Australia’s ground-breaking media law to make platforms pay has cleared its last hurdle before a Parliamentary vote as Microsoft sparked a tech war of words by calling on the United States to pass similar laws.

It is the first time one of the tech giants has sided with the media companies’ calling for new payment laws — another sign of the likely impact that Australia’s unique approach will have globally.

The parliamentary inquiry into Australia’s media bargaining code — which would force Google and Facebook to pay substantial amounts to news publishers to carry journalism — unanimously recommended the bill be passed.  

The platforms strongly oppose its compulsory arbitration, which they say is too favourable to publishers.  

The parliamentary committee concluded the law’s provisions would “provide the basis for a more equitable relationship between the media and Google/Facebook and, through this, help safeguard public interest journalism in Australia.” 

The findings mean the bill is guaranteed to pass.

In a concession, the Australian government has committed to reviewing the impact of the law in 12 months for any fine-tuning. No major changes were recommended, but minor amendments to the bill cannot be ruled out before the final version hits Parliament in the next few days.

Australian Treasurer Josh Frydenberg welcomed the Senate committee’s report. He urged the news media companies and digital platforms “continue to work constructively towards reaching commercial agreements.” (Only if talks fail do the provisions of the mandatory code kick in.)

Google and Facebook have threatened to withdraw key products from Australia if the compulsory arbitration remained the final bill. 

It is now clear the government has not backed down on any of these key measures. The contentious tools were designed by the national competition regulator to address what it argues are substantial imbalance of power. 

Big Tech vs. Big Tech  

Microsoft had recently dealt itself into the Australian debate about a code that doesn’t directly involve it, but its blog calling for the laws to be adopted internationally took its tangle with Google next-level.

Microsoft President Brad Smith posted a lengthy treatise about the role journalism plays in keeping communities strong, saying Google’s “threat to boycott an entire country got our attention.” 

“We are confident we can build the service Australians want and need,” Smith said of its Bing search product. “If we can grow, we are prepared to sign up for the new law’s obligations, including sharing revenue as proposed with news organisations.

“Yes, Australia’s proposal will reduce the bargaining imbalance that currently favours tech gatekeepers and will help increase opportunities for independent journalism.”

Smith added: “The United States should not object to a creative Australian proposal that strengthens democracy by requiring tech companies to support a free press. It should copy it instead.”

Google fired back at Microsoft with its own post: 

“Of course they’d be eager to impose an unworkable levy on a rival and increase their market share,” blogged Kent Walker, its senior vice president of global affairs and chief legal officer.

“The issue isn’t whether companies pay to support quality content; the issue is how. The [Australian] law would unfairly require unknown payments for simply showing links to news businesses, while giving, to a favoured few, special previews of search ranking. Those aren’t workable solutions and would fundamentally change the Internet, hurting the people and businesses who use it.” 

The Australian regulator has argued the code does not require payments for links or preferential rankings.

The code in context 

The code will strengthen the hand of publishers when negotiating their commercial agreements and makes it impossible for a platform to drop a publisher’s content if pricing talks fail. (See below.)

It is geared to generate higher payments to publishers by applying antitrust pressure to redress the power imbalance. 

This is in contrast to the approach taken in France, where a deal was recently signed by Google and a consortium of most French publishers after the regulator intervened to help the media in a long dispute. The French deal is built on strengthening copyright laws, a move that has been mandated across the European Union. Its payments are complex, according to documents sited by Reuters, and substantially lower than the ones Australian news publishers are seeking.

The government and regulator in Australia would prefer commercial deals to be struck without resorting to the tough measures of the mandatory code. But they believe the constant threat of the code hanging over talks will deliver higher and fairer payments. 

After Microsoft met the Australian prime minister, Google appeared to adopt different tactics. It halted its online campaign against the code and reversed an earlier decision not to launch its new Google News Showcase in Australia. The product went live in early February, but top tier media companies and others have dismissed the offers. 

Showcase is a bespoke product offered to a select number of publishers worldwide. It has launched in more than 12 countries. The invitees are paid a fee for submitting a set number of articles every day in a curated feed. It doesn’t cover all a publisher’s stories nor all of Google’s existing products such as Google News or Google Search. 

The regulator, the Australian Competition and Consumer Commission (ACCC), has rejected Showcase because it does not address its competition concerns. 

Google maintains that Showcase would work under the new code, not as an alternative to it, and it is offering deals to every publisher in Australia.  

The ACCC has expressed a preference for network-wide licence which covers the use of all a news media company’s content across a platform’s key assets. And this approach avoids the need for explicit payment for links.

Google responded to the parliamentary committee’s findings through its Australian & New Zealand head of government affairs and public policy, Lucinda Longcroft, who told INMA in a statement: “We’ve proposed reasonable amendments, including fair arbitration and that the Code apply to News Showcase, which is already paying publishers and supporting journalism in Australia, the UK, and around the world. We look forward to engaging with policymakers through the parliamentary process to address our concerns and achieve a Code that works for everyone: publishers, digital platforms, and Australian businesses and users.” 

Yet Google and Facebook may be out of time in Australia. 

The media bargaining code is expected to pass into law over the next two weeks and will create a new global pricing precedent and model for negotiations.

The world is watching

In the preamble to Microsoft’s blog, the company said, “We’ve heard from people asking whether Microsoft would support a similar bargain code proposal in the United States, Canada, the European Union, and other countries. The short answer is yes.” 

• In the United States, the News Media Alliance publisher lobby group has backed the Australian code and welcomed Microsoft’s stance. Its president and CEO, David Chavern, said Microsoft’s endorsement of the Australian bargaining code “shows what real tech leadership looks like. Instead of issuing threats, they are trying to find mutually sustaining relationships that help to build society,” he told The Australian Financial Review. “We were particularly heartened by the call to bring a similar system to the U.S.” 

• In Canada, where the industry group News Media Canada is pushing a similar code to its national government, Chief Executive John Hinds, said they were “100% in support of the Australian model.” They preferred it over the new model in France. “We believe it has to be beyond copyright ... it has to cover links, which the Australian model does. ... We also like the idea of the code of conduct as an ongoing mechanism backed up by legislation,” he said.

• In Europe, lawmakers who are leading the continent’s update of digital regulation have also zeroed in on the Australian legislation as a way to boost news publishers in striking payment deals with the Big Tech’s news aggregators and social platforms. 

The Australian Bargaining Code at a glance 

1. News media publishers and platforms are required to enter binding commercial agreements.
2. Google and Facebook must agree payment to use a publisher’s journalism across the platform’s network (including Google News, Google News Showcase, and Google Search, as well as Facebook’s feed and Facebook News).
3. A range of punitive measures against the platforms would kick in only if deals cannot be reached. 
4. If a negotiation falls over within 90 days, each party would submit a final offer for payment of content and an arbiter must pick one of the two offers. (This is the so-called Major League Baseball arbitration mechanism.)
5. Platforms must strike deals with each Australian publisher. If one is left out, then the platform must drop its Australian use of all professional journalism and from every source — local and international.
6. Google or Facebook must give notice of any major change to their algorithms that would negatively affect a publisher. The length of notice and scope of changes is expected to be reduced further in a concession to the platforms. It includes standards on a range of other service areas.
7. Only Google and Facebook are named in the code, chosen because of their dominant roles in the news ecosystem. Other tech companies may be added later.
8. Collective bargaining by groups of publishers is permitted.
9. The code covers all producers of professionally created journalism.
10. Failure to comply with the Australian code could cost the big platforms fines of up to 10% of their annual local revenue.

Stay tuned here next week as the bill goes to the full Parliament.

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