US tech companies Google and Facebook are in the crosshairs of government regulators in Australia where a new proposal seeks to make them pay for news content. The sweeping changes are a global first in what the government says is an attempt to salvage the future of news by providing a “level playing field” for news businesses.

Under the legally binding framework, Google and Facebook would be required to pay media companies for using and monetising news content on their social media sites. Along with payment for content they would have to address issues over access to user data and transparency of algorithms which rank content in news feeds and search results.

“It’s about a fair go for Australian news media businesses, it’s about ensuring that we have increased competition, increased consumer protection and a sustainable media landscape,” Australian Treasurer Josh Frydenberg said during the announced changes on Friday.

“Nothing less than the future of the Australian media landscape is at stake with these changes,” he added.

Google Australia Managing Director Mel Silva said the intervention was “heavy-handed” and that it threatened to undermine the digital economy. Unsurprisingly the decision was welcomed by Australia’s news businesses who have long called for tougher measures to prevent the siphoning off of both their content and advertising profits.

With the rise of US Big Tech, news businesses in Australia have struggled to weather substantial losses in revenue that have led to mass layoffs and either the merger or closure of numerous news outlets. One of Australia’s biggest publishers, News Limited, announced in May that 112 of its newspapers would either shut or become digital only. To prevent the demise of one of the country’s oldest broadsheets, The Sydney Morning Herald underwent a recent merger with a television network.

Sherine Conyers, a researcher at the school of media and commmunications at the University of Leeds, told FRANCE 24 that the impact of digital platforms on journalism had caused significant losses in Australia’s media industry. How well the government’s new code might “level the playing field”, as stated by the treasurer, would depend on the value placed on news content.

“Media companies spend a lot of time and money producing journalism and want a fair price for their content,” said Conyers, who has also worked as a journalist in Australia. “But for tech companies, the value is likely held in the behavioural data produced as this content circulates around the web.

“The question going forward is how tech companies will value news content, in line with their own business models, and how they respond to this financially, and to the rules being proposed in Australia.”

Both Google and Facebook have previously downplayed the commercial impact of sharing news content, and maintain media outlets benefit from using their platforms.

Facebook has argued that while it supports some form of regulatory code to help tech companies and media businesses work together, "it is not healthy nor sustainable to expect that two private companies, Facebook and Google, are solely responsible for supporting a public good and solving the challenges faced by the Australian media industry," the company said. 

EU vs Big Tech

The problem of how to sustain news businesses because of the value of their content has preoccupied regulators here in Europe where similar regulatory attempts have been introduced but with mixed results.

In October 2019, France became the first to implement new EU copyright rules requiring publishers to be paid for snippets of news stories displayed in search results. It was designed to force Google to pay publishers a so-called “link tax” and was hailed by proponents for enabling publishers to strike deals for content with Big Tech.

But Google circumvented the regulations announcing it would only display headlines instead. In Spain, the company shut down Google News after a law passed in 2014 would have mandated payment for news content.

Facebook, Google hit back

Drawing on lessons from regulators and policymakers internationally, the Australian anti-trust watchdog ACCC said in a statement it had designed its code so it would not reduce the availability of Australian news on Google or Facebook, while still netting fair payment for content.

Google Australia challenged those claims, expressing disappointment over the proposed changes. 

“Our hope was that the code would be forward thinking and the process would create incentives for both publishers and digital platforms to negotiate and innovate for a better future – so we are deeply disappointed and concerned the draft code does not achieve this,” Google's Silva said.
But the code does include some incentive for parties to seal a deal. If the US-based platforms and Australian media businesses fail to negotiate a fair price for content they would have to undergo a mandatory arbitration process. In addition, any breaches of the code would attract penalties of up to Aus$10 million (US$7 million) per breach or 10 percent of the company's local turnover.

In a short statement, Facebook in Australia and New Zealand said it was "reviewing the government's proposal to understand the impact it will have on the industry, our services and our investment in the news ecosystem in Australia".

Though Frydenberg claims Australia’s proposal is “in front of the world” it may take more than the lessons learned by other governments, like those in Europe, to manage the expectations of both media businesses and Big Tech.

The draft code will undergo another round of consultations in August before it is finalised.