Australian treasurer announced face-saving compromise that will see Google and Facebook plunge tens of millions of dollars into struggling local news sector
Representative image: tech2 / Nandini Yadav
Sydney: Facebook said on Tuesday it would lift a contentious ban on Australian news and pay local media companies for the content, after a last-minute deal on historic pending legislation.
Australian Treasurer Josh Frydenberg has announced a face-saving compromise that will see Google and Facebook plunge tens of millions of dollars into the struggling local news industry.
In turn, America’s digital businesses will, for now, avoid being subjected to mandatory payments that could cost them significantly more and set what they see as an alarming global precedent.
Just hours after the compromise was unveiled, Facebook announced its first draft deal with Australian media company Seven West and reportedly struck trade deals with other local news outlets. The company is expected to use the content to launch a dedicated news product in Australia later this year.
“With these changes, we can now work to continue our investments in public service journalism and restore the news on Facebook for Australians in the coming days,” said Will Easton, CEO of Facebook Australia.
The social media company sparked global outrage last week by blocking news from its Australian users protesting the bill and inadvertently blocking a series of Facebook pages with no news related to everything from charities to cancer to emergency response services. Prime Minister Scott Morrison angrily accused Facebook of having made the decision to “detach” from Australia.
Google has already negotiated deals worth millions of dollars with local media companies, including the two largest: News Corp of Rupert Murdoch and Nine Entertainment. Commentators have described the eleventh hour amendments, which came as parliament appears ready to pass the law this week, as “a reasonable compromise.”
“Anyone can walk away saying, well, we got what we wanted,” said Rob Nicholls, professor of commerce at the University of New South Wales. AFP. The two companies now have two more months to enter into other agreements that would avoid binding arbitration.
Tech companies had been fiercely opposed to the legislation from the start, fearing it would threaten their business models. In particular, the companies opposed rules that made negotiations with media companies mandatory and gave an independent Australian arbitrator the right to impose a monetary settlement.
This process will now be avoided if companies are deemed to have made a “significant contribution” to the Australian information industry through unspecified “trade agreements”. “We are now faced with the strange possibility that the mandatory news media code could be passed by parliament and not apply specifically to anyone,” said Marcus Strom, head of Media Entertainment and Arts. Alliance, a union. “It will simply remain in the treasurer’s drawer as a threat to misbehaving digital businesses.”
Google was also keen to avoid setting a precedent that platforms would have to pay anyone for links, which could render their flagship search engine unusable. Facebook, which is much less reliant on news content, originally said that being forced to pay for information just wasn’t worth it and stop the content.
“There is no doubt that Australia has been a proxy battle for the world,” said Frydenberg. Critics of the law say it punishes innovative companies and amounts to a seizure of money by struggling but politically connected mainstream media.
Thousands of jobs in journalism and many news organizations have been lost in Australia alone over the past decade as the industry monitored the flow of advertising revenue to digital players. For every $ 100 spent by Australian advertisers today, $ 49 goes to Google and $ 24 to Facebook, according to the country’s watchdog.
Tech insiders see the legislation as prompted, in particular, by Rupert Murdoch’s News Corp, which dominates the local media landscape and has close ties to Australia’s conservative government. A new provision in the law gives Facebook and Google more discretion over who they deal with and how much money is involved.
“We have come to an agreement that will allow us to support the publishers we choose, including small local publishers,” said Campbell Brown, Facebook’s vice president for global information partnerships.
Facebook and Google could still face the prospect of having to reproduce deals with media around the world, as the European Union, Canada and other jurisdictions work to regulate the industry.
Since their emergence at the turn of the century, Google and Facebook have been largely unregulated and have become two of the world’s largest and most profitable companies.
But a series of scandals over disinformation, privacy breaches, data collection and their near monopoly on online advertising have caught the attention of watchdogs.
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