The best hope is the federal government’s response to the Meta challenge will be the launching pad for a more active approach to the impact of digital platforms, not to mention the growing use of artificial intelligence.
To date the government has been happy to sit back and let the US and Europe set the bar, and has shown little urgency or apparent concern for the issues affecting Australian consumers.
This is strange, given the increased costs involved – at a time when the cost of living is meant to be top priority.
The government can hardly say Meta’s refusal to renew media payments came out of the blue, given Meta has had an ongoing fight with proprietors in Canada for the last six months.
The Canadian law, which came into effect in December, was based on the Australian bargaining code, and the Meta challenges raise serious questions about the enforceability of the new rules in Australia and Canada.
In Canada it is the smaller publishers who are suffering – the very companies the code was designed to help.
Former ACCC boss and present reform taskforce member Rod Sims slammed the December response to the ACCC report on platform enforcement as “insipid”.
In December last year, 18 months after receiving the ACCC recommendations on digital platform enforcement, the government referred the matter for another 12 months’ consultation.
The ACCC recommendations included so-called ex ante (before the event) remedies such as an enforceable code of conduct, but these will now be put on hold.
Ministers Michelle Rowland and Stephen Jones made no comment on the report and opted for another 12 months of consultation, further delaying any possibility of enforcement against the digital giants.
Pathetic – and the same mob are in charge this time now Meta is laying down the challenge.
AI co-ordinating minister Ed Husic has rejected claims the government is taking a wait-and-see approach, but the fact is Europe has regulation up and running and Australia is still working on a voluntary program with enforceable regulation to follow.
Lack of specific guidelines means industry has no guidelines and the market is held back.
Last week, Rowland, Jones and PM Albanese read the riot act in the face of the self-serving media storm about Meta’s decision to effectively ignore the media bargaining code. Albanese said: “The idea that one company can profit from others’ investment, not just investment in capital but investment in people, investment in journalism, is unfair. That’s not the Australian way.”
Having been so strident, the government seemingly has no choice but to come out swinging with action – not more words.
The ACCC has started its own investigations, flagging formal demands for information to establish if Meta has market power. This is necessary to support the code designation.
The trouble with the bargaining code is, as argued recently by Quay Law Partners’ Angela Flannery, it may lead to a dead end.
The first step is for the government to formally designate Meta. Mediation comes after three months of bargaining between the two and then lasts up to four months.
Then Meta argues it no longer supplies news services and the arbitrator will have a tough decision to say otherwise.
In other words, to the extent the Media Bargaining Code was designed to force the platforms to the bargaining table, it may come to be seen as toothless.
Time will tell, but given it all takes seven months to get to that point, the impact on the industry and consumers may have changed dramatically by then.
Sims is still adamant the code will be effective once triggered through the designation.
Meta last year earned $US135bn in revenue and paid media companies $70m so we are not breaking the bank here, but Meta clearly doesn’t want to set any payment precedents.
Trouble is, if Meta drives its metaphorical truck through the code, Google at al will simply walk on through, so this precedent will be a dangerous one.
When it comes to regulation in AI and elsewhere, Big Tech is quick to welcome it because that is one more barrier to prevent innovative upstarts stealing their thunder.
The challenge for the government is get workable rules in place sooner rather than later to help Australian consumers.
Truth about tribunal
The Competition Tribunal’s full decision in the ANZ case is not nearly as supportive of the ACCC’s arguments as the regulator would have you believe.
It described the banking market as “moderately concentrated”, agreed “the home loans market is conducive to co-ordination” but added “the conditions for co-ordination have recently reduced”.
The reason being the growth of Macquarie and the increased share of the market held by brokers (71.5 per cent), who not only initiate new loans but increase pressure by trawling through bank back-books, highlighting myriad cases where the big banks rip off long-term mortgage customers by charging higher than market rates.
The growth of Macquarie and others is shown by the fall in big bank market share from 85.3 per cent in 2012 to 75.2 per cent in 2022.
Against this trend CBA and Westpac spend nine and seven times more than Bendigo, respectively, on productivity-enhancing technology, which maintains the digital divide between big and small banks.
Big bank profit margins at 36.4 per cent compare with 25.8 per cent for small banks.
The ACCC is wary of tacit co-ordination between the big banks, and the tribunal says that “through repeated interaction in the market, firms may simply come to understand that lowering their prices will be quickly matched by rivals” and “they will likely gain no market share, but will lose margin”.
The bottom line in the case is “the additional scale provided by Suncorp Bank would still be unlikely to be sufficient to enable the merged entity to engage in more meaningful price competition with the major banks”.
In other words, what was ANZ thinking when it agreed to pay $4.9bn for a hill of beans, and how much more could be delivered to its customers by using the funds to improve prices and service?
In terms of future deals, as feared by the ACCC, this case opens the door wide for more big banks buying little ones.
Could bringing back a cultural elite save us from our illiberal selves?
Anarchy on social media has proved you can’t have a tolerant and liberal society without ideas being filtered from above.
We must award the people, not their narratives
There’s no point in being given a platform and then not pushing our cause. But we need to know more about how decisions are made for the Australian of the Year Awards.