Technology Feb 03

Microsoft backs pay-for-news plan with challenge to Google

US software giant, in a pointed statement, says it appreciates Australia's contribution to its growth as a company and is committed to supporting public interest journalism and country's 'national security'

Microsoft backs pay-for-news plan with challenge to Google
Microsoft chief executive Satya Nadella spoke with Australia's prime minister, Scott Morrison, and communications minister, Paul Fletcher, last week to discuss the proposed media payment plan. File photo: Reuters.

(ATF) Software giant Microsoft said on February 3 that it would back Australia's controversial plan to make internet companies pay to re-publish local media, in a slap in the face to Google and Facebook, which have vehemently opposed the proposal.

Brad Smith, Microsoft's president, issued a statement saying that there was a "bargaining power imbalance" between digital platforms and Australian news businesses.

"Microsoft is committed to Australia and the news publishers that are vital to the country’s democracy," he said. "Microsoft recognises that the media sector and public interest journalism currently face many challenges from the digital era, including changing business models and evolving consumer preferences."

Smith said Australia's proposed payment plan – the News Bargaining Code, which would force social media giants to pay for news sourced from local media outlets – was a "world-first solution".

He added: "The code reasonably attempts to address the bargaining power imbalance [and] also recognises the important role search plays, not only to consumers but to the thousands of Australian small businesses that rely on search and advertising technology to fund and support their organisations."

Smith noted that Microsoft "is not subject to the legislation currently pending, we’d be willing to live by these rules if the government designates us", saying he and Microsoft chief executive Satya Nadella spoke with Australia's prime minister, Scott Morrison, and communications minister, Paul Fletcher, last week.

"Microsoft will ensure that small businesses who wish to transfer their advertising to Bing can do so simply and with no transfer costs," Smith said. "We recognise the important role search advertising plays to the more than 2 million small businesses in Australia."

LEVEL PLAYING FIELD

Microsoft said it believes Australia's legislative proposal represents a fundamental step towards a more level playing field and a fairer digital ecosystem for consumers, business and society.

"One thing is clear," Smith said in a pointed attack on Google. "While other tech companies may sometimes threaten to leave Australia, Microsoft will never make such a threat. We appreciate what Australia has long meant for Microsoft’s growth as a company, and we are committed to supporting the country’s national security."

In August 2020, Google warned that the proposal to make it pay for news content could threaten its free search services in the country, as it vowed to fight the regulation. The US company also suspended an existing licensing scheme with some Australian publishers.

Google Australia managing director Mel Silva said that the proposed regulation “would force us to provide you with a dramatically worse Google Search and YouTube, could lead to your data being handed over to big news businesses, and would put the free services you use at risk in Australia”.

Last month, Washington asked Canberra scrap the proposed laws that would make Australia the first country in the world to create such a payment plan. Assistant US trade representatives Daniel Bahar and Karl Ehlers suggested Canberra should instead "further study the markets, and if appropriate, develop a voluntary code".

Under the proposed law, which has broad political support and is currently before an Australian Senate committee, Google and Facebook would be subject to mandatory price arbitration if a commercial agreement on payments to Australian media cannot be reached.

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Australia Microsoft Google Internet regulation US