Australia vs Big Tech: Journalism’s Saving Grace or Pitfall?
There has been no lack of discourse surrounding the sheer market power of Big Tech and global attempts to regulate them. Indeed, this has been the topic of discussion of many Law Forward articles. In the latest battle between governments and Big Tech, Australia has placed itself in a showdown against Google and Facebook after introducing its "world-first" regulation, forcing tech giants to pay local news outlets to feature and link to their articles. Google and Facebook threatened to pull away their services from the Australian market altogether, perhaps as an exhibition of their obvious power over the mid-sized nation. This article will review the rationale behind Australia's new statutory code, the arguments of the opposing tech companies, and will evaluate whether this move will save publishers or lead to a detrimental result.
Australia’s Switch to Regulatory Controls
Australia’s new statutory code was drafted following an 18-month long investigation into digital platforms by the Australian Competition and Consumer Commission (ACCC). The investigation resulted in a 623-page report on the anti-competitive behaviour and market power of tech giants in Australia. The report recommended that government intervention in the production and dissemination of news is necessary to promote the public benefit and uphold democratic values. In order to do so, the novel piece of legislation aims to compel Google and Facebook to pay publishers they link to for content and give them notice of any significant changes to their algorithms which would affect the order in which their content appears.
The decision also stems from the massive hit that traditional media outlets have faced in recent years. The ACCC has found that for every $100 (AUS) spent on online advertising in Australia, nearly one third is allocated to Google and Facebook. The sheer market power held by the tech giants has left traditional media outlets unable to bargain for compensation for their content, as they rely on them to reach consumers. Therefore, from the Australian government's perspective, this measure would "level the playing field" amid the market domination of Google and Facebook, giving more bargaining power to newsgroups. The measures will initially be limited to Google and Facebook, since they have been deemed to be the primary news sources of Australian citizens, but other tech firms may be added if they are determined to be large enough.
The code operates by creating a voluntary framework of negotiations between the digital platforms and registered news business corporations, with the latter being able to bargain collectively if they wish to. Should the negotiations fail to reach a conclusion, the parties will then move to arbitration, where an arbitral panel will select between the final offers made by the parties. If the parties fail to comply with the order of the arbitral proceedings, they will risk a fine of up to $10 million AUS.
As expected, the new code was not well received by Facebook and Google. It was even recognised in the Code’s documentation that Google would likely withhold news services in Australia, as the Vice President of Google Australia had threatened to do so. According to the Financial Times, Google's exit would cause publishers to suffer, citing a case study on Google news' exit from the Spanish market in 2014, where publishers lost 10% of their revenue.
However, since then, Google went silent on its threats to leave the Australian market, whilst still insisting that the Code would set a dangerous precedent. Since Google operates as a free service, its primary form of revenue is unhindered data collection; such a measure would strike at the heart of its business model.
At the very last minute, Google eventually agreed to enter into licensing arrangements with Australian media companies in the form of annual content deals, including large media companies such as Nine, and extending to smaller regional sized companies like the Canberra Times. The reason behind Google's change of heart was that the alternative route to arbitration would likely end up with a pay-per-link system, which would be an affront to Google's business model.
An interesting insight into the global effects of this decision can be seen with the deal struck between Google and News Corp, which established a licensing agreement between the tech giant and all of the Murdoch group companies globally. Although this agreement may show positive prospects for other news media companies, the Murdoch deal was the only massive deal of such kind, and the specific conditions of the agreement have not been released for public scrutiny. Therefore, the same promising outcome is unlikely for other news companies in Australia.
It seems that Facebook has pulled the plug on Australian media content, as users found themselves unable to share news links, and publishers were unable to post from their Facebook pages. This has, understandably, been a controversial decision. “Their unwillingness to fairly compensate trusted news organisations speaks volumes about their commitment to protecting democracy,” said Jason Kint, chief executive officer of Digital Content Next. The algorithm behind this ban on news-sharing has negatively affected governmental news sharing accounts, as they were unable to share precious updates on the widely used platform.
For instance, due to the ban, the Australian Ministry of Health was unable to post updates for the vaccine rollout, which highlighted how ill-timed Facebook's move was. The platform fixed its algorithm, but this unpleasant showcasing of power has left many critics. Facebook's rash decision stems from the fact that Facebook, echoing Google's sentiment, finds the code unworkable. Therefore, to avoid entering into negotiations as part of the code, Facebook just decided to pack up its news sharing services and leave the Australian market, deeming that Australian news outlets are more trouble than they are worth. Facebook users can still share news from around the world, just not from Australian news sites.
Is the rule workable?
Having explained the response and impact of the rules themselves and the two distinct reactions from Google and Facebook respectively, it is debatable whether Australia's regulatory regime is a saving grace for news organisations in Australia. There are two main reasons for this, backed by each of the big platforms. Google's licensing deals with news companies have lacked transparency and have mostly occurred with more prominent players in the market. This creates a quasi-monopoly in the Australian news industry as the larger players, like News Corp, have been able to secure more considerable sums for themselves, leaving smaller players with less ability to bargain in the same way or bargain at all. In this way, the Australian regime is feeding into large oligopolies, which seems counter-intuitive in its effort "to level the playing field".
On the other hand, Facebook has shown that it is too big to fall, as its exit from the Australian news market is a demonstration of just how much these news media companies need it, and how much the platform does not need them. This means that in case of any re-negotiation, Facebook has demonstrated it has the upper hand, strengthening its market power even further. Moreover, another possible drawback is that there is no guarantee that the lump sum contributions from Google will enhance the declining competitiveness of the traditional media outlets; transfer of money does not equate to a transfer of power or efficiency.
At this early stage, the effects of Australia's strict regulation of platforms relating to their news sections remain to be seen. The measures mark a shift away from the deregulatory approach traditionally taken by governments in relation to large platforms, and towards greater intervention. The legal actions pending against Big Tech in the US and Europe are illustrative of this global shift. Australia's attempt to limit the unfettered market power of the large platforms is a step in the right direction. Nevertheless, this Australian case study must be scrutinised under a watchful eye to ensure that the measures adopted adequately serve those they aim to protect.
© FT montage; Bloomberg, Alamy
 Treasury Laws Amendment (News Media and Digital Platforms Mandatory Bargaining Code) Bill 2020