Google hits out at ACCC draft code of conduct for news media negotiations

Google A/NZ chief criticised new framework from the regulatory watchdog for a mandatory code of conduct between news media organisations and digital platforms

Google Australia’s local chief has criticised the ACCC’s draft mandatory code of conduct for negotiations between news media and digital platform giants, as the industry takes stock of the latest effort to level the playing field between old and new media.

The Australian Competition and Consumer Commission (ACCC) last week released its draft news media bargaining code of conduct, outlining mandatory steps both sides are required to take in order to negotiate payments for content featured across digital platforms managed by Google and Facebook.

The draft code’s release comes off the back of the ACCC’s initial Digital Platforms Inquiry, first established in late 2017 by the Federal Government, which reported significant detrimental impact resulting from the dominance of digital platform giants, Google and Facebook, on Australia’s media and advertising landscape.

In December last year, a program of work including a voluntary code of conduct for negotiation around content between traditional news media organisations and the digital platforms kicked off. But by April, this had become a mandatory negotiation code, driven by accelerated concerns around the future of news media organisations in the face of the COVID-19 crisis.

In an initial response to the code’s release last week, Google Australia and New Zealand managing director, Mel Silva, said the group was “deeply disappointed” in what’s on the table and claimed the code was not anchored in “commercial reality”.

“Our hope was that the code would be forward thinking and the process would create incentives for both publishers and digital platforms to negotiate and innovate for a better future - so we are deeply disappointed and concerned the draft Code does not achieve this,” Silva stated. “Instead, the government’s heavy handed intervention threatens to impede Australia’s digital economy and impacts the services we can deliver to Australians.”  

In the statement, Silva argued the code doesn’t take into account the fact Google provides news publishers with traffic to their digital sites worth $218 million a year. The company has previously estimated Google Search accounted to 3.44 billion visits to Australian publishers in 2018. 

“It sends a concerning message to businesses and investors that the Australian Government will intervene instead of letting the market work, and undermines Australia’s ambition to become a leading digital economy by 2030,” Silva’s statement continued. “It sets up a perverse disincentive to innovate in the media sector and does nothing to solve the fundamental challenges of creating a business model fit for the digital age. 

“We urge policymakers to ensure that the final code is grounded in commercial reality so that it operates in the interests of Australian consumers, preserves the shared benefits created by the Web, and does not favour the interests of large publishers at the expense of small publishers.”  

As part of its submissions to the ACCC concepts paper submitted in June, Google argued digital platforms were not the cause of inherent difficulties with monetising journalism or the tough market conditions facing traditional news media outlets.  

“The changes in economics to news media businesses have primarily been driven by increased competition in both the supply of classifieds and the supply of news to Australians, including increased competition between existing news publishers,” the submission stated, citing an AlphaBeta Advisors report.

Google has also claimed the direct and indirect economic value Google gets from news is small. In a blog post in late May, the company claimed it generated about $10 million in revenue from clicks on ads against possible news-related queries in Australia last year.

“By introducing a discriminatory pricing regime and singling out two companies, the code disincentivises innovation of the media sector and creates a new market problem in an attempt to solve another,” the submission read. “Ultimately, this signals an unwelcome precedent to businesses and investors around the world that Australian governments will intervene into markets to arbitrarily set pricing not grounded in commercial reality.”  

However, Google said it nevertheless strived to collaborate with news media organisations, noting the global news licensing agreements struck in June this year as an example. These will also extend to Australia.  

The second of the digital platform giants to be singled out by the ACCC’s code of conduct, Facebook, was more tempered in its initial comment on the draft code.  

“We are reviewing the Government's proposal to understand the impact it will have on the industry, our services and our investment in the news ecosystem in Australia,” said Facebook Australia and New Zealand managing director, Will Easton.  

Facebook’s submission to the ACCC’s concepts paper signalled support for a code of conduct between news media organisations and players such as itself, including the inclusion of “commercial deal-making principles” as well as a third-party mediation tribunal.

But like Google, Facebook was quick to highlight the value its platform provides to news organisations in the forms of referrals. The company estimated it delivered 2.3 billion organic referrals to Australian news publishers between January and May 2020, worth $195.8 million.

In addition, Facebook’s submission strived to make clear news content represented a small percentage of total content on user feeds. It’s also argued against further data sharing between digital platforms and news media organisations, as well as for distinction to be made between search and social media players within the code framework.

“The decision to limit the initial version of the code to two US companies is discriminatory and will inevitably give an unfair advantage to Facebook's competitors in the technology sector, including rivals from countries that propagate different and undesirable visions for the Internet,” Facebook also said in its ACCC concepts submission.  

“There should be a clear, objective future process and timeframe for extending the same requirements to other distributors of digital news in Australia to avoid distorting the market.”  

Follow CMO on Twitter: @CMOAustralia, take part in the CMO conversation on LinkedIn: CMO ANZ, follow our regular updates via CMO Australia's Linkedin company page, or join us on Facebook: https://www.facebook.com/CMOAustralia

 

 

 

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