What is happening with Google and Facebook in Australia?

International Feb 09, 2021

In July 2020, the Australian Competition and Consumer Commision, the competition watchdog of Australia, came up with a news media bargaining code. According to this code, digital platforms like Google and Facebook will have to share a part of their advertising revenue with local news media companies. This was done on the request of the treasurer, Josh Frydenberg. to help local news media outlets who were experiencing a steep fall in revenue due to the COVID-19 pandemic.

The code was supposed to be voluntary, and Google and Facebook were supposed to negotiate payment with local news companies for using their content. It also meant that they will have to tell the companies in advance about changes in the algorithm which would affect news rankings, favour news content from original sources, and share their data with companies. However, due to an apparent lack of interest by the tech giants the negotiations were ineffective, and therefore the law was made mandatory.

According to the Australian Securities and Investments Commission, for every $100 spent on online advertising, $53 goes to Google, $28 to Facebook and $19 to other companies. Meanwhile, local news companies have been suffering. NewsCorp Australia has had to shut down 60 of it's local newspapers and many other newspapers have had to have pay cuts, layoffs or completely shut down. Newspapers say that this is unfair as it's their news that is used on Google Search and on Facebook's news feed. This code however does not involve other platforms owned by Google and Facebook such as YouTube or Instagram.

The code encourages news companies to bargain with Google and Facebook outside of it. It merely provides a template to use in their negotiations. However, if both the parties can't reach an agreement, a regulator from the Australian Communications and Media Authority will then use the "final offer arbitration" to decide the compensation the news outlet will receive.

If Google or Facebook refuse to cooperate, or discriminate against the news outlets mentioned in the code, they can be fined up to $10m per breach, three times the benefit obtained, or 10% of annual turnover, whichever one is greater.

The code is currently in Parliament with the Senate Committee to present it's recommendation by February 12th.

Google and Facebook are disappointed with the situation and have announced that if the code is passed in Parliament, they would discontinue some of their services in Australia. Google said that it would discontinue it's search services in Australia. This means that people would have to shift to other search engines like Bing or DuckDuckGo to support their browsers on their phones and desktops. Considering the fact that 90% of desktop searches and 98% of phone searches are done via Google, this would dramatically change the way people use the internet in Australia. Even if one uses a VPN, you won't be able to get search results relevant to Australia.

Facebook on the other hand has said it will stop it's news feed in Australia. People won't be able to post or view links to news posts in Australia. This can lead to an increase in false reporting, since people won't be able to verify the information that they read on Facebook.

Google has faced similar situations in Spain, Germany and France, with Google actually removing it's search engine from Spain. It very recently made an agreement with 300 French publishers to pay them for their content.

Currently, neither party is backing down. It remains to be seen what will happen in the coming weeks.

This article has been written by Sherwyn Fernandes for The Paradigm

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