Global Digital Titans and Fall-out with Australian Media Companies

Summary

• The new code of conduct for digital media platforms might be implemented by the end of 2020, to support fair trade between news media houses and tech giants.
• The draft code of conduct is open for consultation until the end of August 2020.
• The draft code is currently only applicable for Google and Facebook, but other names would be added if they also fail to secure payment deal with news businesses.

Earlier in April 2020, Australian Competition and Consumer Commission (ACCC) was asked by the Australian government to develop a compulsory code of conduct to tackle bargaining power amid Australian media companies and digital platforms like Google and Facebook.

On 31 July, ACCC published a draft code for public consultation, might be implemented by the end of 2020, under which Australian media is enabled to negotiate with tech giants like Google and Facebook to obtain fair payment for news content in case the draft mandatory code released by the ACCC is implemented.

ACCC is Australia’s independent Commonwealth statutory authority, which applies the Competition and Consumer Act 2010 and an array of other legislations. It is responsible to promote competition, fair trade, etc.

In June last year, Australian Competition and Consumer Commission’s Digital Platforms Inquiry report mentioned the effects of digital search engines and social media platforms on media and advertising services sectors. The final report identified payment imbalance between two interlinked industries and recommended bringing in the industry codes of conduct.

The same year in December, the Australian Government had proposed ACCC to collaborate with digital platforms like Google and Facebook and news media houses. The Government asked ACCC to develop and implement voluntary codes of conduct for fair trade between them.

In April 2020, a report generated by ACCC claimed that the payment issue was not likely to be settled voluntarily, following which the Government asked ACCC to develop a mandatory code of conduct. Australian Competition and Consumer Commission has functioned with, Transport, Treasury, and the Department of Infrastructure, etc to build a draft code.

Tough Penalties for Not Following the Code:

To support fair trading in markets, the new code of conduct would be implemented. As per the draft code, Australian news businesses and online platforms, Google and Facebook would have to strike a deal for payment towards news content. News businesses and the digital platforms have 3 months’ time for negotiation and mediation process. If they fail to reach a conclusion, an independent arbitrator will opt for the most reasonable final offer from the two parties.

The released draft code of conduct is free for discussion by the end of this month (i.e. August). Subsequently, the selection will be submitted in the parliament for approval. Before releasing the draft code, ACCC sought feedback on it, and above forty submissions were obtained.

Treasurer Josh Frydenberg said that currently there is a disagreement about the payments for content and the Federal Government would want to dissolve it quickly, resulting in a “level playing field" between the two parties.

ACCC Chairman Rod Sims believes that, the companies related to news businesses have no choice other than dealing with the platforms and have less capability to bargain on payments for their content matter.

Sims also added that the new draft code would ensure fair pay without reducing the availability of Australian news on digital platforms like Google and Facebook. The draft code is currently only applicable for Google and Facebook, but other names will be added if they also fail to secure payment deal with news businesses.

The ACCC can issue penalties of up to $10 million for a breach of the code.

Bargaining Process Between News Media and Digital Platforms:

As a part of the code, media organisations can form a group and bargain the payment over their content with Facebook and Google. The smaller media businesses, including regional and rural media, will particularly benefit from this process.

Around 88 smaller media houses teamed up to submit a joint submission for the draft code as they could again team up to negotiate, with the digital platforms over fair payment on content.

According to the new draft code, the cost of producing journalism will be considered. However, the arbitrator will contemplate if the proposed payment is fair and not adding any unnecessary economic liability on the digital platforms.

The payment method is still under contemplation as it could be a fixed annual sum or payment per content.

There will also be non-payment related dealings between media houses and digital platforms. As per the new draft code, the tech giants must agree to the deal and cannot negotiate the process.

A few points, digital platforms are needed to follow are as mentioned below-

1. Changes in algorithm need to be notified to news media businesses 28 days prior.
2. Algorithm alterations created to impact news ranking behind paywalls.
3. Significant modifications to the display and presentation of news.
4. Direct advertisement related with news piece.

In addition to this, the digital platforms will also have to share user data collected from the user’s interaction with the news. This would include time spent on an article, the number of materials consumed in a time frame and other user engagement information. There are many such minimum standards included in the new draft code.

The code is not applicable to non-news media content like drama, reality tv, entertainment content, etc. The Australian Communications and Media Authority (ACMA) will decide on the criteria to select media houses to follow the draft code. Along with other criteria, media houses which produces significant news content for Australians will fall under this category.