Australia passes Facebook and Google news law

The contested News Media Bargaining Code was successfully enacted after passing the Australian Senate on Thursday. It passed the House of Representatives last week.  

It included last minute adjustments as Facebook and the Australian government reached a deal following the social network’s decision to pull news services out of Australia on 18 February.  

The amended code will have large tech platforms operating in Australia pay local news publishers for the news content made available or linked on their platforms.  

The law’s definition of news content is broad, including content that “reports, investigates or explains … issues or events that are relevant in engaging Australians in public debate and in informing democratic decision-making; or current issues or events of public significance for Australians at a local, regional or national level.”  

A 'good faith' precedent will allow for private talks between Big Tech and news outlets. If the talks fail, a 'last resort' government arbitrator will set the price to be paid by either Google or Facebook.  

Australian treasurer Josh Frydenberg and communications minister Paul Fletcher said in a joint statement: “The code is a significant microeconomic reform, one that has drawn the eyes of the world on the Australian parliament.” 

They added: “The code will ensure news media businesses are fairly remunerated for the content they generate, helping to sustain public interest journalism.” 

The eleventh-hour amendments indicate that the code may not apply to Facebook if it signs enough deals with news outlets for their content. If they are to be held to the code, the government must provide advance notice of one month. 

Amendments also overwrite non-differentiation clauses, so larger publishers will not be able to use the legislation to match higher rates of pay received by smaller publishers. 

Facebook VP for global partnerships, Campbell Brown, stated that Facebook “retain[s] the ability” to pull news content from the platform if circumstances arise which necessitate such action. 

According to ministers, the Treasury will be reviewing the law in one year to ensure it is having the desired effect. Prime Minister Scott Morrison said he has held private talks with India, Canada, France and the UK over the regulation.  

Canada in particular is known to be considering similar measures, whilst there is speculation that the EU could include elements of the code in the Digital Markets Acts and Digital Services Acts; both of which are currently under review in the EU parliament.  

Ariel Ezrachi, Slaughter and May professor of competition law at Oxford University and director of the university’s centre for competition law and policy, said: “Increasingly, policy makers and competition enforcers around the world appreciate that the existing enforcement and regulatory regime has not effectively addressed the rise of big platforms. We need to do more to ensure society benefits from dynamic and open digital markets. Indeed, many jurisdictions are actively updating their antitrust enforcement approach, and consider new regulatory frameworks to address digital gatekeepers and promote a competitive and fair marketplace.” 

Both Silicon Valley-based companies are keen to dissuade such actions in other jurisdictions. Nick Clegg, Facebook’s VP for global affairs and ex-leader of the UK's Liberal Democrats party, cautioned against the danger of “camouflaging” demands for “blank cheque” cash subsidies behind ill-informed internet regulation. He said on Wednesday: “It’s like forcing car makers to fund radio stations because people might listen to them in the car — and letting the stations set the price.” 

Though the platforms championed the support they received from high-profile figures, including Sir Tim Berners-Lee, the support was for preserving the integrity of the internet, not preserving Big Tech.  

John Kettle, competition and corporate advisory partner at McCullough Robertson, said: “Whilst the last decade was focused on privacy law, the next decade will be focused on platform regulation in the spirit of what Australia has done. The proposed news code is cumbersome for platforms, but does also gift them equal treatment when the encoded manual arbitration procedures occur. Let’s see if addressing the ‘portfolio effects’ of conglomerates with behavioral remedies – as Australia has proceeded - will be replicated elsewhere, as seems likely.” 

Facebook and Google each pledged to spend $1bn on content from news outlets and scrambled to sign private deals to bypass the law before enactment. Notably, both signed deals with Seven West Media, Australia's largest diversified media business, and Google signed a three-year deal with Rupert Murdoch’s News Corp for an undisclosed sum. Facebook is understood to be deep in negotiations with other publishers.  

Rod Sims, chair of the Australian Competition and Consumer Commission (ACCC), said: “The code’s introduction to Parliament has already encouraged commercial deals between news businesses and both major platforms, and we expect more to be struck.” 

After three years of public consultation, the code was the subject of robust negotiations from both Google and Facebook. Both wanted the freedom to conduct private negotiations with outlets and threatened to withdraw from the Australian market amid claims the code “fundamentally misunderstands” their relationship with online news publishers.  

Facebook in particular argued that it should be treated differently from Google because the search engine proactively trawls websites, while publishers choose to display their content on Facebook’s platform.  

While Google failed to deliver on its threat to withdraw, Facebook stuck to its ultimatum and exited the market, unwittingly blocking numerous public services such as charities and food banks and incurring significant public backlash. 

There are conflicting interpretations of who capitulated to whom in the proceedings. Ezrachi said Facebook’s decision to withdraw “was used to signal that it considers the price of the new measures to be too high. The forceful pushback proved effective in this instance, and led to the amendment of the regulation.” 

Though the Australian government has succeeded in making Big Tech pay for news, the platforms have, deliberately or not, revealed the immense power they can wield in standing eye-to-eye with a nation’s lawmakers.