Why Australia wants Facebook and Google to pay media outlets

20 Apr 2020

Image: © sitthiphong/Stock.adobe.com

The Australian Competition and Consumer Commission wants to ‘level the playing field’ for media and news outlets.

The Australian government is taking steps that would see Facebook and Google share some of the advertising revenue that news content generates with media companies. In response, Facebook said it is “disappointed” about the move.

The Australian Competition and Consumer Commission (ACCC) is developing a mandatory code of conduct that will apply to the relationship between news and media companies and tech platforms such as Facebook and Google.

Future Human

According to ABC News, the code of conduct will cover issues including the sharing of data, ranking of news content online and the sharing of revenue generated from news.

Australian treasurer Josh Frydenberg said: “It’s only fair that those that generate content get paid for it.”

‘Level the playing field’

The ACCC said that while it has been working on a voluntary code of conduct, it advised the government that getting a voluntary agreement around the issue of payment for content was “unlikely”.

The idea for the code came from a 2019 inquiry into digital platforms, which found that companies such as Facebook and Google were taking a large cut of advertising revenue, despite the fact that much of their content came from media organisations.

Initially, the ACCC planned to work voluntarily with Facebook and Google to draw up a plan, but now the Australian government has decided to introduce a mandatory code, with penalties and dispute resolution processes.

‘Media companies are facing significant financial pressure and Covid-19 has led to a sharp downturn in advertising revenue across the whole sector’

Frydenberg said that a mandatory code would help “level the playing field” at a challenging time for media and news outlets.

Over the last few years, media companies have struggled to generate revenue online, with many outlets shuttering or cutting jobs as a result. Since the Covid-19 pandemic began, these challenges have been exacerbated and many media outlets around the globe are finding it even more difficult to survive.

“Media companies are facing significant financial pressure and Covid-19 has led to a sharp downturn in advertising revenue across the whole sector,” Frydenberg said.

“Digital platforms need to do more to improve the transparency of their operations for news media providers as they have a significant impact on the capacity of news media organisations to build and maintain an audience and derive resources from the media content they produce.”

Facebook’s response

The ACCC plans to release a draft mandatory code for consultation by the end of July. Facebook has already said it is unhappy about the Australian government’s attempt to introduce a mandatory code.

Will Easton, managing director of Facebook Australia and New Zealand, said: “We’re disappointed by the government’s announcement, especially as we’ve worked hard to meet their agreed deadline.

“Covid-19 has impacted every business and industry across the country, including publishers, which is why we announced a new, global investment to support news organisations at a time when advertising revenue is declining.

“We’ve invested millions of dollars locally to support Australian publishers through content arrangements, partnerships and training for the industry and hope the code will protect the interests of millions of Australians and small businesses that use our services every day.”

Google said it had worked with the industry, government and ACCC on the draft code and “will continue to do so in the revised process set out by the government”.

Previous efforts

Frydenberg added that the ACCC “won’t bow to threats” and that this is a “battle worth fighting.”

He acknowledged similar efforts in France and Spain, but said Australia is “prepared for this fight” even though it is “a big mountain to climb”.

Australian communications minister Paul Fletcher said that European nations had failed to implement these measures by relying on copyright law to extract payments. Australia, on the other hand, plans to use competition law.

Fletcher said: “Competition delivers the best outcomes for consumers but when you have one set of businesses acquiring content from another, without the opportunity for a fair discussion about what they paid for it, then that is why we believe the ACCC needs to get involved.”

Kelly Earley was a journalist with Silicon Republic