On the face of it, the Australian government’s formal response to its regulator’s inquiry into digital platforms will require the tech giants to negotiate with media companies on sharing of data and revenue, as well as on algorithm changes.
Australia becomes the first government anywhere to respond with a comprehensive list of initiatives after holding an inquiry into the sector.
In reality, this forced sharing of revenue and data won’t happen overnight, and publishers fear it may not happen at all because the government has adopted a soft approach. This path would see negotiations on the code of conduct struck on a voluntary basis between individual platforms and publishers. The government would only intervene if a deal could not be reached.
The government has largely taken the side of the news media companies, and it follows the conclusion of the broadest inquiry anywhere into the impacts of the digital platforms’ businesses on the journalism and advertising ecosystems.
The inquiry was run by the Australian Competition and Consumer Commission. It was flagged as one to watch by INMA’s recent report on decoding to the publisher-platform relationship because of its unique and comprehensive anti-trust scope.
The government adopted many of the regulator’s recommendations while leaving room to adopt other key points down the track.
What the government will do
- It will require platforms and publishers to strike deals on codes of conduct, which will cover how they work with each other on commercial matters including revenue, data sharing, use of content, and algorithm changes. If voluntary agreements can’t be reach within a year, the government will impose one.
- It will set up a new division of the competition regulator to proactively manage digital platforms
- It will expand part of media regulation to ensure a new framework covers all players in content production and publishing, including the digital platforms
- It will mandate a new, comprehensive inquiry into the digital platforms’ dominance within the advertising technology ecosystem
- It will expand a range of financial grants for local and regional publishers
- And it will reform privacy law to increase the power of consumers and lessen that of the digital platforms
What it won’t do (at least, not yet)
- It won’t embrace the idea of providing tax incentives to invest directly in public interest journalism. (There has been a big push to copy the Canadian model of tax deductions for journalist wages and for consumer subscriptions).
- It stopped short of introducing mandated “take down” laws for use when copyright or other infringements occur online. Instead, it will consult the industry further before it decides its final plan.
- And it rejected the idea of imposing tough anti-merger laws in advance of any future corporate takeovers initiated by the digital platforms
The concept of a code of conduct between platforms and publishers — fundamentally seen as resetting the power imbalance in negotiations — has gained traction in the past year. The UK’s Communication and Media Authority is examining something similar and will report by mid-2020.
The main Australian publishers are united in their view of the need for an agreed code of conduct but are divided on how to get it done.
Hugh Marks, CEO of Nine (the biggest broadcaster and publisher of titles, including The Sydney Morning Herald), said in a statement it was better to give publishers and platforms the opportunity initially to strike a deal.
The step doesn’t go far enough for others, including News Corporation.
“We are encouraged the government is taking action on a number of fronts to deal with the power imbalances the digital platforms hold over media businesses,” Michael Miller, News Corporation Australia’s executive chairman, said in a statement. “However, the government's approach of a voluntary code of conduct to oversee commercial arrangements as a first step appears out-of-kilter with leaders of other jurisdictions who have advocated firmer action.”
The government and the regulator appeared unexpectedly stung by criticism of the voluntary component and quickly sought to toughen their messages.
Communications Minister Paul Fletcher told the media after the response was announced that while the negotiations over the code would be voluntary, the resulting deal would be binding and legally enforced. The Treasurer, Josh Frydenberg, was more emphatic when he released the government’s decision: “The companies are on notice. The government is not messing around. We will not hesitate to act.”
And the head of the regulator, Rod Sims, later felt the need to go on the offensive while talking with Nine’s The Australian Financial Review to reiterate that he would not hesitate to step in if Facebook and Google didn’t reach an agreement with Australian media companies.
No doubt the French news publishers, heading to court over the platforms’ refusal to recognise the new copyright laws, will be watching the government threat of intervention with interest.
While U.S. publishers are fighting on Capitol Hill for support for a new law which would allow them collectively bargain with each of the digital platforms, Australian publishers can gain that right simply by asking the regulator for authorisation to collectively negotiate.
So far they haven’t seen the need to.
Finally, it is worth noting the existing corporate relationships between some of the biggest news media companies and the platforms. These may impact the success of the talks for respective codes conduct.
News Corp has become public supporter of Apple and Facebook this year because of those companies’ decisions to introduce a form of payment for use of content on the digital platforms.
In the other camp is Nine Entertainment, which after its merger with the former Fairfax Media publishing business inherited one of the tightest relationships with Google of any media company. Google is deeply integrated with Nine’s business, effectively performs many key advertising functions for Nine, and acts as the landlord for Nine’s publishing.
Beyond these corporate allegiances, the Australian news media industry, however, is just like other markets grappling with the changing relationships with the all-powerful platform players.
With its national regulator much further down the road than others around the world, the news publishers are now looking to the Australian Government’s new commitments as their main hope to help level the commercial playing field for the new decade.