Australian regulator claims victory in scrap with Big Tech over news

Australia’s competition regulator has declared victory in a three-year battle to make Facebook and Google pay for news after the internet groups signed deals with publishers that could be worth about A$200m a year.

Rod Sims, chair of the Australian Competition and Consumer Commission, told the Financial Times on Tuesday the country’s world-first news media bargaining code had forced big technology platforms to the negotiating table to agree deals with publishers.

“We are on track for deals all around. It’s been a big success,” Sims said in an interview. “We are just about there and the media companies are happy — and that’s the key point.”

Sims made the comments following confirmation from Nine Entertainment that it had signed a multiyear content deal with Google and Facebook. The media company, owner of the 190-year-old Sydney Morning Herald, did not release commercial terms of the agreement but forecast that its publishing unit’s earnings would jump A$30-A$40m ($23m-$31m) in the 2022 financial year.

Australia’s other big media groups, including News Corp, Seven West Media and state broadcaster ABC, have either completed content deals with Facebook and Google or signed letters of intent to do so.

Dozens of smaller publishers have also struck agreements or are negotiating terms following passage of a law in February designed to make Big Tech pay for news.

Analysts said the apparent success of the Australian law could prompt other governments that have struggled to regulate Facebook and Google to adopt a similar model.

Online platforms have grabbed the vast majority of digital advertising, sapping traditional publishers of resources. Lawmakers in the US, UK and Canada have suggested taking similar steps to shift commercial power towards struggling news outlets. 

Brian Han, an analyst at Morningstar, said other countries should consider the Australian model, which could generate about A$200m a year for media groups. Google and Facebook did not immediately respond to requests for comment on the figure.

The legislation enables Josh Frydenberg, Australia’s treasurer, to designate a digital platform as being under the news media bargaining code. Under that designation, news providers can first try to negotiate payment with tech groups but if that is not successful they can request compulsory final offer arbitration, for which there are stiff penalties for non-compliance.

The ACCC’s Sims said this negotiate/arbitrate regime was probably more familiar in Australia than elsewhere but there was no reason why others could not follow Canberra’s approach.

“We think having access to arbitration is a key step in any regime,” he said.

Facebook and Google strongly opposed the legislation with the former blocking Australian news from its platform in February for several days.

The platform restored these services following a compromise agreed between Facebook chief executive Mark Zuckerberg and Frydenberg, which stipulated that the government would not apply the code to the US company if it concluded enough deals with media outlets.

Google said in February it had agreed to pay news publishers through its News Showcase service.

Facebook said it planned to invest $1bn globally over three years to support journalism.

Sims said if everybody was able to conclude deals then there was no need for designation under the code, which would represent a success for media companies.

“It’s actually very light-handed regulation in the sense that with the negotiate/arbitrate model we just want the bargaining power to be equal,” he said.

“Prior to the code deals weren’t getting done because Google and Facebook were dealing with people on a take it or leave it basis. With the code legislated deals are now getting done.”

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