Technology Feb 25

Australia enacts landmark law to make tech firms pay for news

The first-in-the-world legislation - and subsequent deal-making with local media organisations - could prove a model for resolving tussles with regulators worldwide

Australia enacts landmark law to make tech firms pay for news
Australian regulators had accused tech companies such as Facebook, which dominate online advertising, of draining vast amounts of advertising from traditional news outlets while using their content for free. File photo illustration by Reuters.

(ATF) The online world is watching Australia this week after the nation’s parliament passed landmark legislation on February 25 requiring global digital giants to pay for local news content.

The new law – the culmination of an often bitter tussle between the Australian government and media on one hand, and the tech giants on the other – has forced Google and Facebook to share tens of millions of dollars in local content deals.

Formally known as the Treasury Laws Amendment (News Media and Digital Platforms Mandatory Bargaining Code) Act 2021, the law – and subsequent deal-making – could prove a model for resolving the firms' tussles with regulators worldwide. 

The bill passed on Thursday after the Senate reconciled amendments with the House of Representatives.

The social media giants accepted the law would be enacted despite frantic lobbying, including threats to cut their services, plus representations from the US government.

NEWS DEALS KICK OFF

Facebook has already announced it will restore news for Australian users and strike up commercial agreements with local publishers. It signed its first deal with Seven West media yesterday.

Google had also already done deals with News Corporation, Nine Fairfax, Seven West Media, The Guardian and regional news company ACM.

Last week, Facebook blocked thousands of government charity and emergency services accounts as it called for changes to the proposed legislation and stepped up opposition to the bill.

The government reacted by threatening to stop all advertising campaigns on the social media platform. "Interestingly, it’s this move which most likely assisted the recent negotiated outcome with Facebook," said Rob Nicholls, professor of government at the University of New South Wales in Sydney.

Australian regulators had accused the US tech companies, which dominate online advertising, of draining cash away from traditional news organisations while using their content for free.

MANDATORY NEGOTIATIONS

Big tech firms had fiercely opposed the legislation from the outset, fearing it would threaten their business models. In particular, the companies objected to rules that made negotiations with media companies mandatory and gave an independent Australian arbiter the right to impose a monetary settlement.

That prospect was dramatically reduced by last-minute government amendments.

"Importantly, the code encourages parties to undertake commercial negotiations outside the code and the government is pleased to see progress by both Google and more recently Facebook in reaching commercial arrangements with Australian news media businesses," Treasurer Josh Frydenberg said in a statement.

On Wednesday (Feb 24), Facebook pledged to invest at least $1 billion worldwide to support journalism over the next three years. Nick Clegg, its head of global affairs, said in a statement that the company supports news media but remains concerned about mandated payments

PUBLIC RELATIONS MISTAKE

Although Facebook restored news to Australian readers, the social media icon has suffered a public relations blow and experts are divided over the potential fallout.

Most users saw the temporary ban on Australian news sharing as an inconvenience rather than a deal-breaker, Suranga Seneviratne, a professor at the School of Computer Science at Sydney University, said.

“Facebook’s biggest asset is its user base," he said. "The more users engage in the platform, the more revenue Facebook makes. The major means of keeping user engagement is through sharing content – user generated or otherwise."

Fiona Martin, an associate professor at Sydney University's Department of Media and Communications, said Australians were already beginning to diversify their social media usage away from Facebook.

“It will be interesting to monitor the backlash from users. We want to see where they go instead of Facebook-owned platforms,” she said.

With reporting by Agence France-Presse

ALSO SEE:

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US calls on Australia to cancel plan to make internet giants pay for news

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