Australia Requires Facebook and Google to Pay For News

The Australian government has unveiled its plan to force tech giants such as Google and Facebook to pay news outlets for their content. Australia will force U.S. tech giants Facebook Inc (FB.O) and Alphabet Inc’s (GOOGL.O) Google to pay Australian media outlets for news content in a landmark move to protect independent journalism that will be watched around the world.

Treasurer Josh Frydenberg said the “world-leading” draft code of conduct aimed to give publishers “a level playing field to ensure a fair go”.

Many news outlets have shut or shed jobs this year amid falling profits. Facebook and Google strongly oppose the proposal, even suggesting they could walk away from Australia’s news market.

Mr Frydenberg said the code of conduct – drafted by Australia’s competition regulator – would be debated by parliament. It could impose “substantial penalties” worth hundreds of millions of dollars on tech companies which fail to comply, he said.

The Draft Code

The Australian Competition and Consumer Commission draft calls on tech companies to pay for content, though it does define what it is worth.

It would allow news companies to negotiate as a bloc with tech giants for content that appears in their news feeds and search results. If negotiations fail, the matter could be arbitrated by the Australian Communications and Media Authority. The draft code covers other matters too, including notifying news companies of changes to algorithms.

Australia will become the first country to require Facebook and Google to pay for news content provided by media companies under a royalty-style system that will become law this year, Treasurer Josh Frydenberg said.

“It’s about a fair go for Australian news media businesses. It’s about ensuring that we have increased competition, increased consumer protection, and a sustainable media landscape,” Frydenberg told reporters in Melbourne.

Penalties could be up to A$10m (£5m; $7m) per breach, or 10% of the company’s local turnover.

The code will initially focus on Google and Facebook but could be expanded to other tech companies, the treasurer said. The move comes as the tech giants fend off calls around the world for greater regulation, and a day after Google and Facebook took a battering for alleged abuse of market power from U.S. lawmakers in a congressional hearing.

The code of conduct will be subject to a month-long consultation period before being debated in parliament “shortly after” August, Mr Frydenberg said.

If legislation is passed, the code is designed to be reviewed after a year.

The Rationale Behind the Move

Mr Frydenberg said: “Nothing less than the future of the Australian media landscape is at stake with these changes.”

“Today’s draft legislation will draw the attention of many regulatory agencies and many governments around the world,” he said.

Australia’s biggest media companies have lobbied hard for the proposal.

It was a “watershed moment” in efforts to end “free-riding” by the tech companies, News Corp Australia executive chairman Michael Miller said on Friday.

Google’s local managing director, Mel Silva, said the company was “deeply disappointed” and argued the move would discourage innovation.

“The government’s heavy-handed intervention threatens to impede Australia’s digital economy and impacts the services we can deliver to Australians,” she said.

Facebook has previously suggested it could remove Australian news from its platform if such requirements were imposed – arguing the cost to its business would be negligible.

The conservative government is pushing ahead with the changes after the pandemic created an advertising revenue crisis for many Australian media companies.

Facebook and Google did not immediately respond to requests for comment.

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