Australia is in the process of forcing Google and Facebook, the digital giants, to pay local media companies for using their news content. The Federal Government has asked the Australian Competition and Consumer Commission – ACCC to develop a code of conduct for tech platforms to pay fair compensation to ‘level the playing field.’ The government authorities step up the efforts in response to a slump in the advertising industry inflamed by coronavirus pandemic.Â
Josh Frydenberg, Australian Treasurer, said that the digital platforms are consuming the content of local media organizations and sharing a large portion of online advertising revenues. In contrast, the publicizing agencies are suffering from a downfall. The regulatory body called ACCC drafted a regime of revenue sharing between the tech companies and the local media groups for a voluntary agreement.
The competition watchdog, ACCC, was already working with resources to crack down on digital platforms as the Federal Government sought the growing market of Facebook and Google using the market power of local advertising agencies. The Government also confirmed that it would allocate a budget of $27 million to a new team in ACCC to monitor the competitive activities within the digital companies.
Becoming one of the first countries to ask digital platforms to pay for the content, the Australian Government talked with Facebook and Google that failed to yield a voluntary code. Now ACCC will frame a mandatory code of conduct between the two parties after the talks hold up the content payment rules.
“We understand the challenge that we face; this is a big mountain to climb. These are big companies that we are dealing with, but there is so much at stake we’re prepared for this fight,” Frydenberg reports in Canberra.
Paul Fletcher, the Communication Minister, also said that the new reforms would protect Australian journalism. He said that “Journalism matters. Journalism is vital in a democracy. Journalism costs money to produce. It’s our Australian media companies that employ journalists and produce the stories, produce the analysis, produce the content that Australians want to see.”
The mandatory code will include the Privacy Act strengthening the power of Australian media agencies over their information collection and usage. The system will also contain the rules for sharing, ranking, and displaying of data collected from local news and how the revenue generated from news content will be shared.
If in case the code is misconduct, the watchdogs will compel the penalty established for binding dispute resolutions. Frydenberg said in a statement that “It’s only fair that those that generate content get paid for it.”
A report by ACCC says that the online advertising market of Australia is worth around A$ (Australian Dollar) 9 billion a year, which is eight times more than the 2005 total revenue figure. Frydenberg explained that of every A$100 spent on online advertising, excluding classifieds, Facebook is consuming 24% of the amount, whereas Google claims 47% of the revenue in total.
Facebook and Google in response to the new model
The mandatory code of conduct will make it compulsory for digital platforms to ensure that they will neither harm the market power of Australian media nor damage its competition. If that happens then the Federal Government will force it and impose new regulations for the control over its obligations.
Facebook seemed to be surprised as the Government of Australia made a harsh move. Will Easton, the managing director of Facebook Australia and New Zealand, said in an email that “We’ve invested millions of dollars locally to support Australian publishers through content arrangements, partnerships, and training for the industry.”
Facebook already invests in the news industry with $100 million – Facebook Journalism project – that the company pledged to support the news organizations at times when the advertising revenue is declining. Easton said that “We believe that strong innovation and more transparency around the distribution of news content is critical to building a sustainable news ecosystem.”
Google was already cooperating with the ACCC on the matter and decided to continue with plans for the media’s mandatory code of conduct. Google spokesperson said that “We have sought to work constructively with industry, the ACCC and government to develop a code of conduct, and we will continue to do so in the revised process set out by the government today,”
The Executive Chairman Australasia of News Corporation Australia, Michael Miller, said that the news industry is looking for “fair payment and at the same time a substantial payment.” Though there isn’t any confirmation on how much Google and Facebook will pay news publishers, but would go beyond millions of dollars.
Australian media support package
In a fray to get fair compensation, many media companies have stopped working on dozens of newspapers across Australia as the industry is facing a pandemic shutdown that has cost the advertisers severe damage.
The Australian Government, besides the new code reforms, recently announced a package of A$50 million to support the local media companies. However, TV commercials and radio broadcasters will be given a wave-off of frequency spectrum taxes for 12-months.
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