Microsoft Urges US to ‘Copy’ Australia’s Big Tech Media Law

Satya Nadella, CEO of Microsoft, speaks in Berlin, Germany, on Feb. 27, 2019. Sean Gallup/Getty Images

Microsoft is calling on the United States to adopt Australia’s media payment law.

In a blogpost, Microsoft President Brad Smith wrote that Australia’s News Media Bargaining Code “deserves serious consideration” and that the United States should not object to the law, but “copy it instead.”

Smith indicated that Microsoft would support similar proposals in the European Union, Canada and other nations.

Since 2000, U.S. newsroom revenues have fallen by 70 percent and employment has halved, while over 2,000 newspapers have closed across the country, according to his post.

“Democracy has always started at the local level. Today, far too many local communities must nurture democracy without a Fourth Estate,” he wrote.

“The cure will likely require multiple medicines. However, part of an innovative prescription has emerged from halfway around the world.

“In Australia, Prime Minister Scott Morrison has pushed forward with legislation two years in the making to redress the competitive imbalance between the tech sector and an independent press.”

The News Media Bargaining Code introduced in July legislates a framework that will allow eligible Australian news companies to enter negotiations with Google and Facebook for payment.

Parties are given a three-month period to negotiate. However, if negotiations stall, the matter can be taken to an independent arbitrator.

The arbitrator has the authority to mandate an agreement via “baseball arbitration.” This means both parties submit their best offers, and one will be selected.

Google Australia was critical of the clause, among other issues, saying it “doesn’t provide a level playing field.” It argued that news businesses could make enormous demands based on vague valuations of news content.

However, Microsoft has applauded the clause saying “baseball arbitration” was used precisely to level unequal bargaining positions.

“With only one or two whales on one side of a nation’s table and dozens or hundreds of minnows on the other, the result is often a lengthy and expensive negotiation that leaves the minnows short on food,” he wrote.

The arbitration process is employed in Major League Baseball and has been credited with encouraging parties to speed up negotiations, to avoid a final adjudication.

“The Australians deserve credit for studying this landscape and discerning the similarity to negotiations between tech gatekeepers and smaller news organisations that have no choice but to do business with them,” Smith wrote.

But Google has hit back at Microsoft.

Global Affairs and Chief Legal Officer Kent Walker wrote, “Microsoft’s take on Australia’s proposed law is unsurprising—of course, they'd be eager to impose an unworkable levy on a rival and increase their market share.”

“But in its eagerness, Microsoft makes numerous claims that have been thoroughly and independently debunked.”

Top management from the tech giants have met with Australian leaders over the new Code.

Facebook CEO Mark Zuckerberg spoke with Treasurer Josh Frydenberg in late January.

Around the same time, Microsoft CEO Satya Nadella, and Smith, spoke with Prime Minister Scott Morrison, saying their search engine Bing, could service Australia if Google made good on its threat to pull its search service from the country.

Google Australia made the threat during a Senate Committee hearing into the new Media Code.

Shortly after Microsoft’s meeting, Google CEO Sundar Pichai also held talks with the Australian prime minister.

Morrison said the talks were “constructive” and should give Google “great encouragement to engage with the process.”

After the talks, Google Australia rolled out its News Showcase, potentially an alternative platform that will allow the tech giant to negotiate pay deals with media.