Just eleven days after the French government ruled that Google must pay French publishing companies, the Australian government announced on 20 April 2020 that it has decided to make Google and Facebook pay media companies for content. The decision follows an investigation by the Australian Competition and Consumer Commission (ACCC) begun in June 2018 and its findings in December 2019. The ACCC concluded in December 2019 that the two US-based tech giants generated vast ad revenues and profits by riding on the back of news content that they had not produced.
Giving its finding in December 2019, the ACCC recommended that the parties mutually come to a settlement within 11 months and set up a voluntary code of conduct. “The progress on that voluntary code of conduct has been very limited, so the government has taken the decision to set in place a mandatory code of conduct which will be released by the end of July and then brought into force,” said Josh Frydenberg, Australia’s Treasurer on 20 April 2020.
The Australian government’s press release states, “The Government has decided that the original timeframe set out in its response requires acceleration. The Australian media sector was already under significant pressure; that has now been exacerbated by a sharp decline in advertising revenue driven by coronavirus. At the same time, while discussions between the parties have been taking place, progress on a voluntary code has been limited according to recent advice provided by the ACCC following a request by the Government for an update. The ACCC considers it is unlikely that any voluntary agreement would be reached with respect to the key issue of payment for content.”
Frydenberg is still calibrating various remuneration methods to figure out how much the news aggregators will have to pay Australian news companies. He did, however, suggest that “multi-billion dollar fines” would be levied for non-compliance by tech companies. “What we’ve seen over recent years with the evolution of technology is the rise of these social media giants. It’s delivered enormous consumer benefits to people across the world and indeed here at home. Still, it’s also been the source of major disruption, and it has brought into question the viability of traditional media outlets,” Frydenberg said.
Australian media companies have welcomed the government’s action to make the tech giants pay as their classified revenues declined from $2.35 billion in 2001 to $143 million in 2016, according to ACCC estimates adjusted for inflation. The declining ad revenue situation for media owners was exacerbated by the Covid-19 pandemic lockdowns expected to shrink the Australian economy by 6.7% this year. In the wake of lockdowns, several Australian dailies have suspended all staff and printing, and the shareholders of the 85-year old Australian Associated Press wire service have decided to close down operations.
News Corp Australia’s chairman Michael Miller said that the tech giant’s massive failure to pay content creators and copyright owners has put at risk the original reporting that keeps communities informed. News Corp recently made it known that it will stop printing around 60 regional newspapers. Marcus Strom, president of the Media Entertainment and Arts Alliance, a media professionals’ trade union, said, “The Australian government has realized that voluntary codes don’t work when there is a bargaining power imbalance.”
Some news publishers apprehensive of government’s action
However, some Australian news publishers are apprehensive of the government’s action backfiring or having unintended consequences as Google has a history of finding loopholes in previous attempts to create a somewhat level playing field. They fear the possibility of some kind of retaliation by the tech giants as they have done in the past.
When Spain declared in 2014 that news aggregators would have to pay royalties for using news content, Google shut down its news service in that country. In 2019, a group of 200 Germany publishers sued Google under the 2013 copyright law in the European Union court of justice for US$ 1.2 billion for the use of content. However, Google won the case on a technicality because the EU court ruled that Germany had not duly notified the European Commission on the existence of the law.
Facebook has reacted with disappointment to the Australian government’s action. It said it had invested millions in supporting local publishers with content arrangements and training and created a US$ 100 million fund to help news media organizations suffering from losses caused by the Covid-19 lockdowns. However, US$ 75 million of this fund is for free advertising on Facebook, and the other US$ 25 million will go only to North American publishers. Google has also quite charitably set up an offer of free advertising for small and local news media publishers.