The mechanism will see Google, Meta and TikTok pay for the media content they benefit from but do not create themselves
The Albanese government should be commended for announcing the news bargaining incentive.
It addresses an issue with the existing news media bargaining code framework caused by Meta seeking to avoid payment by threatening to remove news from their Facebook platform.
The code was legislated in 2021 to address the problem of news media businesses not having sufficient bargaining power to get payment for the benefit they provide to platforms through the provision of news media content. Google searches, for example, will often show news content in response to a search query, and Facebook provides a feed of current news and information, which used to be called a “news feed”.
Google and Meta make their money by gaining user attention and then targeting them with advertising. Content that gains or extends the user interface is very valuable to these platforms.
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Following the legislation of the code framework, Google and Facebook entered into commercial deals in 2021 with news media businesses worth around $250m per annum – Google with close to all eligible media businesses, Facebook with most of them, albeit with some strange exceptions.
Google and Facebook do not create news content, they simply benefit from it. If news media businesses are not compensated then we will have less news from journalists, which will see non-trusted sources of information take their place. A vibrant news system is vital for our democracy as it provides a journal of record, a challenge to authority and a forum for debate. While our news media express a wide variety of views, they largely do so from agreed facts.
Google’s often five-year deals are, largely, still running. But Meta has said it will not continue with the expired three-year deals entered into by Facebook.
Some have suggested Meta be designated under the code to force them to negotiate with news media businesses. But when this was done in Canada, Meta took all news off Facebook and Instagram. That is, rather than pay for news media content, Meta was happy for its feed not to include news prepared by journalists.
This is of huge public policy concern because about half of Australians (49%) use social media as a general source of news, with Facebook remaining the top social media platform for news, according to the latest University of Canberra digital news report.
In response, the government has introduced the news bargaining incentive. This will impose a charge on eligible platforms (likely Google, Meta and TikTok) which can be offset by payments under commercial deals done with news media businesses. It is, in essence, a mechanism that forces the platforms to work under the code.
There is much to commend. Large digital platforms should pay for the media content they benefit from, and they should not be allowed to avoid this obligation by degrading the quality of content they show. I doubt Google would ever do this as quality information is essential for their search business, but Meta has formed the view it can do without quality content in a few countries so as to avoid a trend of making payments to news media businesses.
It is also excellent that the new scheme, as with the code framework, wants individual deals done, rather than a system where the government collects the charge and then distributes the revenue to news media businesses as it decides.
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The details will be worked out next year, and there are some important issues to address.
Firstly, how to set the level of the charge? Will it be around $250m, or more? How will this be allocated between different platforms, so we know they are making their share of the payments?
Secondly, if a platform does many deals but cannot reach an agreed deal with a particular news media business, will arbitration be the next step, as it is under the code?
And, will deals need to be done with all eligible news media businesses as is the case when platforms are designated under the code? We do not want some news media businesses missing out.
With Meta’s decision to walk away from the code the government faced difficult issues. It seems they have responded well, albeit with some important details still to be worked out.
Rod Sims is a professor at the Crawford School of Public Policy, Australian National University. From 2011 to 2022 he was chair of the ACCC
