Why Google and Facebook are being asked to pay for the news they use – explainer

Guardian Technology 04 Sep 2020 08:00

The Australian government has released draft legislation to compel Google and Facebook to negotiate with Australian media companies. The digital platforms have responded aggressively, warning users of dire consequences and, in the case of Facebook, threatening to remove news from Australian Facebook pages. Here’s what the fight is about.

Why does the Australian government think Google and Facebook should make payments to Australian media companies?

It’s all about the relative market power of the news companies and the tech giants.

News companies and the digital platforms need each other. Google and Facebook are gateways to the internet for almost every Australian, so news companies have no choice but to distribute their journalism via these platforms. That benefits publishers when the platforms send readers back to news websites.

But the digital platforms also need news. Users would find Google or Facebook far less helpful if no news appeared on their feeds or in their search results. More than half the Australian population finds news via the platforms, the 2019 University of Canberra digital news report found. The platforms monetise these audiences by selling advertising against the attention paid to news. They also collect vast amounts of data about those readers, which helps them target advertising and become even more dominant in the advertising market that once paid for the production of news. Excluding classifieds, the ACCC estimates that Google collects 47% of all online advertising in Australia; Facebook collects 21%.

That is why the government is proposing a code of conduct, including the possibility of some kind of payment to publishers.

News companies are different because they compete directly with the platforms in the digital advertising market in a way other online businesses don’t – and without Google and Facebook’s market power. For example, Google competes with the Guardian for digital advertising but does not compete with Bunnings for hardware or Westpac for home loans.

Can the government force the platforms to pay?

Has the government told Google and Facebook how much they have to pay?

If no agreement is reached after three months, an arbitrator is appointed. Each side – the platform and the media company – submits a final offer, and the arbitrator chooses the most reasonable, taking into account how much the platforms benefit from the news provided, how much it costs the media company to produce that news, and whether the amount being sought would put an “undue burden” on the platform. This so-called final offer arbitration is intended to encourage both sides to submit reasonable offers.

This was the government’s decision. Guardian Australia, along with many other media companies, have argued the public broadcasters should be included.

No. Before the draft legislation was released, Google had agreed to pay several Australian publishers to license content for a new “publisher curated news” product for Google News and Google Discover. In the US, Facebook is also paying publishers to license content for the news tab, but this has not yet launched in Australia.

Is the code a bailout for News Corp, as former prime minister Kevin Rudd has alleged?

Could the code disadvantage small media companies?

How has Facebook responded to the draft legislation?

Google says the code would require them to give media companies data and prior notice of changes to algorithms and that this would put other users of Google Search and YouTube at a disadvantage. Is this true?

The minimum standards also require the platforms to provide news businesses with information on the consumer data collected from news. This is because data has value and should inform the negotiations between platforms and publishers, but the code is explicit that the minimum standards are not intended to force the digital platforms to disclose trade secrets or share any user data.

It shouldn’t. The code is not intended to compensate news companies for the loss of advertising income due to digital disruption. It is intended to facilitate fair payment for the benefit the platforms receive from news. For Guardian Australia, any payment from the platforms would help us invest more in local journalism while continuing to seek revenue from advertisers and readers.

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