Who owns the news?

This article was co-authored with Alex Buchanan.

The Australian government recently introduced a new legislative bill, which requires Facebook and Google to compensate Australian news outlets when displaying that outlets news. The mandatory code of conduct has been drafted by the Australian Competition and Consumer Commission (ACCC), with the intent to even out the playing field between large tech giants and news organisations.

The ACCC is Australia's national regulatory body, responsible for monitoring fair trading and competition in Australia. Its intervention suggests that it is no longer possible for the free market to regulate the relationship between local news media and global tech platforms. Rather, the proposed new bill reflects the need for change within competition law, to balance the concentration of power in Australian media. The ACCC sympathises that while participation on these platforms is voluntary, news outlets are now concerned that if they do not participate, their revenue will curtail. In an industry already financially struggling, the view appears to be that the power that these platforms hold has diminished smaller organizations' freedom of choice and created a power imbalance, that promotes anti-competitive behaviour.

The ACCC have reported that more than 80% of digital advertising goes to Facebook, Google and Youtube. These platforms argue that this revenue is not because of news media, but because of the appeal of advertising to a large audience. While this argument is true, it fails to address the fact that news media helps to drive audience traffic onto Facebook and Google. This is the position that the ACCC hold. From this perspective, the ACCC see it as fair that news outlets obtain relative compensation, as Facebook and Google benefit from the advertising gained indirectly through the increased audience that is driven by news. While Google and Facebook have established commercial arrangements with some publishers where they pay for content, they feel that this code goes too far.  It would provide a regulatory fallback to commercial negotiations that they fear may result in less than good faith negotiations from publishers.  

Google suggested in response to a parliamentary enquiry that the proposed scheme would be unworkable and untenable for it and that the result may be that its search engine ceases to be available in Australia. Google also ran an experiment with about 1% of its users where news site results were buried.  Some speculate that this experiment was seeking to establish the value of Google to news sites and therefore that it should not have to pay for news content.

Facebook has responded indicating that the new code would impact on Australians.  It has suggested that it may need to remove the ability for Australians to post news content if the code proceeds.  The 3 mains concerns Facebook has set out in relation to the code are the code:

1. effectively mandates a commercial agreement with every single publisher in Australia which would be a challenge;
2. contains binding arbitration in relation to price -this would undermine any good faith negotiations; and
3. requires non differentiation that would prevent Facebook from offering commercial terms to certain publishers and enable agreement on terms to change the display of their content.