Facebook, Google and the Australian Law that will Change the Concept of Paid Media

The relationship between tech firms and the news world over the years has been quite an interesting one. While tech firms freely share content from news organizations in the name of promoting journalism (while making profits), said news organizations have protested the practice, citing unfairness in standards when it comes to dealing with bargaining rules.

While this has, on various occasions led to clashes between the two entities – and sometimes even those involving the law itself, not much has been done to actually repair the issue. The closest development that has ever happened is the deal Facebook recently made with news outlets in the UK (https://www.theguardian.com/technology/2020/dec/01/facebook-to-pay-uk-media-millions-to-licence-news-stories) which requires the former to pay a certain annual sum to the latter in exchange for featuring their content.

The Australian government, however, seems to be on a path to change all of that. In what is being considered a landmark move worldwide, their parliament has passed a major law that will now require global tech powers to pay for any news content they feature on their platforms.

Known formally as the ‘News Media and Digital Platforms Mandatory Bargaining Code,’ the law has been passed by the Australian Competition and Consumer Commission (ACCC) after an 18-month period of discussion and deliberation. According to the ACCC, the passing of the law has been the need of the hour, given the severe lack of balance of power between the two entities.

Up until now, tech platforms have been taking away the larger portions of revenue earned from ad spend involving original news content. Essentially, around 53% of revenue from all ad spend goes to Google, while 28% goes to Facebook. This leaves a mere 19% for all other parties involved. Media companies have further argued that it is beyond unfair for the companies to profit in this way from news and analyses that they have painstakingly put together – and offer them the least cut when it comes to profits.
The new media law essentially turns this concept upside down. Based upon the initiative of allowing journalists and news outlets to earn the funding they deserve, the law makes it mandatory for global technology platforms such as Facebook and Google to pay the news organizations for their content.

The law essentially regulates this through a set bargaining code that allows both parties to come to an agreement within a particular framework. In the event that they cannot reach any agreement even with the framework in place, an arbiter will be brought in to determine the “final offer arbitration.”

Both tech platforms and media companies are expected to fully abide by the code. The law explicitly states that either party found breaching the code – even if it is “based on good faith,” shall be punished by a fine equivalent to $10m or 10% of the company’s annual turnover – depending on which is larger.

Unsurprisingly, technology companies have not taken the news well. Both Facebook and Google have cited the law as unfair and have threatened the Australian government with suspending users from sharing news content and eliminating the search option respectively. Google even went on to publicly launch a campaign against ACCC’s code, calling it a major factor behind “breaking search. The only entity that has so far supported the initiative has been Microsoft. Though not yet subject to the code, they have shown positivity for the same, and have openly claimed that they would be happy to comply.

With the law now passed, the next steps include the ACCC’s treasurer reviewing the workings of the code for the upcoming 12-month period. The main goal behind this is to see to it that the purpose of passing the law – to ensure that news organizations are rightfully remunerated for their content – remains a reality.