The Australian government introduced a world-first media legislation in parliament on Wednesday which forces big tech giants Facebook and Google to negotiate a payment deal with news organizations and media outlets for using their content in Facebook’s newsfeed and Google’s search. The law aims to address the loss of advertising revenue traditional media companies have faced as both advertising and viewership are shifting to the big tech platforms. Australian print media has seen a decline of 75% in advertising revenue since 2005. While this loss has been partially offset by subscriptions, it still hasn’t been enough to sustain media houses. This has led to several Australian news outlets to close down or cut jobs.
The law works by providing media outlets with a safety net to fall back to when payment negotiations with Google and Facebook do not lead to a commercial deal. After all negotiations fail, the law will force a resolution through a final offer arbitration where each party would present their offer to independent judges to make a decision. If the tech giants fail to comply and refuse to negotiate, they face a penalty of A$10m, or 10% of their annual turnover through Australia, or three times the benefit obtained, whichever is greater.
While the law was welcomed by media companies and news outlets, the same feeling wasn’t shared by Google and Facebook. Once the law is passed, it will set a global precedent for other countries to regulate these digital platforms. In a retaliatory move, Facebook threatened to stop Australian users from sharing news stories on their platform if the law is passed. Google ran an advertising campaign in Australia arguing how damaging the law will be, stating its search services will dramatically worsen under the change.
The bill came into existence in response to a report from the Australian competition regulator, the Australian Consumer and Competition Commission. In 2017, the commission was tasked by the government to inquire into the impact of Facebook and Google on the state of competition in media and advertising. Following an 18-month inquiry, the commission found there was a bargaining power imbalance between news outlets and digital platforms and recommended that guidelines should be created to govern their commercial deals.
The bill was introduced in the House of Representatives on Wednesday but is unlikely to be passed before 2021. This leaves a lot of room for changes to be made to the draft. One such concession made to the draft in the favour of Facebook and Google as the legislature now recognizes the monetary value the platforms provide to news businesses by directing readers to their websites.
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