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:

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:

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:

In conclusion, Australians should consider:

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

18 September, 2020

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