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In News: For two decades, global news outlets have complained internet companies are getting rich at their expense, selling advertising linked to their reports without sharing revenue. Now, Australia is joining France and other governments in pushing Google, Facebook and other internet giants to pay.
Australian PM Morrison has launched a global diplomatic offensive to drum up support for Australia’s proposed law (News Media and Digital Platforms Mandatory Bargaining Code Bill 2020). The bill mandates a bargaining code that aims to force Google and Facebook to compensate media companies for using their content.
- That might channel more money to a news industry that is cutting coverage as revenue shrinks. But it also sets up a clash with some of the tech industry’s biggest names.
- Google, a unit of Alphabet Inc., has announced agreements to pay publishers in Australia while Facebook said it has blocked users in the country from viewing or sharing news.
- Facing a proposed law to compel internet companies to pay news organizations, Google has announced deals with media houses.
- Australia’s proposed law would be the first of its kind, but other governments also are pressuring Google, Facebook and other internet companies to pay news outlets and other publishers for material.
- In Europe, Google had to negotiate with French publishers after a court last year upheld an order saying such agreements were required by a 2019 European Union copyright directive.
- France is the first government to enforce the rules, but the decision suggests Google, Facebook and other companies will face similar requirements in other parts of the world.
Australia’s legislation – Voluntary Mechanism was not the solution
- Back in 2017, the Australian Competition and Consumer Commission (ACCC) recommended a voluntary code with an aim to address the negotiating skew between major digital platforms and media businesses
- Based on these recommendations, the Australian government in 2019 asked various stakeholders and the ACCC to develop this voluntary code.
- The ACCC, however, pointed out in April 2020 that the businesses were not likely to reach an agreement voluntarily. This paved way for drafting a mandatory code.
- The provision of mandatory code requiring Google & FB to enter into payment negotiations with media companies — with an arbiter mandated to adjudicate if no agreement is reached — or face heavy fines, has met with resistance.
- The arbiter is deemed important mainly for smaller publishers who may face a negotiation skew with the platforms.
- European authorities have specifically linked payments to copyright, without putting a forcing device into the agreements.
- Australia’s code, on the other hand, is almost entirely focused on the bargaining power of news outlets vis-à-vis the tech majors, and has some coercive features as well.
What is the core issue between Tech Giants and Regulators?
- While links to news may not be direct advertising money-spinners for Facebook or Google, both see the presence of news as an important aspect of audience engagement with their products.
- Google and Facebook are two of the largest and most profitable companies in history – and each holds far more bargaining power than any news publisher. The news media bargaining code sets out to undo this imbalance.
- The fight in Australia is in fact, centred on how much control these companies would be able to retain on their payout process — operational aspects such as deciding the quantum of payments for news feed sources, and having to reveal changes in their algorithm
Response by Tech Giants
- Threatens: In January 2021 when bill was being introduced, Google threatened to remove its search engine from Australia, and Facebook warned it could block Australian users from posting or sharing news links.
- Arguments of Google & FB: They say that the media industry was already benefiting from traffic routed to them by the digital platforms, and that the proposed rules would expose the Internet companies to “unmanageable levels of financial and operational risk”.
- Conciliatory position of Google: Google has backtracked and has moved ahead to sign a deal with one of the News Corporation
- Retaliation by FB: However, Facebook— which has 17 million users in Australia — retaliated with a news blackout, blocking all news links on its platform.
- Consequences of FB’s actions: In the process, FB also ended up silencing some emergency services, and reportedly removed posts from Australia’s Bureau of Meteorology, state health departments, fire and rescue services, charities, and emergency and crisis services.
The Debate in India
- According to a FICCI-EY report for 2020, there are 300 million users of online news sites, portals and aggregators in the country — making up approximately 46% of Internet users and 77% of smartphone users in India at the end of 2019.
- With 282 million unique visitors, India is the second largest online news consuming nation after China.
- In India, digital advertising spends in 2019 grew 24% year-on-year to Rs 27,900 crore and are expected to grow to Rs 51,340 crore by 2022.
- A substantial discussion on the impact of intermediary platforms on the health of news media outlets is yet to begin in any meaningful way.
Impact of Australia’s new media code
It still seems likely that, eventually, Facebook and the Government will come to an agreement and things will go back to normal in the Australian market.
Talks with Facebook are ongoing, while Facebook has said that the ball is now in the Government’s court, and that it won’t be changing its stance on the Media Bargaining Code. But the blockage will put increased pressure on media businesses, at a time when many are still struggling to maintain cash flows. That will subsequently put pressure on the Government to make a deal, and while it’s not certain that this will happen, it seems like there will be an agreement at some stage.
But it’s an interesting case study either way, and it could set a new precedent for Facebook’s negotiations on similar proposals moving forward. Now, other nations know that Facebook will go so far as blocking certain sites if it has to, that its claims are not a bluff. That will mean that anyone looking to push The Social Network will also have to consider the expanded impacts of such shifts.