Could Australia’s News Media Bargaining Laws Spell The End of The Tech Giants?

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You’ve probably seen the threats metered out by Google in response to sabre rattling from the Australian government over a new plan to force Google and Facebook to pay producers for the content that they show on their platforms.

Now, with legislation making its way through parliament, Google and Facebook have ramped up their campaigns, calling for changes to the proposed laws. Meanwhile, in the background, an army of lobbyists and influence groups are putting the pressure on lawmakers to change their views.

The whole thing is a fraught and fairly complex argument that has managed to stay in the background for the past few years, but in recent months it has spilled over into the mainstream as the changes look more and more certain to happen.

What exactly is going on and what this will all mean for users of those platforms – which is, you know, everyone – is less clear as the two sides face off. Let us take you through it.

Sizing It Up

This argument all started in 2018 but it has a much longer history wrapped up in the decline of traditional media. The power of print media has been slowly eroded by the rise of the internet and was sped up to the point of collapse by the dominance of Google and Facebook.

These are two of the biggest companies in the world, each earning US $181 and US $85 billion in global revenue last year respectively. They control almost all facets of our increasingly online lives and know so much about us as to make the concept of privacy redundant.

In response to complaints from news organisations about unfair market practices – read: a last-ditch effort by the media to cling onto life as they are squeezed out of existence – the Australian government asked the competition regulator to investigate.

The Australian Consumer and Competition Commission then spent 18 months looking at how the media and advertising landscape in Australia operates and found that there were significant imbalances. It proposed a media code that the government could enforce and released the draft to the public. The tech giants were not happy about it.

What Is Being Proposed?

Effectively, what has been suggested is that tech companies should pay for the content they show on their platforms. This would mean a portion of advertising spend is allocated to each publication that is shown on their sites or in searches.

Media companies are being encouraged to make commercial deals with Facebook and Google using the code as a framework for bargaining. If they can’t agree, a third party arbiter will have to be brought in to settle the deal.

If Google or Facebook refuse to negotiate with a publisher, they could be fined up to $10 million.

How Did They Take It?

Not well. Facebook and Google responded by saying that they are not publishers, they only direct people to content like a digital highway. If anything, they argued, they should be the ones being paid for sending millions of eyeballs to news publications.

In fairness, there is some merit to this view. Publishers leverage Facebook and Google traffic to direct people to their sites. It’s a mutually beneficial deal, even if the vast majority of the money ends up in the pockets of the platforms and not the people who actually make content people want to read.

In reaction to the code, Facebook threatened to block Australian’s from sharing news on its platform. Google starting telling users the code was unfair, culminating in this rather embarrassing video above of Google Australia boss, Melanie Silva, pleading with the country not to go ahead with the plan because they’re a benevolent god with only our best interests at heart and that the changes would “break” their business.

Google bosses have been holding meetings with Prime Minister Scott Morrison and Treasurer Josh Frydenberg. Facebook founder Mark Zuckerberg has been lobbying top federal ministers in an effort to sway them. Australian politicians have however appeared resolute in their stance of making the tech companies pay.

Is This a Good Thing?

Well, yes and no. On the one hand, Facebook and Google have sucked up almost all of the Australian advertising spend in a relatively short time period. Once upon a time, physical newspapers and magazines made hefty profits selling quality content that advertisers would pay to be placed next to. Now, for every $100 spent on advertising in Australia, $53 goes to Google, $28 to Facebook, and the remaining $19 is shared between everyone else.

Pumping some much-needed revenue into Australian media is essential to keep it functioning. It’s already a fraction of what it used to be and, with News Corp shutting 60 rural publications last year, it’s only going to get worse without help.

Asserting national sovereignty over the will of global tech companies is also a good thing. For years, digital organisations have operated with impunity, invading our privacy, collecting our information, and selling it to advertisers. They’ve turned human attention into the most valuable resource on the planet and crafted their platforms using learnings from the gambling industry to keep us hooked on their services. Governments have been slow to react but now appear to be consciously trying to reign in some of the most damaging effects that this digital saturation has had on our lives and communities.

This being said, the idea for the media bargaining laws is one that has its origins in the dark arts of the Murdoch press. News Corp has been particularly vocal about the changes which the coalition have championed. Jeff Jarvis, Professor of Journalism at City University, New York, has argued that the law is “pure protectionism from the brain of Rupert Murdoch”.

It’s no coincidence that the coalition has a particularly cosy relationship with News Corp, who own the vast majority of Australian print media, and are keen to sure up its dominance in exchange for continuing favourable coverage and attacks on its opponents.

Indeed, the early interactions of the bill saw public service broadcasters and arch-rivals of Sky News, ABC and SBS, cut out from the profits of the deal. It was only when the Greens threatened to withdraw support for the bill that the policy changed.

What Will The Changes Look Like?

For users, no different. The internet will appear exactly the same while money is changed hands in the background.

A recent Guardian survey showed that almost 60% of Australians thought Facebook and Google have too much power and should be regulated, with only 13% disagreeing.

So, What Could Happen?

When the law is passed, Google could make good on its threat to withdraw from Australia. However, that appears unlikely. If they do, there are plenty of other companies willing to fill the void. Morrison has already said he’s pretty sure Australian’s would shift to using Microsoft’s Bing if Google pulled out – a suggestion that has not been met warmly.

What Google really doesn’t want is a Western democracy showing that it can work without Google. That’s part of the begging that Melanie Silva did in that video, explaining how our lives would shatter without Google. The truth is, they almost certainly won’t and by pulling the trigger here, Google could potentially be shooting itself in the foot globally.

Of course, the global market is the real worry for the tech companies. If Australia successfully negotiates a profitable deal with the digital platforms, it’ll be open season for the rest of the world to start striking deals which will significantly reduce the profitability of Facebook and Google. Already France has settled a deal with Google and the EU and Canada are lining up to do similar depending on the outcome of this deal.

It’s a frightening prospect for the tech giants and, if they were forced to pay up, could spell the end of their global dominance. However, in doing so, it could make media more reliant on the tech companies than ever before, potentially giving them a strong bargaining tool to use when dealing with governments over, say, privacy laws or political advertisements.

While Facebook and Google have managed to shape the media bargaining code somewhat by getting the government to agree that YouTube and Instagram won’t be part of the deal, there is ultimately enough support here to push the bill into law. Google and Facebook will have to pay, it just remains to see how much and what the effects will be.

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