Can Australia force Google, Facebook pay for news? Here's what you need to know

Earlier this month, the Australian government introduced a legislation in parliament that targets tech giants like Google and Facebook to compensate publishers for the news content on their platforms.

Here’s what you need to know:

• The Australian government first mooted the idea in April when treasurer Josh Frydenberg asked competition watchdog Australian Competition and Consumer Commission (ACCC) to develop a mandatory code to govern commercial dealings between tech giants and news media companies.
• Media companies experienced a sharp fall in advertising revenue due to COVID-19. He said the code would help "level the playing field" by making tech giants pay for news content.
• “It's only fair that those that generate content get paid for it," Frydenberg told local media.
• This is the first time in history a law is being introduced to force tech giants to pay to display news articles.

READ MORE: Australia to make Facebook, Google pay news outlets for content

• Apart from the sharing of revenue generated from news, the code covers sharing of data and ranking of news content.
• Under the regulation, the platforms can negotiate a fair payment with news publishers for using their content in Facebook’s newsfeed and Google’s search.
• If they can't strike a deal, a government-appointed arbitrator will decide for them.
• Digital platforms could face fines up to AUS$10 million if they do not comply with the decision.
• The draft legislation is called the News Media and Digital Platforms Mandatory Bargaining Code.

What is the response from Google, Facebook?

• In July, the ACCC released draft legislation after extensive consultations and amendments.
• Facebook responded with a threat, saying Australians could be blocked from sharing news content on its platform. “"Assuming this draft code becomes law, we will reluctantly stop allowing publishers and people in Australia from sharing local and international news on Facebook and Instagram,” said Will Easton, Facebook's Australia and New Zealand Managing Director.
• In August, Google published an open letter saying that Australian users' search experience will be hurt by new regulation and “the way Aussies use Google is at risk”.
• Australia’s ACCC pushed back, saying the letter contains misinformation. It said “The draft code will allow Australian news businesses to negotiate for fair payment for their journalists’ work that is included on Google services. This will address a significant bargaining power imbalance between Australian news media businesses and Google and Facebook. A healthy news media sector is essential to a well-functioning democracy.
• Today, Google Australia boss Mel Silva slammed the proposal, saying the regulation “forces Google to pay to show links in an unprecedented intervention that would fundamentally break how search engines work.”
• Google said it had provided a better model with Google News Showcase model whereby Google pays for some paywalled content. The platform was launched in October.

READ MORE: Google says Australian law on paying for news is unworkable

What’s next?

• The draft legislation is expected to be referred to a Senate committee before a final vote in Parliament around February or March 2021.
• The initiative has been closely watched as it could set a global precedent.
• If every country starts demanding the same, it will have a profound impact on Google and Facebook’s financial model.
  
• Other countries have tried and failed to force the hands of the tech giants.
• In Europe, Spain and Germany tried to make Google pay publishers for taking snippets of their news articles.
• But that backfired after Google News pulled out from Spain in 2014. Traffic of Germany's big news publisher Axel Springer plunged after it sought to block Google. Axel ended up scrapping the move.
• In France, Google stopped showing news snippets from European publishers on search results for its users after the European Union passed a copyright law reform in March 2019.
• Google resisted paying French publishers for the content, arguing that their websites benefitted from increased traffic via Google but last week, Google announced that it has reached agreement with six French newspapers and magazines over copyright payments.