Facebook announced on Tuesday that it would restore news to Australian users and sign commercial agreements with local publishing houses. Yesterday, it signed its first deal with Seven West Media.
Google has made deals with News Corp., Nine Fairfax Media, Seven West Media, The Guardian, and regional news provider ACM. It has backed down from its original threat to remove Google Search in Australia.
Facebook blocked the news for Australians, as well as domestic violence helplines and charities that support children with cancer and the Royal Australian College of Physicians.
In exchange, the federal said that it would cease all advertising campaigns using. This move is what most likely “aided” the recent outcome of negotiations with Facebook.
The code was changed in a small but significant way. Remember that the goal of the code was to equalize the bargaining power between news media and big tech platforms.
It is a way to force a commercial settlement when it’s not possible for the parties to reach an agreement voluntarily. The code is mandatory because the Australian Competition and Consumer Commission thought that platforms would never get an offer or a settlement without it.
Treasury Josh Frydenberg has outlined four changes that Facebook requested.
Before a digital platform can be “designated” and become subject to the code, the Minister must first consider whether the platform has commercial agreements with news media companies.
The government must notify any platform that it intends to designate as subject to the code at least one month in advance.
The non-discrimination provision (designed as an antiavoidance mechanism) will not apply to the remuneration or commercial outcomes that result from normal business practices.
Final offer arbitration is a last resort. Good faith mediation should precede it, as long as this does not last more than two months.
A major change?
These amendments by the government do not change the scope of the News Media Bargaining Code in a major way. They do, however, include some important clarifications about how the code will work.
Google and Facebook both feared that the “final offer arbitrage” approach would negatively affect them. If a deal could not be reached, the media and platform businesses would both have to make their offer and then defer to an arbitration to decide.
Google and Facebook initially advocated “commercial arbitration,” where the arbitrator has more discretion. Commercial arbitration favors the party that has the most information and bargaining power.
A classic approach to dispute resolution is the compromise of requiring good-faith mediation before any mandatory arbitration (commercial or final offer arbitration).
Win some and lose some.
The News Media Bargaining Code is now a compromise, but it has not lost its original intent. Negotiating changes to the code revealed the values of Facebook, Google, and other parties who could be affected by it.
The introduction of the Bill followed the exposure draft, the Senate Committee, and Facebook’s obstinate actions. All of these have led to financial results for Google, Facebook, and Australian news publishers.
It was a painful but classic exchange of information, which would have otherwise been kept close to each player’s chest.
Google has learned that Google Search cannot be changed, even if it costs millions of dollars in just a few days. Facebook has shown that it is difficult to change social media offerings quickly (like removing news from Australia).
It is too early to tell if Facebook’s strategy of pushing its lobbying efforts to the limit was successful or not. It will be interesting to see how the platform interacts with the new UK Digital Markets Unit, a regulatory regime aimed at large tech companies.
After a long dry spell, money will soon be flowing into public interest journalism.
The News Media Bargaining Code aims to create a commercial environment in Australia where deals can be made between platforms and news media companies.
Google and Facebook are now paying Australian media companies tens or even hundreds of millions of dollars per year for local content.
According to a report by the Australian Financial Review, Facebook Australia paid just under A$17million in taxes in 2019. Shutterstock
It’s reasonable to expect regional news businesses to receive money in exchange for local news, although the platforms have yet not made a standard offer.
This will not alter the inevitable shift in the business model of news to a digital environment. It does, however, balance the value proposition of news curation and news creation.
Facebook, Google, and the news media have also been made aware that they operate and exist in a symbiosis. What is the status of this relationship? Well, it isn’t very easy.