Google responds to News Media Bargaining Code again labelling it "unworkable"

Google has labelled the News Media Bargaining Code tabled in Australian Parliament earlier this month as “unworkable” until further changes are made to the legislation.

In a blog response on the Code posted today, Google A/NZ managing director and VP, Mel Silva, said the legislation tabled on 9 December 2020 falls far short of a workable code and flagged three key issues the search engine giant remains concerned with as it goes to the senate for ratification.

The first issue Google remains critical of is requirements to pay to show news media links. Raised by the company at the beginning of consultations earlier this year, the final Code proposed in Parliament was adapted to include reference to the value Google and Facebook provide publishers in linking to their content.

In the latest blog post, however, Silva called the payments requirement “an unprecedented intervention that would fundamentally break how search engines work”.

“No website and no search engine pays to connect people to other websites, yet the Code would force Google to include and pay for links to news websites in the search results you see,” the MD stated. “This sets the groundwork to unravel the key principles of the open Internet people use every day—something neither a search engine nor anyone who enjoys the benefits of the free and open Web should accept.”

Instead, Google is proposing a model where it would pay Australian news businesses through its US$1 billion Google News Showcase editorially curated product, announced earlier this year. Silva noted this program remains on hold in Australia while the current Code remains in circulation.

“Making it available here would enable normal commercial bargaining between publishers and platforms based on comparable market rates,” Silva stated. “We would be paying for publishers’ editorial expertise and for beyond-the-paywall access to news content for users—not for links to news content. Of course, News Showcase would still be subject to a Code, and backstopped by a standard commercial arbitration model.”

The second concern raised by Google is the mandatory negotiating model required under the Code. Silva compared it to “baseball arbitration” and a system which would require the final arbiter to choose a single offer and restrict good-faith negotiations. She also pointed to references suggesting 75 per cent of negotiations under a code were expected to end up in an arbitration process.

Instead, Google is proposing a standard commercial arbitration model for deals on News Showcase so arbitrators could look at what it sees as comparable transactions, Silva stated.

“Ultimately, by imposing final-offer arbitration with biased criteria, it encourages publishers to go to arbitration rather than reaching an agreement,” Silva stated. “And while the Code professes to recognise the value Google Search provides to publishers, in fact it encourages publishers to argue that arbitrators should disregard that value. It does this by allowing the arbitrator to consider a hypothetical scenario in which there is no Google Search and yet publishers receive the same amount of traffic, just from other sources. This scenario—laid out in the explanatory materials— invites unfair outcomes based on speculation rather than evidence.”

Thirdly, Google has again raised the 14-day advanced notice of algorithmic changes to the news media organisations. Google has repeatedly labelled the notification system as giving preferential treatment against the larger news media publishers over smaller organisations.

Although the extent of these notifications was tempered down in the final code tabled in parliament, Silva in the latest blog again claimed such notifications would also delay updates and drive-up operating costs.

Despite what appear to be overwhelming objectives, Silva said Google was committed to finding a workable solution, even as it emphasised the significant impact of its business on Australia’s media and news landscape, including 117,000 jobs nationally and $35 billion in business benefits it claims to create annually within the Australian economy.

“Those high stakes are why we’ll continue to stand firm where the Code threatens the fundamentals of our services,” Silva stated. “But we strongly believe that with the practical changes we’ve outlined, there is a path forward. As we enter this new stage of the process, we’ll keep engaging constructively with the Government, Members of the Parliament, the news industry and the ACCC, so we can get to a final Code that works for everyone: publishers, platforms, and all Australians.”

The News Media Bargaining Code was tabled in Parliament on 9 December 2020. Speaking to CMO, several of the country’s largest media houses welcomed the news, with several seeing it as a positive step and Seven West Media’s chief, James Warburton, calling it a “sensible and fair proposal”.

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