In what could be a significant move in the broader regulation of the digital eco-sphere, the Australian Government has announced that it’s looking to provide financial assistance to struggling local news organizations by implementing a new, mandatory code of conduct which would require Google and Facebook to share any revenue they generate as a result of news content with the relevant publishers of such material.

As per Australian Treasurer Josh Frydenberg:

“The Government has instructed the Australian Competition and Consumer Commission (ACCC) to develop a mandatory code to address commercial arrangements between digital platforms and news media businesses. Among the elements the code will cover include the sharing of data, ranking and display of news content and the monetization and the sharing of revenue generated from news.”

Treasurer Frydenberg notes that the Australian media sector was already under significant pressure, but that’s now been “exacerbated by a sharp decline in advertising revenue driven by coronavirus”. This, along with inaction from the digital giants in working to provide a more adequate process of compensation for publishers, has prompted the Government to act.

The announcement stems from the ACCC’s 600+ page “Digital Platforms Inquiry” report which was released in June last year. The report covers all aspects of the online media industry, and concerns relating to data-sharing, misinformation, and consumer understanding of how digital platforms operate.

The report breaks down the shifting media landscape, and how Google and Facebook have come to dominate the local advertising market, at the expense, in particular, of print media.

That imbalance prompted the Government to seek alternatives, and with a significant amount of Google and Facebook’s content coming from news publishers, a case can be made for a more mutually beneficial arrangement between them.

As per the report:

“The content produced by news media businesses is also important to digital platforms. For example, between 8 and 14 per cent of Google search results trigger a “Top Stories” result, which typically includes reports from news media websites including niche publications or blogs.”

That said, the ACCC also notes that:

“Google and Facebook each appear to be more important to the major news media businesses than any one news media business is to Google or Facebook.”

That gives the online giants significant power, which is why the Government is now seeking to step in and facilitate an alternative arrangement.   

Among the many recommendations, the ACCC calls for both Google and Facebook to:

• Within the limits of data protection and privacy laws, share data with media businesses about users’ consumption of the media business’ news content on the digital platform’s service(s). For example, data collected by Facebook on its platform, or Google on news content published in the AMP format and served from Google’s cache, derived from news content provided by media businesses.
• Give media businesses early warning of significant changes to the ranking or display of news that would be reasonably likely to affect the referral traffic of media businesses.
• Ensure that the digital platform’s actions will not impede news media businesses’ opportunities to appropriately monetize their content on the digital platform’s sites or apps, or on the media businesses’ own sites or apps.
• Where the digital platform obtains value directly or indirectly from content produced by news media businesses, fairly negotiate with news media businesses as to how that revenue should be shared, or how the news media businesses should be compensated.​

The final point is the key focus here, though the advanced warning of any algorithm shifts is also significant. 

Within its additional notes, the ACCC also calls for the parties to negotiate such deals among themselves:

“The ACCC considers that determining such issues by commercial negotiation, taking into account the unique nature of each commercial relationship, is more appropriate than having a regulator determine aspects of the relationship such as an appropriate price or snippet length.” 

Initially, on the official release of the report in December, the Australian Government gave Google and Facebook eleven months to respond to its request for the development of voluntary codes to address these concerns, but as noted, with the COVID-19 pandemic further reducing the capacity for news outlets to generate revenue through traditional means, and a lack of engagement from the online giants with respect to the development of these agreements, the government is now looking to take action, and legislate official rules on news revenue sharing.

Various nations have attempted to implement similar regulation, with less than desirable results.

Last year, France implemented its ‘neighboring rights’ copyright laws, which stipulate that media firms be adequately compensated when their content is used on websites, including in search engine results and on social media platforms. Google responded by saying that it wouldn’t ‘pay for links’, instead setting up an alternate process which meant that it would only display articles, images and videos in search results from media companies that had explicitly allowed it to use such for free. The dispute is still ongoing as to how to resolve the stand-off.

Spain, meanwhile, implemented its own laws around such usage back in 2014, which essentially required news aggregators to pay for a license to use news content. As a result, Google shut down Google News in Spain at the end of 2014, a move that reportedly saw many publishers experience double-digit drops in web traffic.

Given the precedent, it’ll be interesting to see what the outcome is in the Australian market. Based on past history, and its specific inaction in response to the Australian Government’s initial call for negotiation, there’s nothing to indicate that Google will be looking to alter its stance.

If anything, it seems that Google has sought to make a clear example of such cases – if Google negotiates, and allows other nations and publishers to see that such agreements are possible, that could end up costing it billions in fees around the world. As such, in all likelihood, neither Google nor Facebook will be intending to make a switch in their approaches, and will instead seek to alter their processes in accordance with revised local laws.  

That could lead to significant changes in the way content is displayed on the digital giants, which, if anything, will only take traffic away from the traditional media players, and provide more instead to less mainstream outlets.

The outcome then could be less reliable news coverage overall – which is another key area of concern raised by the ACCC’s report. As such, the initiative is interesting, and the logic behind the push has merit. But enforcement looks set to remain problematic.

The Australian Government plans to have a draft mandatory code by the end of July, with a final code to be settled soon thereafter.