Here's what the new legislation for tech giants and the media means

Google and Facebook will need to pay media organisations for news they promote and use. Picture: Shutterstock
Google and Facebook will need to pay media organisations for news they promote and use. Picture: Shutterstock

The government has introduced legislation which would transform the relationship between Google and Facebook, on the one hand, and the established media, on the other.

It wants to compel the two sides to go to arbitration if the two tech companies can't come to an agreement with the media organisations over how much the tech giants should pay for the news on their sites.

The argument made by the media, and accepted by the government, is that Google and Facebook sell advertising on the basis that the people see that advertising because they go to Google and Facebook for their news.

In other words, the media employ journalists at some cost but the tech giants get very substantial advertising revenue at little cost.

That destroys the traditional business model of the commercial media, and that is bad for democracy. So, runs the argument.

Countries all over the world are watching. If it goes through, Australia would be the first country to dent Google and Facebook's immense market power.

That's why the stakes are so high.

What would a new law do?

The draft law was drawn up by the Australian Competition and Consumer Commission which spelt out its reasoning: "The code seeks to address the fundamental bargaining power imbalance between Australian news media businesses and major digital platforms.

"This imbalance has resulted in news media businesses accepting less favourable terms for the inclusion of news on digital platform services than they would otherwise agree to."

If the legislation is eventually passed, the two sides - the tech companies and the media organisations including this one - would be encouraged to reach an agreement, but if no agreement was made after, say, three months, an outside arbitrator would decide.

Media organisations could negotiate separately or together.

Google and Facebook make good money in Australia.

On the latest figures available, Google made $4.3 billion in advertising revenue in Australia in 2018 and Facebook made $700 million, according to documents filed with the Australian Securities and Investment Commission.

Which media would benefit?

Broadly, the established media. The ACCC defines them:

  • They predominantly produce "core news", and publish this online.
  • They adhere to appropriate professional editorial standards.
  • They maintain editorial independence from the subjects of their news coverage.
  • They operate primarily in Australia for the purpose of serving Australian audiences.

That includes the newspaper you are now reading.

What do Google and Facebook say?

They argue that the media organisations overlook how much they benefit from their presence on Google and Facebook.

People search for stories and then go to the websites of the papers and broadcasters.

But Facebook has also threatened to take news off its site in Australia. It's not saying whether that threat remains but it hasn't withdrawn it.

About 40 per cent of Australians get their general news via Facebook so a political question down the line might be: Would there be outrage if Australians suddenly found that their usual source of news from, say, the ABC or this paper, was not available on Facebook?

The ACCC responds: "Facebook already pays some media for news content. The code simply aims to bring fairness and transparency to Facebook and Google's relationships with Australian news media businesses."

The managing director of Facebook Australia, Will Easton, said this week: "We're reviewing the draft legislation tabled by the Australian government. We'll continue to engage through the upcoming parliamentary process with the goal of landing on a workable framework to support Australia's news ecosystem."

If media companies get paid then why shouldn't Bunnings?

People use Google to search for all kinds of information and services from online music to the price of plugs.

The argument is that Google shouldn't have to pay these other commercial organisations because it's not competing with them - whereas it is competing for advertising with the online media (except publicly funded organisations such as the ABC).

As Treasurer Josh Frydenberg put it this week: "For every $100 of online advertising spend, $53 goes to Google, $28 goes to Facebook, and $19 goes to other participants."

He said advertising revenue for newspapers had crashed 75 per cent since 2005.

Google and Facebook have siphoned advertising revenue from the traditional media and that's led to the mass closure of papers, particularly in country Australia.

There are now swathes of the country which are "news deserts", and that matters for democracy. If newspapers aren't there to cover councils, who knows what goes on?

It's true that technologies change - nobody argues that banks shouldn't have gone online to preserve the jobs of bank tellers. Drovers once used horses but now the quad bike roars over properties. The fireman on the steam train is as dead as the Tasmanian devil.

But with journalism, there is a bigger concern, and that is that democracy depends on trusted sources of true information. Without that, a whole valued system ceases to function. All of us are worse off.

So runs the argument.

Australia is a pioneer

Other countries have tried to take on the tech giants without much success.

Spain passed a law in 2014 compelling Google to pay a licence fee to display news content - so the company shut down Google News, the part of Google that puts lots of news sites together. In Germany, a coalition of media companies negotiated with Google but Google divided and ruled, blocking the tougher negotiators from its platform.

So the task undertaken by the Australian government is tough. There has already been some horse-trading, with concessions made to Google and Facebook to include their worth to the news organisations in negotiations over payments.

But will it be enough?

This story Here's what the new legislation for tech giants and the media means first appeared on The Canberra Times.