Thoughts on the Australian Government's draft news media and digital platforms mandatory bargaining code

For ones success at the expense of the other, should the automotive industry have been forced to subsidise the horse and carriage industry? As ridiculous and anti-progress as this sounds, this is essentially what the Australian Government’s draft news media and digital platforms mandatory bargaining code argues. Earlier this year, the Australian Government requested the ACCC to address the alleged “bargaining power imbalance” between news media businesses and Facebook and Google. The resulting proposal is incredibly misguided, big-government hypocrisy from the small-government Liberal party and should alarm Australian residents and businesses previously under the impression that the parliament, and not News Corp, was the highest governing body in the land.

While it is unfortunately common for large companies to lobby for regulation to cement their dominance into law, it is rare for government handouts, in the form of market regulation, to be as blatant and bold as the ACCCs draft news media bargaining code. At a high-level, the draft proposes:

• Facebook and Google must provide advance notice of changes to their content ranking algorithms.
• Facebook and Google must compensate news media businesses (who qualify) for original content shared on their platforms.
• Facebook and Google must give news media businesses (who qualify) more control over user comments and user data as it pertains to interactions with their respective content.
• Facebook and Google must let news media businesses opt-out of their content being shared on their platforms.

The premise of this proposal misunderstands the way value currently flows between news organisations and social media. While it is likely true that audiences are shifting their attention from news media to social media, this is not happening because social media companies are taking anything from news businesses:

• News content ends up on Facebook because it is shared by users, in the form of links which direct new users back to news websites. In this sense, Facebook is, for free, increasing the accessible audience for news businesses, not decreasing.
• To read news content posted on Facebook, users must navigate to the source website. Facebook is not stealing any content, merely linking to it.
• Facebook users do not go to Facebook primarily for news content and Facebook is not competing as a news business. Facebook simply shows users what their friends are posting and even has a preference for more personal content. Audiences turning their attention from older media to newer media is an inevitable constant through human history.
• Google is in the business of information discovery and is not the gatekeeper the ACCC seems to imagine it is. Like Facebook, Google directs traffic towards news destinations and is best thought of as an upstream sales channel to these websites that can acquire a massive new audience via both platforms. If someone was sending a big chunk of new prospective customers your way, would you then expect them to also pay you for the trouble?

Either this proposal is written by people with a fundamental misunderstanding of how social and news media interact, or it is written to achieve specific outcomes for specific beneficiaries at the expense of specific parties and is not concerned with the flow of value. I suspect the latter given the proposal calls out Google and Facebook by name and sets a high bar to qualify as a beneficiary.

Industry regulation should make competition fair and protect consumers by setting the rules for industry. Anyone should be able to play provided they play by these rules. This proposal does not set the rules for industry and is instead targeted at specific companies determined to be bad actors as the FAQ for the code itself boldly calls out:

Digital platforms must participate in the code if the Treasurer makes a determination specifying that the code would apply to them. The Government has announced that the code would initially apply only to Facebook and Google.

Regulation as arbitrary as this, that applies to you simply because the Treasurer decides it does, is an outrageous overstepping of power that makes investing in the Australian market increasingly risky and unappealing, and reeks of an invitation for future contenders to seek backchannel deals to avoid inclusion on the list. What criteria were used to include Facebook and not Twitter in this? What must they do to appease the Government to ensure they don’t end up included in the future?

As bold as the ACCC is to call out Google and Facebook by name, they’ve exercised some restraint by not mentioning News Corp as the core beneficiary. They have, however, defined the criteria to qualify through a conveniently specific description of News Corp that also limits any benefit to upstart competitors.

Based on the news sources they nominate, news media businesses can participate in the code if:

• They predominantly produce ‘core news’, and publish this online: The draft code defines ‘core news’ as journalism on publicly significant issues; journalism that engages Australians in public debate and informs democratic decision making; and journalism relating to community and local events. Some examples of this kind of journalism are political reporting, court, and crime reporting.
• They adhere to appropriate professional editorial standards: These can include editorial standards set by the Press Council or the Independent Media Council; editorial standards set in relevant media industry codes; or equivalent internal editorial standards.
• They operate primarily in Australia for the purpose of serving Australian audiences. In addition to the criteria above, an eligible news media business’s annual revenue must exceed $150,000, in either the most recent financial year or in three out of the five most recent financial years.

In conclusion, Australians should consider:

• What type of influence did Rupert Murdoch’s News Corp have on the drafting of this legislation and the politicians that have promoted it? Is this how Australians want federal laws to be drafted? Former Prime Minister Kevin Rudd has numerous times called for a royal commission into News Corp and its impact on Australian democracy.
• Are there ways to address the various legitimate concerns regarding big tech without a handout to Rupert Murdoch?
• Should it be acceptable for the government to target specific companies with regulation rather than broader industries?
• Should the Australian Government be doing any favours at all for news media businesses that have significant sway on public opinion and election outcomes?

All excerpts are sourced from the ACCCs Q&As: Draft news media and digital platforms mandatory bargaining code document.

18 September, 2020