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Nine Entertainment urges Australian MPs to ignore Big Tech threats over news code

One of Australia’s largest media groups has called on the country’s MPs to ignore Google’s threats to shut its search engine, urging them to legislate a code aimed at forcing Big Tech to pay for news.

Nine Entertainment, owner of the 190-year-old Sydney Morning Herald newspaper, also dismissed the US tech giant’s efforts to persuade lawmakers to water down the proposed media bargaining rules after it struck a flurry of commercial deals with small Australian publishers.

“You’ve got to understand this: the Australian government doesn’t take its orders from Google,” Peter Costello, chairman of Nine, told the Financial Times in an interview. “It will decide what is in the interests of Australians. It doesn’t need permission from Google to legislate.”

Nine is a A$5bn (US$3.9bn) group with broadcast, newspaper and internet assets.

The EU, the UK and Canada are considering Australia’s code as a model for similar regulation to support news publishers in their own jurisdictions.

Australian MPs will begin debating legislation on Monday to enact the code. It would create a binding arbitration system that could make decisions on the fees Facebook and Google would have to pay news providers for content carried on their platforms if commercial negotiations fail.

Media groups claim they suffer from a “fundamental imbalance” in bargaining power when negotiating with Big Tech over payments for content displayed on their platforms.

Google and Facebook have aggressively lobbied MPs to amend the code, which they claim is unworkable and may force them to withdraw services from Australia. Google has signed deals with several smaller publishers this month — including Seven West Media on Monday — to carry their content on its News Showcase service as it seeks to persuade parliamentarians that the code’s most controversial elements should be diluted.

Josh Frydenberg, Australia’s treasurer, told local radio that he spoke to both Facebook and Google at the weekend and said media organisations were “very close” to agreeing deals with the pair.

However, even if the code is enacted, the tech groups hope to persuade Canberra not to make their main platforms Google Search and Facebook News Feed subject to it, as long as they do deals with publishers.

Under the draft legislation, the treasurer has the power to designate which services are subject to the code, and could choose News Showcase rather than Google Search.

Nine and Rupert Murdoch’s News Corp, the two biggest Australian publishers, are negotiating with Google over the use of their content but have been unable to agree terms. Nine has said it is owed up to A$600m by the two digital groups, while News Corp has suggested it may be owed up to A$1bn.

Costello, a former deputy leader of Australia’s ruling Liberal party, said the code was needed because Google’s monopoly in the search business gave it undue bargaining power. He rejected the idea that the News Showcase platform weakened the requirement for the media code.

“Our point is pretty simple — if Google uses our material they should pay for it,” Costello said.

Google alleges the code undermines a fundamental principle of the internet by forcing it to pay to provide links to news websites.

An Australian parliamentary committee on Friday backed the proposed measures, saying it was confident it would provide the basis for a more equitable relationship between the media and the two Silicon Valley groups.

Google has proposed amendments it claims would create a “fair” arbitration system and ensure the most stringent aspects of the code apply only to content carried on News Showcase rather than its broader search services.

“As we’ve said since the draft was released in July last year, we remain committed to a workable code. The concerns that we, and others, have been raising consistently are about specific aspects of the code,” said Lucinda Longcroft, director of government affairs at Google Australia and New Zealand.

“We look forward to engaging with policymakers through the parliamentary process.” 

Facebook said in a statement on Monday that the law remained unworkable and urged MPs to amend it.

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