(Staff articles from The BLOOMBERG NEWS & FOX BUSINESS on 30 July 2020.)
Frydenberg
said the mandatory code of conduct, which will be legislated into law this
year, is needed to ensure the viability of Australian media companies. "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.
Under Australia's proposal, the U.S. social media and search giants would be required to negotiate with Australian media companies to use their content. Australia will become the first country to require Facebook and Google to pay for news content. Both companies have spent years fending off demands for payment from news publishers worldwide.
Neither
Google or Facebook immediately responded to requests for comment. If an
agreement cannot reached, the matter will be sent to a statutory authority for
arbitration. If a deal still cannot be reached within 45 days, the government
body will make a final determination.
Facebook Shouldn’t Have to Pay Publishers for News
With
local newspapers ailing, the Australian government has hit on a seemingly
simple solution: force Google and Facebook to subsidize them. It’s the latest
example of an increasingly global tactic. And it’s hopelessly misguided.
Last month, the Australian Competition
and Consumer Commission released a “mandatory code of conduct” that (if the
legislature approves) will establish a bargaining process between digital
platforms and local news organizations.
The
stated goal is to determine how much the latter should be compensated for the
snippets of news that the platforms display to their users, on the premise that
an imbalance of competition has led to the publishers’ decline. If the two
sides fail to agree, an arbitration panel will decide how much the platforms
have to cough up.
As a
start, this approach misdiagnoses the problem. Journalism’s business model
wasn’t broken by digital platforms. The internet unbundled many of the services
— classified advertising, job postings, movie listings and so on — that newspapers
once provided, while eroding the local or regional monopolies that made them so
profitable.
It
offered consumers a wealth of free news and opinion and gave advertisers
options and audiences that traditional publishers haven’t been able to match.
It’s true that Facebook and Google have capitalized on these trends, but they
hardly caused them.
Moreover,
for the platforms, news is an insignificant source of revenue. Only about 4% of
Facebook’s News Feed is actually “news,” as opposed to posts from family and
friends, while Google doesn’t even bother to monetize Google News; it reckons
that only about 1% of searches in Australia have anything to do with current
events.
By contrast, publishers everywhere are
hugely dependent on platforms to drive traffic to their sites. If anyone should
be paying up in this relationship, it isn’t Google and Facebook. Nor has either
platform acted abusively. If a publisher doesn’t like how Google displays
snippets of its content, for instance, it’s free to adjust those settings or to
opt out entirely.
Neither
aggregator impedes consumers from visiting news sites directly if they so
choose. And both have voluntarily committed hundreds of millions of dollars to
newsrooms around the world in recent years. Whether they’ve done so out of
civic duty (as they say) or to deflect critics (as seems likely) hardly
matters.
But
the best reason to oppose Australia’s approach is that it’s a proven failure.
By inducing platforms to do away with news snippets and previews altogether, it
will in all likelihood reduce publishers’ traffic, depress ad revenue, erode
competition, impede innovation and needlessly deprive consumers of a valuable
service.
Just
ask Spain and Germany, where similar rules led to steep declines in local news
traffic and caused outsized harm to smaller publishers. Or ask France, where
regulators recently took the extraordinary step of requiring Google to provide
and pay for news snippets whether it wanted to or not — a policy so
heavy-handed and obtuse that it stands out even by European standards.
Good journalism is, of course,
essential to democracy. If Australia’s government, or any other, wishes to
subsidize newspapers for the public good, that’s worth debating. But demanding
that two overseas companies do so on a false pretext hardly makes for sound
policy making and won’t fix any underlying problems. Combined with the threats
implicit in such rulemaking — Australia has mused about confiscating 10% of a
wayward platform’s annual turnover — this approach is more akin to
racketeering.
Life
hasn’t been easy for news organizations for some time, and it’s unlikely to get
much easier. It’s heartening that policy makers now want to help them find
workable solutions. Their first responsibility, though, is to avoid making
things worse.
(Following is the Google's "Open
Letter to Australians from" Google Australia MD Mel Silva.)
Google's Open letter to Australians
The way Aussies search every day on
Google is at risk from new regulation
You’ve
always relied on Google Search and YouTube to show you what’s most relevant and
helpful to you. We could no longer guarantee that under this law. The law would
force us to give an unfair advantage to one group of businesses - news media
businesses - over everyone else who has a website, YouTube channel or small
business.
News
media businesses alone would be given information that would help them
artificially inflate their ranking over everyone else, even when someone else
provides a better result. We’ve always treated all website owners fairly when
it comes to information we share about ranking. The proposed changes are not
fair and they mean that Google Search results and YouTube will be worse for
you.
Your Search data may be at risk
You
trust us with your data and our job is to keep it safe. Under this law, Google
has to tell news media businesses “how they can gain access” to data about your
use of our products. There’s no way of knowing if any data handed over would be
protected, or how it might be used by news media businesses.
Hurting the free services you use
We
deeply believe in the importance of news to society. We partner closely with
Australian news media businesses — we already pay them millions of dollars and
send them billions of free clicks every year. We’ve offered to pay more to
license content. But rather than encouraging these types of partnerships, the
law is set up to give big media companies special treatment and to encourage
them to make enormous and unreasonable demands that would put our free services
at risk.
This
law wouldn’t just impact the way Google and YouTube work with news media
businesses — it would impact all of our Australian users, so we wanted to let
you know. We’re going to do everything we possibly can to get this proposal
changed so we can protect how Search and YouTube work for you in Australia and
continue to build constructive partnerships with news media businesses — not
choose one over the other.
You’ll
hear more from us in the coming days — stay tuned.
Thank
you,
Mel
Silva, Managing Director, on behalf of Google Australia
