What the Google and Facebook news payments proposal means for the digital landscape

The ACCC's proposal to regulate how Google and Facebook will pay news media organisations for content raises a range of issues for data sharing and privacy, UGC, copyright and non-payment penalties. CMO investigates

Google and Facebook have hit back with public campaigns warning of the dire consequences of a news payments regime proposed by the Australian Competition and Consumer Commission (ACCC).

While media and industry commentators have welcomed the ACCC's draft regime, Facebook has now said it will block Australians from sharing news on both Facebook and Instagram, while Google said the scheme is unworkable and will impact Google Search itself. 

The competition watchdog wants to restore the balance of power between traditional news media organisations and digital platforms like Google and Facebook by ensuring both pay for the news content shared on their social media platforms. Major news media organisations including Nine Entertainment, Guardian Australia and News Corp Australia support the proposed code as a way to offset the loss of advertising revenue to the digital giants.

The news payments proposal comes off the back of the ACCC’s Digital Platforms Inquiry, first established in late 2017 by the Federal Government to explore the potentially detrimental impact digital platform giants such as Google and Facebook are having on Australia’s media and advertising landscape.

Briefly, the proposed code covers several aspects - determining the value of news and content payments by Google and Facebook to news media organisations; defining news and news media outlets; data sharing between digital platforms and the news media, and managing user comments on news stories on the third-party platforms.

While many have applauded the ACCC's framework and what it could mean for the industry, King Kong founder, Sabri Suby, was one who saw the news payment’s regime as ultimately hurting, not helping publishers. He saw it resulting in nothing but traffic flatlining and news businesses dying.

“Any media outlet that relies on Facebook and Google clicks to drive digital advertising and traffic will suffer, particularly small or niche independent publications,” Suby told CMO.

"If this is to go ahead, there is another 'transformation' required from advertisers and publishers who have become dependent on these channels for success. Facebook and Google have built killer digital marketing systems and many publishers have become 'addicted' to the drug. Media outlets are in the business of selling advertising, and they need all the eyes they can get on their content, so they need to focus on innovating and looking for other ways to monetise.”

CMO takes a look at submissions received to the ACCC’s proposal to date, and draws out the key issues at play with some thoughts from industry on the proposed news payments system.

The value of a healthy news landscape

Defining the value of news is at the core of the ACCC's proposed new payment regime. But it is also one of the most contentious and complex aspects that needs to be determined to create a framework for payments.

It's clear both the digital platforms and news media outlets benefit from having news content on the platforms. This value exchange increases discoverability of content, aids search results, boosts advertising and increases audience referrals. Google and Facebook have argued the exchange is already fair, while the ACCC and most other involved organisations say there’s a huge imbalance between the digital behemoths and the Australian news media.

A healthy news business is the best scenario for everyone and several organisations such as Private Media, which includes Crikey and Smart Media mastheads, and the Media Entertainment and Arts Alliance (MEAA) agree news content is valuable to digital platforms. Equally, the news media benefits from their presence on Google and Facebook through referrals, visibility of ads on news websites that these referrals facilitate and through the dissemination of user data to news organisations. 

“Although there is a ‘value exchange’ between digital platforms and news providers, the carriage of Australian news content on Google and Facebook significantly increases the appeal of these platforms and their related services,” Private Media said in its submission.

Pearman Media MD, Dominic Pearman, noted the code only targets Google and Facebook, with no mention of LinkedIn or Twitter, for example. The ACCC's proposed arbitration panel must also consider the direct and indirect benefits, whether monetary or otherwise, to Google and Facebook, he said.

“That does seem to be quite a vague way of determining ‘value’,” Pearman said.“There is no doubt news companies have suffered since the ’rivers of gold’ classifieds, job ads and car sales migrated to the internet and it is good to see the Government trying to ‘balance the power’. The news stories on Facebook and Google do enhance the consumer experience and deliver more data to the tech companies; however, the question around how they monetise that is highly contentious."

In terms of user insights Google and Facebook accumulate from consumers accessing their sites and services for news content, MEAA said this data would be unavailable to the digital platforms in the absence of news content.

“As a general principle, the code should facilitate access to data captured from users of Google and Facebook who access news content and provide minimum data-sharing obligations for each of Google and Facebook,” the MEAA said in its submission.

What it means for digital advertising

In 2020, the digital platforms and media publishers are reliant on each other to survive. However, trying to understand exactly what the proposal means for digital advertising, on publisher sites and elsewhere, remains unclear at this point.

MediaSmiths digital media manager, Michael Tibbles, suggested the new regime could actually benefit larger publishers who can leverage it to drive increased traffic to their site. And for advertisers, the advantages seem clear, he told CMO.

“Media giants will supply increased traffic to serve adverts and should be able to pass on a more complete picture of who their audience is. A valuable asset for advertisers. However, we are yet to see how the tech giants will respond once the code is in place, and only then will we understand the true impact on advertisers,” he said.

Tibbles noted publishers already benefit from the huge reach of Facebook and Google. But if they become too greedy, tech giants may need to take radical steps to protect themselves, as seen in Spain where copyright reforms led to the removal of Google News from the market entirely. Facebook has also threatened to prevent all local and international news being shared should the code be put in place.

"To be successful, publishers must remember - this is a symbiotic relationship," Tibbles said. "Transparency and restraint are essential for success in the implementation of this proposal. Importantly, it must also consider the impact and protect the interests of smaller, and community focused publishers, with less to bring to the table and more risk of being lost in the mix."

Algorithm transparency

Several submissions to the ACCC focus on the issue of algorithm transparency, and in particular, Google making changes to the underlying algorithm governing how sites are ranked and which content is served up in response to search queries. Several noted changes to the algorithm can significantly impact a site’s standing in the search results, which in turn significantly impacts scope for its content being found and accessed by users of these social platforms. 

The Press Council shares the concern about the impact on public interest journalism of the technological and other changes faced by the media industry in Australia and, in particular, the significant market power of digital platforms. In its submission, the council supported digital platforms providing news media businesses with advance notice of significant changes to their algorithms.

“The activities of the digital platforms are having a significant financial impact on publishers that are members of the Press Council and this is already having flow on effects for the Press Council with the risk of serious loss of capacity in the future,” its submission stated.

Several submissions also noted it takes considerable time and cost for publishers to adjust their sites after an algorithm change to take into account the changes and how their pages are scoring and ranking in search results. Not-for-profit consumer advocacy association, Choice, wants the code to achieve transparency and accountability for algorithm changes in a way that allows small publishers to continue to compete. It said  consumer data protections need to be included in any new code.

“Consumer data should not be bartered without the involvement of the party most affected: Consumers," the Choice statement read.

Choice also wants to be consulted and respectfully heard when major decisions are made about platform algorithms that will affect our business model. "We want assistance and guidance that is fair, particularly for the technical changes required that will involve significant investment and time to implement.”

Indago Digital MD, Gary Nissim, noted Google and Facebook are completely different - one is a search engine and the other a social media network. To treat them in this similar fashion makes little sense.

“Even if Google did share its algorithm, and its secret blend of herbs and spices, does the ACCC have the skills to interpret and understand it? What is the merit behind this?” he said to CMO.

It's a sentiment echoed by Suby, who said while the code asks Facebook and Google to give advance notice of algorithm changes, it's not realistic to expect these giants to give away their first move advantage at the expense of increased profit.

"The truth is, social media and Google haven't really changed that much at all. While algorithms might get a fine tuning every now and then, the basic mechanisms remain the same," Suby said.

Control over user comments

The ABC, in its submission, agreed with other organisations that advanced notice on algorithm changes is appropriate. It also wants additional non-personal data from the digital platforms to help better understand how audiences are consuming its content on third-party platforms. 

And along with Choice, the ABC wants to see more controls for publishers of user comments on their stories on digital platforms. It wants enhanced moderation tools, such as disabling comments, pre-moderating comments and a streamlined process for notification of fake news to the digital platforms.

“There should be more flexible tools provided by digital platforms to allow news media business to deal with these issues… Some digital platform products such as Facebook pages do not allow news organisations to effectively moderate, take down or disable harmful user generated content. In the absence of improved tools, news media businesses may be forced to withdraw from use of some of these products,” the ABC submission stated.

User privacy can’t be overlooked

Alongside this, user privacy must not be overlooked in any new regime that includes provisions for sharing user data between the digital platforms and news media organisations. Many organisations involved in news media generally noted privacy provisions need to be addressed and properly managed in these arrangements.

The Office of the Australian Information Commissioner, which among other things manages privacy requirements, noted proposals to share data, or increase the types and amount of data to be shared between digital platforms and news media organisations, raises important privacy considerations. Digital platforms collect large amounts of user data about individuals, including personal information and anonymised, pseudonymised or aggregated data, but it’s not always possible to draw a line between personal information and de-identified information.

The OAIC recommended the ACCC conduct a privacy impact assessment for any proposals to share user data under the bargaining code. This would assist the ACCC to identify the privacy impacts that the proposed data sharing mechanisms may have on individuals, and identify measures for managing, minimising or eliminating those impacts.

The OAIC has also proposed a new, binding privacy code that will apply to social media platforms and other online platforms that trade in personal information. It will require these entities to be more transparent about data sharing, meet best practice consent requirements when collecting, using and disclosing personal information, stop using or disclosing personal information on request, and comply with specific rules to protect the personal information of children and vulnerable groups.

Copyright implications

The Australian Digital Alliance, a non-profit coalition of public and private sector group with a focus on public interest in copyright policy, wants to avoid any impact on copyright from the proposed payments code and continues to allow individuals and organisations to share news under Australian copyright law.

“To avoid similar consequences in Australia, it is essential any code provisions avoid language which invokes copyright or limits the circumstances in which it is legal to share news content," the submission to the ACCC stated. "For example,the code should steer away from language such as 'licence' or 'royalty', as this implies that a use isremunerable under intellectual property law, which as we note above will often not be the case.”

Don’t forget the creators

The Australian Copyright Council, a not-for-profit organisation representing the peak bodies for professional artists and content creators, welcomed the code and a broad definition of news including arts and entertainment and wants to see revenue sharing as an integral component.

It wants to see the code to include provisions for the collection and distribution of fees not only to media organisations (large or small), but that there be provision for payment to underlying rights holders.

“Factoring in payments to these underlying rights holders (and associated administration), should be a factor in determining the appropriate remuneration for news media businesses.”

To enable this system, the copyright council wants a remuneration framework where what constitutes a remunerable ‘use’ of news content takes into account any pre-existing rights, including copyright. Similarly, Screenrights which is the Audio-Visual Copyright Society, said any payments scheme must take account of the contribution of the underlying, and often unremunerated, rightsholders, in addition to the broadcaster of the news content. 

Broaden the definition of news

The Australian radio industry strongly supports the proposed News Media and Digital Platforms Mandatory Bargaining Code and said it would assist in addressing the fundamental bargaining power imbalance between Australian news media and major digital platforms.

Commercial Radio Australia’s (CRA) submission recommended eligibility criteria for participation in the code should not be limited to public interest journalism but should be broadened to include coverage of community and local events as well as talk back radio programs that discuss core news content. 

“This will require amendment of the content test to remove the requirement that programs contain ‘predominantly core news content’ together with the limitation that content must be produced by a ‘journalist’,” CRA said.

While the definition of news might need to be recast in a new payments regime, it could also be starved of content if Facebook goes ahead with its threat to stop sharing of local news stories. Suby questioned whether Facebook is nimble enough to address this across its entire platform.

"Is it agile enough? And is it worth the investment of their time to create a blanket ban?" he asked. "These tech giants are too big to completely change their format, no matter how hard the government, ACCC and publishers try. It hasn't been agile enough to respond to other harmful posts, groups and pages before. Just this week, Mark Zuckerberg said the company was too slow to remove a page that violated its policy on dangerous organisations in the hours leading up to a deadly shooting."

A framework must include effective penalties

The Copyright Agency, the not-for-profit organisation that negotiates, collects and distributes licence fees and royalties for creators and publishers, said price setting mechanism used by the ACCC must ensure the price is set in a ‘short sharp’ manner with minimum opportunities for gaming and delay.

The agency also said the code should accommodate direct agreements between media companies and the platforms as well as collective arrangements. It emphasised the need for a penalty mechanism for breaches of the regime, with large enough penalties to act as an effective deterrent.

Noting other governments have tried, and failed, to develop payment mechanisms that have been fought by the likes of Google, the agency said court proceedings and other remedies need to be available to the regular to compel large digital platforms to comply with the code.  

“The bargaining imbalance is huge, and the position for media companies is further exacerbated by information asymmetry. As the ACCC recognises, the Australian government will need mechanisms to address the behaviour that has so far defeated proposals to compensate media companies in Germany, Spain and, more recently, France," the Copyright Agency stated. "Without effective deterrents, the code risks becoming a mechanism the platforms can use to delay the negotiation of commercial fees with news content owners.”

At this point, one thing is clear: In the first round, Google and Facebook have hit back. Similar attempts in other countries have tried, and failed, to impose conditions on these digital giants, so there may be more to come in this stand-off. Nissim told CMO Google’s ‘Open Letter’ in response to the draft news code at first felt like it was a local, childish knee jerk reaction.

"After thinking about it, it’s likely to have been the opposite – a measured response from Mountain View by a company that is scared about the global ramifications if this comes to fruition," he said.

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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