Why the world is watching Australia's tussle with Big Tech

Why the world is watching Australia's tussle with Big Tech

Australia wants to force Google and Facebook to pay local media organisations for hosting news
Australia wants to force Google and Facebook to pay local media organisations for hosting news content or face millions of dollars in fines AFP/SPENCER PLATT

SYDNEY: Facebook's decision to pull news content from its platform in Australia comes in response to legislation that would force tech giants to pay for sharing news content. 

While Big Tech and media outlets have battled over the right to news content in other jurisdictions, Australia's looming law represents the most expansive reform and is being closely watched around the world.

Here is a look at what the proposed rules are, and what it might mean for users:

WHAT IS HAPPENING

After two decades of light-touch regulation, tech companies such as Google and Facebook are coming under increased government scrutiny.

In Australia, regulators have zeroed in on the firms' online advertising dominance and its impact on struggling news media.

According to Australia's competition watchdog, for every A$100 spent on online advertising, Google captures A$53, Facebook takes A$28 and the rest is shared among others.

To level the playing field, Australia wants Google and Facebook to pay for using expensive-to-produce news content in their searches and feeds.

WHAT WILL THE LEGISLATION DO?

The so-called Media Bargaining Code has been designed by the government and competition regulator to address this power imbalance.

READ: Australia to introduce landmark Google, Facebook legislation to parliament next week

Under the code, news outlets will be required to negotiate commercial deals individually or collectively with Facebook and Google. If they cannot reach an agreement, an arbitrator will decide whose offer is more reasonable. 

If Facebook or Google break any resulting agreements, they can be fined up to A$10 million (US$7.4 million) in civil penalties.

The law also requires tech firms give media outlets notice when they change search algorithms in a way affecting the order in which content appears. They must also share their use of consumer data extracted from news content on their sites.

The proposed code will apply to Facebook and Google, although the regulator, which advised government on the legislation, has said it is likely other tech firms will be added.

HOW IS AUSTRALIA'S APPROACH DIFFERENT?

Australia has used competition law to draft the Media Bargaining Code, an approach the regulator has argued is much more effective than the copyright legislation being used in other jurisdictions, including the EU.

The difference between the two has been highlighted by the recent deals struck with Google by Australian publishers and by outlets in France, which is the first EU country to bring an EU directive on copyright into national law.

Australia's two largest free-to-air television broadcasters have struck deals collectively worth A$60 million (US$47 million) a year, according to media reports. That dwarfs the $76 million Google will split between 121 publishers in France over three years, which averages $209,000 a year per publisher, as reported by Reuters.

READ: News Corp signs news partnership deal with Google

WHY HAS THE DISPUTE ESCALATED?

Australia's proposed legislation has reached a crunch point, with widespread support in parliament, where it is expected to be voted into law within days.

In recent years, traditional media companies operating in Australia have suffered huge hits to income streams, due to dwindling subscriptions and advertising.

After Facebook decided to pull the news plug on Thursday (Feb 18), Australia's Prime Minister Scott Morrison signalled his willingness to press ahead with the legislation regardless.

WHY IS IT GETTING WORLDWIDE ATTENTION?

Although the rules would only apply in Australia, regulators elsewhere are looking closely at whether the system works and can be applied in other countries.

Microsoft - which could gain market share for its Bing search engine - has backed the proposals and explicitly called for other countries to follow Australia's lead, arguing the tech sector needs to step up to revive independent journalism that "goes to the heart of our democratic freedoms".

European legislators have cited the Australian proposals favourably as they draft their own EU-wide digital market legislation.

READ: Australian emergency services hit by Facebook ban

Facebook's move has also raised questions about countries' "digital sovereignty" after some emergency response Facebook pages used to alert the public to fires, floods and other disasters were inadvertently hit.

The company quickly moved to amend that mistake, but the incident left questions about whether social media platforms should be able to unilaterally remove services that are part of crisis response and may even be considered critical infrastructure.

WHY ARE GOOGLE AND FACEBOOK OPPOSED?

More broadly, Facebook and Google are pushing back against a slew of potential regulation worldwide that threatens to undermine business models that have allowed them to become some of the biggest and most profitable companies in the world.

Concretely, both companies say they do not have a problem paying for news - and, in fact, both already pay some news organisations for content.

Their main objection is being told how much they have to pay. That goes much further than European legislation, which encourages deals between social media and traditional media companies.

Under the Australian rules, an independent arbiter could decide if the deals reached are fair, to ensure the tech firms are not using their online advertising power to dictate terms.

Opponents have argued the new rules amount to a gift from Australia's conservative government to allies in Rupert Murdoch's News Corp, the country's biggest media group, to prop up his struggling newspapers.

WHAT DOES IT MEAN FOR ME?

World Wide Web inventor Tim Berners-Lee has warned introducing the precedent of charging for links could open a Pandora's Box of monetary claims that would break the internet.

"Links are fundamental to the web," he told an Australian Senate inquiry. "If this precedent were followed elsewhere, it could make the web unworkable around the world."

Both Facebook and Google have argued that the proposals would spell the end of some of their most popular products.

But Facebook's move to block news in Australia would be difficult to repeat in larger markets such as the United States and Europe as a whole - potentially hitting the company's bottom line.

Google Australia had made similar threats to pull its search service in Australia, but pulled back from the brink - instead making deals to pay several Australian media groups.

Source: Agencies/vc

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