amazon faced five hours of interrogation about unfair business practices from Republicans and Democrats on the house anti-trust subcommittee.

Google’s criticism of Australia’s move as “heavy-handed intervention” that “ threatens to impede Australia’s digital economy and impacts the services we can deliver to Australians” does not stand up to scrutiny. The code encourages negotiation between news companies and the platforms. A mandatory code is necessary, as the Treasurer said, because progress was not being made on the critical issue of payment for content. It was time, Mr Frydenberg said, to redress the “very unequal bargaining position between Australian news media businesses that produce original content and the digital platforms”. Doing so will benefit the public as newspapers and broadcasters will be better able to invest in good journalism and news coverage.

The new code also will allow news media businesses to prevent or remove comments on individual news stories posted on digital platforms such as Facebook. Their present inability to do so leaves news companies open to defamation actions arising from outsiders’ comments posted on such sites. As technology has developed, and the power of Google and Facebook has grown, regulatory frameworks have not kept up. The government’s legislation finally will bring digital regulation into the 21st century.