Tech companies and news publishers are waiting to see how Google’s fight with Australia pans out

Google has been leading the fight against the proposed Australian law, claiming that, if passed, it will make their business untenable.

For consumers of news and original journalism, the internet has been a boon to consumption, with a seemingly unlimited stream of content available on users’ digital devices. Unfortunately, for the producers of that content (specifically newspapers and journalists), the internet may have expanded their audience, but it has critically eaten into their profits.

A major reason for the financial hit is the existence of third-party content aggregators like Google and Facebook, which have become the main sources for news consumption for most readers. The shift toward these platforms and away from the original reporting sites has siphoned off almost all internet advertising, with Google earning US$135 billion through ads in 2019 alone.

With advertising dollars being spent elsewhere and subscriptions only making up a fraction of what news organizations once earned in the pre-internet age, publishers are struggling. Nations are looking at various ways to ensure news publishers earn a fair share for their work, while Google and Facebook have both vowed to pay news organizations.

In 2020, Australia proposed the News Media Bargaining Code, or simply the Code. The Code’s purpose is to give news and media organizations more power in negotiating with Google and Facebook over payments. It is just one of multiple pieces of legislation in countries around the world designed to chip away at the advertising monopolies of the major tech companies.

Google has been leading the fight against the proposed Australian law, claiming that, if passed, it will make their business untenable. Google and Facebook have both threatened to limit the availability of their platforms in Australia if the Code becomes law.

Australia has said it refuses to be bullied by the tech giants. If the Code does become law, it could put Google and Facebook in a bind. The Code may also provide a blueprint for reviving news and media outlets around the world.

What is the News Media Bargaining Code?

In April 2020, the Australian government charged the Australian Competition & Consumer Commission (ACCC) to draft a law that would address the advertising monopoly of big tech companies.

In Australia, the ACCC reported that Google and Facebook earned 81% of all the online advertising profits for 2019. Google alone accounted for 53% of that total. All other tech companies and websites accounted for the remaining 19% of advertising dollars.

The first draft of the ACCC’s new code was released on July 31, 2020, with an open invitation for interested parties to provide their views of the law by the end of August. The final draft of the bill was introduced in Australia’s parliament in December.

Per the summary, the proposed law, “establishes a mandatory code of conduct to help support the sustainability of the Australian news media sector by addressing bargaining power imbalances between digital platforms and Australian news businesses.”

The Code requires “digital platform corporations” to enter into negotiations with “news business corporations” about payment for access to the latter’s content. If a deal cannot be met, a government-backed arbitration will be required.

Additionally, the digital platforms must alert the news organizations of any internal changes that will affect news content and digital platforms cannot favor news organizations that do not participate in the Code.

In response to the new requirements, Google announced on January 22 its intention to block its search engine in Australia. Australian Prime Minister Scott Morrison shot back at the company, saying, “We don’t respond to threats.”

It appears for the moment that Australia plans to pass the new law and enforce it, which will force Google and Facebook to decide if they will follow through on pulling out of the nation. While there are many other search engines, Google is currently responsible for the search traffic of 90% of desktop users and 98% of mobile users in Australia.

What does Google say?

In an “open letter” posted by Google, Mel Silva, Google’s Managing Director in Australia, laid out the company’s objections to the Code.

“Our objections aren’t about complying with a code or the principle of paying to support journalists,” the letter says, “but how we do that matters. We need to find a way of supporting journalism without breaking Google Search—and we’ve come to the table with a solution.”

The proposed solution is a global initiative that will pay AU$1.3 billion (US$1 billion) over three years to news publishers through a program called Google News Showcase. The program would pay for content to be created or curated specifically for Google News and allow readers access to content otherwise hidden behind websites’ paywalls.

Silva goes on to warn that, if the law is passed, it will create “an unreasonable and unmanageable financial and operational risk to our business. If the Code were to become law in its current form, we would have no real choice but to stop making Google Search available in Australia.”

Silva’s open letter was somewhat undermined, however, by the January 21 announcement that Google had come to a separate deal to pay French publishers for publishing their content. The agreement is similar to the proposed Australian Code, with Google negotiating individual license agreements with publishers for an undisclosed amount.

France updated its laws in response to revised European Union copyright laws. Those revised laws, updated in 2019, created greater liability for digital platforms whose users engage in copyright infringement.

While France was the first country to enact changes in response to the new EU copyright laws, the other member states will have to similarly update their laws. At that time, the major tech companies could be forced to negotiate with publishers across multiple countries, whether they want to or not.

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