Australia pushes plan to force Facebook, Google to pay for news

Australia finalised plans on Tuesday to make Facebook Inc and Alphabet Inc’s Google pay its media outlets for news content, a world-first move aimed at protecting independent journalism that has been strongly opposed by the internet giants.

Under laws to go to parliament this week, Treasurer Josh Frydenberg said the Big Tech firms must negotiate with local publishers and broadcasters how much they pay for content that appears on their platforms. If they cannot strike a deal, a government-appointed arbitrator will decide for them.

“This is a huge reform, this is a world first and the world is watching what happens here in Australia,” Frydenberg told reporters in the capital, Canberra.

“Our legislation will help ensure that the rules of the digital world mirror the rules of the physical world … and ultimately sustain our media landscape.”

The law amounts to the strongest check of the tech giants’ market power globally, and follows three years of inquiry and consultation, ultimately spilling into a public brawl in August when the US companies warned it may stop them from offering their services in Australia.

Facebook Australia managing director Will Easton said on Tuesday the company would review the legislation and “engage through the upcoming parliamentary process with the goal of landing on a workable framework to support Australia’s news ecosystem”.

A representative for Google declined to comment on Tuesday, saying the company had yet to see the final version of the proposed law.

Starving newsrooms

Until recently, most countries have stood by as advertisers redirect spending to the world’s biggest social media website and search engine, starving newsrooms of their main revenue source and bringing widespread shutdowns and job losses.

But regulators are starting to test their power to rein in the two mega-corporations which take more than four-fifths of Australian online advertising spending between them, according to Frydenberg. This year, a French regulator told Google to negotiate with publishers over payment for news content and the matter remains before the courts.

“It’s both very ambitious and very necessary,” said Denis Muller, an Honorary Fellow at University of Melbourne’s Centre for Advancing Journalism, referring to the Australian law.

“Taking their news content without paying for it, in exchange for a very questionable reward of ‘reach’, seems to be a very unfair and uneven and ultimately democratically damaging arrangement.”

News Corp Australia executive chairman Michael Miller said the law was “a significant step forward in the decade-long campaign to achieve fairness in the relationship between Australian news media companies and the global tech giants”. In May, News Corp stopped printing more than 100 Australian newspapers, citing declining advertising.

In changes to draft legislation announced earlier this year that might favour the tech companies, the final version of the law would not affect news content distributed on Facebook’s Instagram subsidiary or Google’s Youtube.

But Frydenberg added to the list of media companies with whom the tech giants must negotiate, saying public broadcaster the Australian Broadcasting Corp and specialist public broadcaster SBS would be included, along with dominant private sector outlets like News Corp and Nine Entertainment Co Holdings Ltd.

Drawing a line

In a blog posting in late August, Facebook said that the proposal was unfair and would allow publishers to charge any price they want. If the legislation becomes law, the company says it will take the unprecedented step of preventing Australians from sharing news on Facebook and Instagram.

By pushing back in Australia, Facebook is telling other European regulators what to expect in disputes over the platform’s use of news, said Rob Nicholls, an associate professor at the business school of the University of New South Wales in Sydney. At the very least, Facebook wants to force a change in the legislation, or even delay its introduction, he said.

“If you draw a line in the sand here, you’ve effectively provided that benchmark for negotiations,” Nicholls said.

The chairman of Australia’s competition watchdog, Rod Sims, said in an interview in July that he knew of several counterparts overseas considering taking similar steps to Australia’s.

In June, Google said it would pay some media outlets that will be featured in a yet-to-be-released news service in Germany, Australia and Brazil.

Last October, Facebook introduced a separate news section, paying some publishers whose stories were featured.