The Australian treasurer has unveiled a world-first mandatory code, or bargaining model, that will force Google and Facebook to enter negotiations with media publishers to pay for news content. If discussions break down, negotiations can go to arbitration where a deal will be mandated.
The announcement is the latest stage in an 18-month process which has seen the Australian government push the digital giants to finalize an agreement with media companies. The code also compels the tech giants to provide more data transparency and control to media companies using their services.
Treasurer Josh Frydenberg said in a press conference on July 31, “As the technology has developed and as the power, the wealth, the influence of these digital platforms, namely Google and Facebook, has grown, our regulatory framework has not kept up.”
“And as a result, there is a very unequal bargaining position between Australian news media businesses that produce original content and the digital platforms,” he added, saying the media landscape was “at stake” if changes were not made.
“It became apparent to us a number of months ago that we werent making progress on that critical issue of payment for content,” he said. “Hence we are moving down the path of a mandatory code.”
In December 2018, the consumer watchdog, the Australian Consumer and Competition Commission (ACCC) released a report about the market influence of Google and Facebook on the Australian mediascape. The report found a “fundamental bargaining power imbalance” between the digital giants and media.
In December 2019, the federal government tasked the ACCC to work with Google, Facebook, and media companies on creating a voluntary code. However in April this year, the ACCC reported to the government that negotiations were fruitless.
On April 20, the treasurer along with the communications minister announced that the ACCC would be developing the mandatory code, which was released today. This code will go through a round of public consultation before being finalized.
The code currently covers Facebook and Google, but other digital platforms may be added if they attain a “bargaining power imbalance” with Australian news businesses in the future. Further, public broadcasters ABC and SBS will miss out.
How the Code Works?
News media organizations can notify Google and Facebook that they intend to enter a formal bargaining process over how the digital giants will pay for news content.
The code requires both parties to negotiate in “good faith” and allows for a three-month period to negotiate and mediate.
Smaller media organizations can also band together and collectively bargain with the digital giants. ACCC Chairman Rod Sims noted that the bargaining power imbalance between the tech companies and small or rural news companies was “particularly acute.”
In fact, the code even allows media companies with relatively low annual turnovers of $150,000 per year to negotiate payment deals.
If no agreement is reached between the parties, the matter can be taken to an arbitrator. The arbitration process must be completed in 45 days. Both parties will be allowed to submit one offer to the arbitrator and can respond once to the opposing partys offer.