Google and Facebook Forced to Pay Media by Australian Government

Treasurer Josh Frydenberg gives a press conference at Parliament House in Canberra, Australia on Nov. 27, 2018. Tracey Nearmy/Getty Images

Following a wave of support to speed up the regulation of Google and Facebook, the Australian government on Monday announced that it will introduce a mandatory code to force the tech giants to pay publishers for content.

Treasurer Josh Frydenberg, along with Communications Minister Paul Fletcher, issued a joint statement today, instructing the Australian Competition and Consumer Commission (ACCC) to develop the code.

The code will cover issues related to data sharing, the rank and display of news content on feeds, enforcement mechanisms, and most importantly, revenue sharing from news content.

A draft of the code will be released at the end of July 2020 for consultation.

May 2020 was the original deadline set for the media companies and tech giants to negotiate a voluntary code.

However, the federal government received advice from the ACCC that progress was slow, and an agreement unlikely.

This ultimately forced the hand of the government—pushed along by the fallout from the CCP (Chinese Communist Party) virus, commonly known as novel coronavirus.

In recent weeks the CCP virus’ effect on the economy has forced media businesses into widespread cost-cutting, with the government stepping in last week with a media relief package.

The government’s announcement today follows hot on the heels of a decision by the French competition regulator on April 9 requiring Google to negotiate a voluntary agreement with French media companies for content.

In the United States, Google, Facebook, Amazon, and Apple are facing antitrust investigations on several fronts.

Why a Code in Australia?

The ACCC began its investigation into Google and Facebook in December 2017 in response to concerns of the “substantial market power” of the two companies in Australia.

In July 2019, it released the Digital Platforms Inquiry report. The ACCC found a significant portion of advertising was being diverted to Google and Facebook.

One key issue was how Google and Facebook grew their user base and generated web traffic from content owned by media companies but appearing on Google News or Facebook’s News Feed. A large portion of users would never make it to the media’s own website.

However, media publishers were not being paid for this content. In turn, the tech giants would sell the generated web traffic to advertisers.

It helped contribute to the slow decline of revenue for Australian media over a 15-year period.

In an opinion piece published in The Australian on April 17, Frydenberg said: “For every $100 spent by advertisers in Australia on online advertising ... $47 goes to Google, $24 to Facebook and $29 to other participants.”

In 2001, Australian media had classified advertising revenues of around $2 billion (adjusted for inflation: $3.08 billion), by 2016 this number had fallen to $200 million (adjusted for inflation: $211 million).

The ACCC found there was a 26 percent decline in the number of print journalists between 2006 and 2016.

Further, 106 local and regional news publications closed between 2008 and 2018. The closures left 21 local government areas (16 of which are in regional areas) without coverage by a single local newspaper.

This left a gap in news reporting on local government, courts, and regional issues. There was little chance the tech giants or new competitors would fill this gap.

The ACCC stated that these areas could not be left without coverage by journalists, and the media performed a “critical role in the effective functioning of democracy at all levels of government and society.”