Australia aims to make tech giants pay remuneration to traditional media

Say a friend recommended a news article to you but can’t remember exactly what publication it was in. You might search a few keywords on Google to find it. Or your friend might tell you who posted the story on Facebook, so you find it on their feed. It’s entirely possible that you’re reading this story because you saw it on one of those platforms. In the digital age, news media and these tech giants have formed something of a symbiotic relationship: Google and Facebook have become the go-to places for anything and everything, including news, and they in turn send readers to news media websites. More and more each year, the tech giants’ worth goes up as traditional media outlets see revenues shrink. It raises the question, if these tech companies are profiting in part from the work of news outlets, do they owe those outlets any remuneration? The Australian government’s answer is yes. What’s more, they have gotten Google to agree.

New Town Square 

The federal government had already commissioned the Australian Competition and Consumer Commission to draw up a code encouraging remuneration and cooperation between tech giants and news organisations, with negotiations between the parties leading to a finalised code of conduct in November. But when the COVID-19 pandemic’s economic fallout led to the print discontinuation or even total closure of more than 100 regional newspapers, permanent loss of jobs came along with it. Traditional media outlets that did not close still saw a precipitous drop in ad revenue with businesses shuttered and lacking resources to spend on advertising, resulting in the standing down of staff or cutting their pay.  

This prompted Treasurer Josh Frydenberg in April to instruct the ACCC to write the code itself and deliver it by the end of July with the goal of creating “a level playing field.” Communications minister Paul Fletcher said the code would do just that. 

“Digital platforms have fundamentally changed the way that media content is produced, distributed, and consumed,” he said. “Digital platforms need to do more to improve the transparency of their operations for news media providers as they have a significant impact on the capacity of news media organisations to build and maintain an audience and derive resources from the media content they produce.” 

Large tech companies have become the new town square, traditional outlets argue, and they became that way in part because of the reliable and credible news traditional media bring to the forum. In other words, news organisations lend their legitimacy to the tech companies, and some remuneration is only fair. 

Wide Gap 

Google for its part does not deny that there is value in high-quality news, both social and monetary. It does, however, dispute how much advertising revenue it makes from news stories produced by traditional media. Nine news chairman Peter Costello wants the new code to require remuneration of 10% of what the tech giants make in online advertising. That figure was $6 billion in 2018, meaning news outlets would receive $600 million. But Google says only $10 million of its 2019 Australia revenue came from news-related searches and that it directed more than 3 billion searches to news outlets’ websites in 2018, a value of more than $200 million. 

“For publishers, large and small, we provide the ability to monetise their content with advertising and send over 24 billion visits (or clicks) to news publishers every month globally—that adds up to 9,000 visits a second,” Google Australia managing director Melanie Silva wrote in response to the ACCC’s Digital Platforms Inquiry last year. “In total in 2018, Google sent more than 2 billion clicks to Australian news publishers from Australian users, and more than 1 billion additional clicks to Australian news publishers from users globally. Our Google News Initiative supports news publishers of all sizes to develop, test and implement innovative approaches to drive revenue for publishers and support greater media literacy among consumers.” 

But Google reversed course late in June, announcing a licensing program that will pay publishers such as InQueensland and South Australia’s InDaily. What’s more, in some areas Google will pay for users’ access to articles that are behind paywalls, allowing readers to learn valuable information and publishers to make money off their work.

Facebook has said it “disappointed by the government’s announcement, especially as we’ve worked hard to meet their agreed deadline.” Its earning report from 2019 shows it made $674 million in Australia last year, though there is no breakdown of how much of that came as a result of ad revenue from news stories. Facebook pointed to changes in its News Feed that prioritise content from friends and family over public content, including news. “Notwithstanding this reduction in news content on our services, the past two years have seen an increase in people engaging on our services and increased revenues, suggesting both that news content is highly substitutable with other content for our users and that news does not drive significant long-term commercial value for our business,” Facebook said. 

ACCC chair Rod Sims said in May that the commission is also focusing on the “indirect value” Facebook and Google gain from hosting news stories on their platforms. The legitimacy lent to the tech companies is worth far more than the direct benefit of ads on news stories, an assertion Silva denied. 

Measuring Value 

What exactly is that indirect value, and how does one measure it? The first part of that is easier to answer than the second.  

“You want to be the allsinging, dancing search engine … you need news so that when someone types in coronavirus you want all the news articles on that. Otherwise it’s a pretty limp search,” Sims said. “But there’s other benefits from having news media. One is that you get better content. It’s in the platform’s commercial interest to have quality. 

“They talk about benefiting society. Journalism does benefit society … how important is it to them to be part of that? In their public pronouncements I don’t think Google and Facebook have really been addressing that issue, but it is going to be front and centre of what we will be discussing. 

It’s hard to deny that in the pandemic accurate information about the novel coronavirus, the threat it poses, and potential medical treatment is of vital social importance. As is accurate information about government regulations related to the pandemic: what businesses may open, how many people are allowed to gather for certain events, etc. This information is particularly valuable when put up against the stream of fake news regularly found on these platforms—although one could argue that fake news provides a lucrative revenue stream of its own. 

Deciding on an appropriate sum is something the sides would likely never agree on given how far apart they are on figures. When Spain ordered Google to pay publishers remuneration for Google News revenue, it responded by removing the service from the country. France has been unsuccessful thus far in getting Facebook and Google to pay for media content hosted on their platforms. But in its about-face, Google said it will pay publishers in Australia, Brazil, and Germany, with more countries to come. Google did not divulge financial details of the licensing arrangement. Can Australia really get them to pay $600 million or perhaps even $1 billion? Fletcher thinks that using competition law rather than copyright law can make the difference. Whether he’s correct remains to be seen, but the scrutiny has already sparked change.