Competition Watchdog Tasked to Make Google, Facebook Pay

Experts weigh in on what might happen next
April 21, 2020 Updated: April 21, 2020

Australian Treasurer Josh Frydenberg, along with Communications Minister Paul Fletcher, announced in a press release on April 20 that a mandatory code would be created to govern a range of issues on how Google and Facebook work with media companies.

This has come about because the government wants to accelerate the original timeframe for the parties to develop voluntary codes—which was slow to progress—given the media sector was already under pressure before advertising revenues declined sharply due to the pandemic caused by the CCP (Chinese Communist Party) virus, commonly known as novel coronavirus.

They have now tasked the Australian Competition and Consumer Commission (ACCC) with pioneering an agreement between media publishers and the tech giants.

The most prominent issue being the payment to media companies for reusing content.

Fiona Martin, senior lecturer in Convergence and Online Media at the University of Sydney, told The Epoch Times via email that the Australian government’s approach was “interesting” given the difficulties European nations have had trying to pin down the tech giants.

In 2017, the European Union (EU) fined Google €2.4 billion (AU$4.1 billion) for anti-competitive practices by promoting its own shopping service ahead of competitors.

In 2018, the EU again fined Google €4.3 billion (AU$7.4 billion), this time for unlawful restrictions around the Android system.

In 2019, the French government transposed an article from the EU Copyright Directive allowing media publishers to charge “society service providers,” namely Google and Facebook, for content.

The idea was for the digital platforms to pay media companies when they display excerpts of news content on their feed.

Google responded to the move by removing news excerpts altogether in its Google News feed. French users would only be able to see headlines and no description of a news story they were searching for.

Following an appeal from local media companies, the French competition regulator last week deemed this practice uncompetitive. It issued an injunction ordering Google to finalise a deal within three months with French media companies for re-using content.

Martin said Google was already beginning to pay European news services and has begun negotiating with French publishers.

She said the ACCC’s code, however, looked “far more ambitious than the European regulators” because it was asking the tech giants to “reveal information on their ranking algorithms and give publishers more access to user data.”

“I can’t see media players of this size complying with this regulation, and Australia will probably face a similar outcome to their European counterparts,” she said.

The most well-known incident was in 2014 when the Spanish government attempted to pass an earlier version of the EU directive. Google responded by closing its news service in the country entirely.

Rob Nicholls, associate professor at the University of New South Wales’ Business School, believes the likelihood of this happening is slim. Instead, he said social media giants would likely come to the table.

“The referral by the Treasurer does not stop Google and Facebook from proposing prices to the ACCC … Indeed, that is precisely what I expect would happen from both the publishers and the platforms,” he told The Epoch Times via email.

Nicholls suggested this could be the strategy adopted by Google to “work on the price in Australia as a benchmark for Europe.”

“This may be a more valuable option than repeating the action taken in Spain,” he said.

Rod Sims, the chairman of the ACCC addressed these concerns in an interview with the Australian Financial Review on April 20 saying he did not think the social media platforms would be willing to sacrifice valuable news content and would be open for discussion.

“When you think about search, somewhere between 8 and 14 percent of searches you and I make on Google come up with news stories,” he said.

Google and Facebook’s willingness to negotiate may stem from changing circumstances globally, including the looming, multi-faceted antitrust investigations into Google, Facebook, Amazon, and Apply in the United States.

Nicholls believes the injunction issued in France stemming from the 2019 EU Copyright Directive was in some ways a watershed moment for tech giants paying publishers to become “normal practice.”

For Martin: “The bigger question is whether the gradual, combined impact of national regulatory moves—if they continue—will eventually force the platforms to do more revenue sharing.”