A search for “Australia News” on the Google home page placed on a desktop computer in Sydney, Australia on Friday January 22, 2021.
David Gray | Bloomberg via Getty Images
Australia has passed a new law requiring digital platforms like Facebook and Google to pay local media and publishers to link their content in news feeds or search results.
The move was widely anticipated and comes a few days after the government made some last minute changes to the proposed bill, officially known as the mandatory code of negotiation for news media and digital platforms.
“The Code will ensure that media companies receive fair compensation for the content they generate, which will help uphold public interest journalism in Australia,” said Treasurer Josh Frydenberg and Communications Minister Paul Fletcher in a joint statement.
They added that the government “was pleased that both Google and Facebook have recently made progress in reaching commercial agreements with Australian news media companies”.
The law will be reviewed by the Treasury Department within a year of its inception, officials said.
What did Facebook and Google do?
Both Facebook and Google have been battling the law since last year.
In essence, Australia will be the first country where a government-appointed arbitrator can decide the final price that either platform will have to pay to Australian news publishers if a commercial deal cannot be reached independently.
The decision is made by a decision in favor of a party – the digital platform or the publisher – who, according to experts, has no room for a medium-term agreement.
In this week’s amendments, the government said that the parties involved will be given a two-month brokerage period to mediate before going to arbitration as a last resort.
Facebook announced on Monday that it was restoring news pages in Australia and overturned an earlier decision to block access to news content in Australia in retaliation against the then-proposed bill.
Facebook vice president for global news partnerships, Campbell Brown, said Tuesday that the Australian government had made it clear that the tech company can still decide whether messages appear on its platform so that it doesn’t automatically become foreclosed.
Google initially threatened to pull its search function out of Australia. However, in the past few weeks a number of significant trade deals have been signed with Australian publishers, including Murdoch-based family-owned media conglomerate NewsCorp.
Before the bill passed parliament, both the Australian competition watchdog and Facebook called this week’s moves a victory.
Former British Deputy Prime Minister Nick Clegg, who is now Vice President for Global Affairs on the social network, explained in a lengthy blog post Facebook’s decision to restrict news in Australia and then restore it.
The latest changes to the bill have been a face rescue exercise for both sides, but especially for Facebook, said Johan Lidberg, associate professor of journalism at Monash University, Australia.
“However, the final call to apply the code or not is on Josh Frydenberg, the treasurer, not (Facebook),” Lidberg told CNBC via email. He explained that while Facebook may decide to remove the newsfeed from Australia in the future, it would be a poor reflection of the company’s brand.
“The mandatory arbitration clause is still there. Had it been dropped, the code would have turned into a paper tiger,” said Lidberg, adding that without the code behind the scenes, neither Facebook nor Google would have come to the negotiating table in good faith.
“The main game now is closely monitoring deals with media companies,” he said. “If the deals stay with the big four companies and local and regional media are ignored, Frydenberg has the option to invoke the code and mandatory arbitration. This is what governments should do when market forces are as distorted as in this case. “
Microsoft President Brad Smith has weighed Australia’s decision and described the new law as a “big step forward”. In a tweet, he said it would “ensure that publishers and journalists get a fairer share of what they do”.
Microsoft publicly endorsed the media code this month after Google initially threatened to remove its search functionality from the country. The company’s Bing search engine holds just 3.6% of the market share in Australia, a fraction of Google’s 94.5%, according to web analytics firm StatCounter.
The new Australian law could set a precedent for how other countries regulate big tech. Countries like France have taken some measures to make tech firms pay for news, while others like Canada and the UK are considering their next steps.