Global tech giants made to pay for plundered content

Google and Facebook will be forced to pay media companies for siphoned news content under world-first laws by the government.

Treasurer Josh Frydenberg said the decision to force tech giants to pay for news content was prompted by advice from the competition watchdog that the companies were dragging the chain on negotiations to reach a voluntary code. Picture: AAP

Global tech giants Google and Facebook will be forced to pay media companies for siphoned news content posted on their sites under a landmark decision by the Morrison government to impose a mandatory code of conduct on digital platforms.

The move to legislate will see Australia become the first government to impose a legal regime including financial penalties around the behaviour of the digital platforms that have used unregulated space to cannibalise and profit from content produced by the news media.

The mandatory code would ­reverse the imbalance and force the tech companies to pay for the content they siphon from news media companies, share their consumer data and be subject to rules on the rankings of news on their platforms.

Josh Frydenberg said the decision to accelerate the move was prompted by advice last week from the competition watchdog that the tech companies were dragging the chain on negotiations to reach a voluntary code by November and were unlikely to come to the table.

The ACCC has found Google is the dominant search engine in Australia. Picture: AP

The collapse in the advertising market since the COVID-19 outbreak has compounded the ­urgency of an issue that was ­already threatening to undermine the future of Australian journalism. The decision is a major win for tradi­tional media companies and consumers by returning bargaining power to the news media ­industry, which claims it had been forced to a tipping point by the unfair practices of the global digital platforms that have been able to take and post locally produced content without paying for it.

The Treasurer said the fundamental issue was the media companies that generated content, only to have it replicated for free on digital platforms, deserved to be paid for it. “The groundbreaking report prepared by the ACCC into digital platforms was world-leading and now paves the way for a mandatory code of conduct ­requiring payment for content,” Mr Frydenberg said. “This will help to create a level playing field.”

The ACCC will now be tasked with developing a mandatory code by July. Prices for content or the nature of commercial agreements would need to be negotiated but with remedies available to force tech companies into arrangements if they were recalcitrant.

The government had threatened a mandatory code following the digital platform inquiry, which ­required the ACCC to facilitate negotiations between the digital platforms and news media organisations that would lead to a voluntary code to address the imbalance in market power favouring the tech companies.

The government decided to pull the trigger early on imposing a mandatory code, with the ACCC claiming the tech companies were unlikely ever to agree on terms under a voluntary regime.

Facebook is an essential gateway for many consumers, 46 per cent using social media as their main news source. Picture: AP

Michael Miller, executive chairman of News Corp Australasia, has consistently warned he did not believe tech giants would co-operate in good faith to come to terms on a voluntary model that would see media companies paid for original content.

Mr Miller lauded the government’s decision as a “vital step” in seeking to right the practices by Google and Facebook that have allowed the tech giants to destroy the business model of original journalism. “For two decades, Google and Facebook have built trillion-dollar businesses by using other people’s content and refusing to pay for it. Their massive failure to recognise and remunerate creators and copyright owners has put at risk the original reporting that keeps communities informed.

“The decisive move by the Australian government to go directly to a mandatory code of conduct between the international tech giants and Australian news media companies is a vital step that can help secure the future of Australian journalism,” Mr Miller said. ACCC chairman Rod Sims recently said he would not hesitate to force the tech platforms into a mandatory code if they could not come up with an equitable voluntary agreement.

Michael Miller, executive chairman of News Corp Australasia. Picture: Brett Costello

Mr Miller described the decision as “progressive leadership” in the wake of the ACCC’s landmark digital platforms report and the havoc wrought to the Australian media landscape by COVID-19. “The Australia media industry is at a tipping point and a mandatory code that leads to the platforms paying a fair — and very significant price — must be put in place urgently,” he said.

“It is essential the mandatory code corrects the power imbalance between the tech platforms and local news media companies and sets rules that lead to the platforms finally paying for the news content they take and profit from.”

Nine Entertainment CEO Hugh Marks issued a statement this morning congratulating the government on what he called “swift and decisive action.”

Nine, who publish The Sydney Morning Herald, The Age and The AFR, have also been lobbying the government for further action to make big tech pay for content, however had previously said they were satisfied with a voluntary code of conduct being drawn up between big tech and media.

“Now more than ever, it’s important the global technology companies take some responsibility for contributing to our society through financially supporting the creation of quality Australian content.

“We look forward to working constructively with the Government to get the settings in place for this to operate in a simple manner,” Mr Marks said.

Seven West Media boss James Warburton commended the government for not only acting “but to lead internationally on this critical issue.”

“The media industry is dependent on the value of its content being recognised by all users - foreign digital platforms in particular. In the past month our news content alone has reached millions of Australians - it’s only right when this is accessed via third party platforms its creators are fairly compensated,” Mr Warburton said.

Despite a huge spike in readership of traditional journalism in print, online and television news during the COVID-19 crisis, media has been hard hit due to a crash in the advertising market, forcing companies to update guidance, stand down staff and cease printing papers — some of which date back over 100 years.

“The rush of audiences back to trusted news sources during the COVID-19 crisis has been a powerful reminder that real journalism must not be destroyed by companies that take it for their own use and refuse to pay,” Mr Miller said. “I look forward to working through the process to get this code of conduct in place for the start of the next financial year so it can make a material contribution to the future of our industry.”

The ACCC determined that Google was the “dominant” player in search engines with a 95 per cent market share in Australia with a significant share of searches relating to “top stories” produced by news media.

It also found Facebook was an essential gateway for news for many consumers with 46 per cent using social media as a main source of news, which was primarily news produced by traditional media that Facebook has been refusing to pay for.