A proposed law would require the tech giants to negotiate with publishers. Similar attempts in Europe have largely failed.
Australians visiting Google.com last week found, hovering below the search bar, an exclamation point encased in a yellow triangle. A warning: “The way Aussies search every day on Google is at risk from new government regulation.”
The warning links to an open letter from Google Australia and New Zealand managing director Mel Silva. Google’s and YouTube’s offering in Australia could become “dramatically worse,” she warns. The services themselves are “at risk.” All Australians users could be affected.
Silva’s warning stems from a proposed law that would require Google and Facebook to negotiate with news outlets and pay for news content featured on their platforms. Australian regulators say the tech giants benefit from publishing news generated by others, but Google and Facebook are so dominant in search and social, respectively, that publishers can’t make them pay for it.
It’s not the first time a country has tried to force Google and Facebook to pay media companies for republishing their news. A 2014 Spanish law required publishers to charge Google for the headlines and snippets of their stories that appeared on Google News. In response, the company removed the Google News service from Spain and took Spanish publishers off its news service globally. Readership of news stories dropped, particularly at smaller, less-well-known outlets, according to one study.
Last year, France wrote into law an EU copyright directive that demands Google pay for the news content that appears on its sites. Google was ordered back to the bargaining table this year after it removed French publishers’ snippets from its search results and did not pay for links. In 2014, Germany’s biggest publishing house briefly barred Google from featuring snippets of its articles in a bid to make the search giant pay licensing fees but backed out after traffic plunged.
Australian officials studied those efforts and took a different approach. They are not relying on copyright law, and they included measures designed to prevent Google or Facebook from dropping or down-ranking Australian news based on whether outlets try to negotiate a price, as happened in Europe. In response, Google is pitting itself against “big media companies” and appealing to the Australian public to oppose the proposal.
Regulators and media executives around the world are watching to see if Australia can succeed where others have stumbled. The Australian approach could set a global precedent, says Belinda Barnet, a senior lecturer at Swinburne University of Technology. “If every country in the world starts demanding the same, then it will have an impact on [Google and Facebook’s] financial model.”
The proposed Australian law emerged from an 18-month inquiry into the power of digital platforms by the country’s competition regulator, the Australian Competition and Consumer Commission. The commission concluded that many news businesses are reliant on—and benefit from—Google and Facebook for traffic but have little bargaining power with the tech giants.
It also found that while Google and Facebook derived little advertising revenue from featuring news headlines and snippets on their sites, original news content benefited both platforms. More than one-third of Facebook users reported using the social media site to access news, according to the ACCC. Google placed a Top Stories carousel of headlines and snippets in response to 8 to 14 percent of queries, which the commission said indicated that Google values surfacing news content. Google’s ability to provide high-quality and reliable search, and Facebook’s ability to attract and retain eyeballs on its feed, the ACCC argued, relied to some degree on their ability to showcase independent, accurate news content.
The dispute is “about the extent to which [news publishers’] content drives traffic, and they don’t receive returns from that,” says Terry Flew, a professor at the Queensland University of Technology. He says the proposed law recognizes “that each party derives benefit from the other. In the case of the platforms, it’s the content; in the case of the publishers, it’s the distribution channels.” Australia, Flew says, has “proposed that there must be a just price, if you like, for the financial benefit gained by the platforms.”
That just price is intended to result from negotiations between the online platforms and media companies. Should they fail to agree, the parties will submit “final offers” to a panel of arbitrators, who must choose one or the other. The proposed law also would require that Google and Facebook give news outlets 28 days notice of changes to their algorithms that would harm news businesses, such as removing snippets, down-ranking publishers, or closing Google News in the country. Violations, including of the nondiscrimination requirement, could result in fines of up to 10 percent of the platform’s annual revenue in Australia—for each offense.
Silva, the Google executive, says the company pays some publishers for their content, through a licensing agreement announced in June with several Australian, Brazilian, and German publishers, and is looking to do more so, but that the draft code is “unworkable.” Google says the continual changes to its algorithm make it impractical to identify changes that might affect news businesses.
The proposal, Silva said in a statement, “ignores the significant value Google provides to news publishers.” Sharing details about the algorithm “would provide an unfair advantage to news businesses and help them feature more prominently in organic search results at the expense of other businesses, creators, and website owners,” she said, adding that the proposal also doesn’t include safeguards for data shared with news businesses.
Together, Google argues, these conditions put its services in Australia at risk. “We’re going to do everything we possibly can to get this proposal changed,” Silva wrote in the open letter to Australians. Asked in July whether this could mean removing Australian news from its services, Silva replied: “All options are on the table.”
Facebook hasn’t directly appealed to users to oppose the proposed law. Will Easton, the company’s managing director in Australia and New Zealand, said in a statement when the proposal was released in July, “We are reviewing the government’s proposal to understand the impact it will have on the industry, our services, and our investment in the news ecosystem in Australia.”
Fires, a Pandemic, and 8 Reporters
Australia’s news media industry has been contracting, with title closures and journalist job losses across the country. Media companies are in a bind, Flew says. They can’t afford not to be on Facebook and Google, but the distribution of news on the platforms undermines news media companies’ ability to monetize their content and build brands. In its inquiry, the competition commission found that after viewing news snippets, some consumers won’t click through to a news site where the publisher can generate advertising revenue. Google and Facebook account for 71 percent of the $6.5 billion (US) spent annually in Australia.
But the commission did not base its proposal on lost advertising revenue. Rather, it argues that the content itself is of intrinsic value to platforms and therefore they should pay for it.
One of the country’s largest media companies, Nine, headed by a former federal treasurer, has suggested the two companies compensate media companies up to $432 million (US) for use of their content.
For smaller outlets, any compensation at all would be welcome. Bruce Ellen’s team of eight journalists at the Latrobe Valley Express newspaper, covering an area east of Melbourne, has had a busy year. Summer bushfires singed the edges of their readership’s region. Then, as Covid-19 hit in the autumn and returned for a second, more deadly wave in the winter, the newspaper published breaking and exclusive stories about test shortages and the outbreak of clusters in the area. This kind of reporting could not be found anywhere else. But it appears via a Google search and is posted on Facebook, including by the paper itself.
“We get no recompense from Google at all,” says Ellen, general manager of the paper. “Not one cent. My P&L shows nothing at all.”
News is valued by users of Facebook and Google and can attract and keep users on the platforms. It costs his business to produce this content, but so far it has cost Facebook and Google nothing to feature it in headline or snippet form. “They’re leveraging our content to drive traffic,” says Ellen.
The proposed law is not a panacea for the problems facing news media, he says.“We have to row our own boat.” But it could help stop the hemorrhaging of journalists and publications. For his paper, believed to be the last regional newspaper in Australia to print two editions a week, it might just mean survival.
“In reality it means we can continue to employ the same number of journalists,” he says.
A Battle for Public Opinion
The code has received a generally warm reception from Australian news businesses. News Corporation Australasia executive chair Michael Miller called it a “watershed moment.” In a statement, he said that the law would mean that the platforms, which derive “immense benefit” from news content “will no longer be able to use their power to walk away from negotiations with news creators … The tech platforms’ days of free-riding on other people’s content are ending.”
A consultation period over the proposed law ended Friday. The ACCC will consider revisions before putting the proposal before Parliament. With general support from both the governing conservative coalition and the Labor opposition, the legislation is expected to pass.
“Then we get into the realm of public opinion and pressure,” says Flew, the Queensland professor. “The strongest card that Google and Facebook have is a strong dislike of News Corporation and mainstream media in general in Australia, in particular among young people.”
Google “could potentially rally the troops in a way that no other company could,” says Barnet. “It’s their only option. But it’s huge.”
Shortly after Google released its open letter, the ACCC responded, accusing Google of spreading “misinformation” by suggesting it might have to charge for its services or share additional user data. Google disputes that its letter included misinformation.
“Our little ACCC has got the chutzpah,” says Barnet.
Back in the Latrobe Valley, Ellen harbors a cautious optimism. “But the fight has only just begun,” says the newspaper manager. “I assure you.”