Controversy Ensues As Austrailia Announces Tax On Google and Facebook, Former Publishes Open Letter In A Bid To Oppose Legislation

Australia is on the verge of becoming the first country in history to tax Google and Facebook for the news they circulate. In a landmark regulatory move by the country, Facebook and Google would pay a certain predetermined amount to the media outlets for publishing their news on their social platform.

The government of Australia based on a survey report had acknowledged the need and asked The Australia Competition and Consumer Commission (ACCC) to develop a code that would make the social outlets pay for publishing the news in their platforms. According to that the board, ACCC has developed a draft, which if passed would make Australian media outlets get paid in a matter of months.

Publishing the draft, the Australian Treasurer Josh Frydenberg had said, “Our regulatory changes are designed to create a level playing field and a fair-go. Want the rules in the digital world to reflect the rules in the physical world. We want to ensure consumer protection is enhanced, competition is increased and of course, we deliver a sustainable media environment for all Australians for the future.”

We want to create a level playing field where Australian news media businesses get a fair go & digital platforms like Google & Facebook pay for news content.

The rules in the digital world should reflect the rules in the physical world.

Moreℹ️https://t.co/j0JIJ8cN4p pic.twitter.com/jr6le4nFrN

— Josh Frydenberg (@JoshFrydenberg) July 31, 2020

What are the news media and digital platforms’ bargaining code?

To rectify the imbalance in power between the media houses and digital platforms like Google and Facebook, the Australian government decided to make a code of conduct. Thereafter they asked the ACCC to come up with it.

This code if approved would let the media houses bargain an amount from the tech giants like Google and Facebook in return for which they would be allowed to publish the news in their platform.

Along with this, some minimum standards are to be followed.

The standards as mentioned in the draft exactly are:

1. Providing advance notice of changes to algorithmic ranking and presentation of the news;
2. Appropriately recognizing original news content; and
3. Providing information about how and when Google and Facebook make available user data collected through users’ interactions with news content.

Digital platforms that would be covered by the code?

As announced by the government and included in the draft, as of now Google and Facebook are the digital platforms to whom the code would apply. Although, in the future, if other digital platforms might be added.

The necessity of the code:

According to the Australian government, the draft is prepared to keep in mind “the fundamental bargaining power imbalance between

Australian news media businesses and major digital platforms”. They added that this imbalance in the power has forced the news media business to accept the less favorable terms for the inclusion of news in the digital services.

Although there are several examples of imbalance of power in several stages of the society, the government decided to uphold and address this context as “a strong and independent media landscape is essential to a well-functioning democracy.”

How the code was created?

ACCC developed the code with close consultation with the Department of the Treasury and the Department of Infrastructure, Transport, Regional Development, and Communications.

The ACCC would be empowered with the administration and enforcement of the code. Determining the eligibility of news businesses to participate in the code would be made by the Australian Communications and Media Authority (ACMA).

Who can apply to participate in the code?

According to the draft readied by the ACCC, any media business that wishes to apply the code has to apply to AMCA. Then they need to nominate which of the sources they want to be included in the code, which might be websites, newspapers, and other print publications, television programs, radio programs, and other audio or video content made available online.

They can participate if:

They produce and publish  “core news”: The term “core news” is defined in the text as “journalism on publicly significant issues; journalism that engages Australians in public debate and informs democratic decision making; and journalism relating to community and local events. Some examples of this kind of journalism are political reporting, court, and crime reporting.”

• They maintain professional editorial standards: These can be standards set by the Press Council or the Independent Media Council.
• The news outlets must not be owned by a party with a commercial interest like a magazine that focuses on publishing sponsored content or advertisements. They also must not be owned by political parties, unions, or organizations.
• They must be an Australian organization with an interest in serving the Australian citizen.

Along with this, the media organizations must also have annual revenue of $ 150000 or more in the last financial year or three of the five last financial years.

Which news will be covered by the code?

According to the draft published by the government, the media business has to nominate one or more of its sources that publish “core news”. The term “core news”, according to the draft refers to “journalism about publicly significant issues; journalism that engages Australians in public debate and informs the democratic decision making; and journalism relating to community and local events. Some examples are political reporting; court reporting and reporting on crime.”

After the business attains its nomination, they can negotiate with the digital platforms to include other aspects of the news, published by them, to be covered, not just the core news.

Some examples of non-core news that is covered by the code when published by eligible news agencies are:

1. Sports reports like interviews of coaches and players. They might also be investigative reports on sports administration.
2. Entertainment industry reports like information on new film releases or television shows.

What would not be covered by the code?

According to the draft, the code will not cover any “non-news” content like:

1. Sports broadcasts or scoreline updates.
2. Entertainment contents like dramas or reality television programs.
3. Product reviews.
4. TalkBack radio.
5. Academic publications.
6. Documentary films.

How would the code help the smaller and rural media houses?

The government says that small and rural media businesses would benefit a lot from the addition of the new law. The code would allow both options of individual and collective bargaining. Smaller media businesses when collectively bargaining with the larger digital platforms would get a fair result in their favor, whereas individual bargaining might find them getting overwhelmed.

The minimum standards of the code would require the digital platforms to provide the media businesses with “clear information about the nature and availability of user data collected through users’ interactions with their content on digital platform services.” Smaller media businesses that do not currently get this data will get a chance to serve their audiences better with the inclusion of these new statistics.

Also, the digital platforms will be mandated to provide the media businesses with at least 28 days of notice before any change of algorithm that might affect the traffic of the websites. This would provide the businesses with ample time to alter and update the ways they currently follow and engage more people. However, in special circumstances, the code would allow the digital platforms to make changes in a shorter time frame.

Time limit on negotiation and mediation:

The news and media businesses have to notify the digital platforms i.e. Google and Facebook about their intention to negotiate about the inclusion of news in their platform.

Thereafter, they have three months to negotiate. Within the first 11 weeks, both parties have to attain mediation.

What happens if they cannot come to an agreement?

Failing to agree within the above mentioned time period would mean that “news media businesses can elect to bring the dispute to compulsory arbitration, which would only consider payment on a limited number of digital platform services.”

All about arbitration:

Like said earlier, if the parties fail to agree, they would attain arbitration by default. But, if they want to get to the stage before, they have the option available to do so. They can commence arbitration after 10 days of negotiation and must attend at least one day of mediation. Once commenced, there is no turning back and both parties must attend the arbitration.

AMCA would appoint a register (consisting of at least ten experienced individuals) of the arbitrators. The main objective here would be to resolve the dispute.

The parties would have the option to choose between a single arbitrator or a panel of three individuals, who also might not be from the aforementioned list. If the parties fail to decide, AMCA would appoint three individuals from the register as the panel. AMCA would also take into consideration and try to have an equal distribution of economic, industrial, and legal experience among the panel members. As mentioned by the draft, the parties need to split the cost of the arbitrator(s).

According to the draft, arbitration would consider the inclusion of the news in the following social platforms:

Facebook:

• Facebook News Feed (including Facebook Groups and Facebook Pages);
• Instagram; and
• Facebook News Tab (when launched in Australia).

Google:

• Google Search; and
• Google News; and
• Google Discover

Final offer arbitration:

According to the code, the arbitration would be done according to the ‘ final offer arbitration ‘.

Both parties must submit a final offer on the remuneration to be paid by the digital platform within ten days after the arbitration has been triggered. After that, they will have five days to comment on each other’s offers. Occasionally, ACCC might submit to the arbitrator, to assist them in the process. The code also provides full discretion to the arbitrator on whether to consider the ACCC’s submission.

After the comments from the parties and the ACCC, the arbitrator would have a period of 30 days to choose the offer made by either of them which would become a final binding arrangement between the parties.

If the arbitrator senses any significant harm to the public interest by the offer made by both the parties, the arbitrator also has the power to adjust the offer closest to being fair. The parties also might continue to bargain between themselves within that time period. If they reach an agreement before the arbitrator announces the final decision, the arbitrator will cease.

According to the draft code, while weighing the offers made by the parties, the arbitrator has to consider:

1. The direct and indirect benefit that the content of the news business (or news businesses’) provides to the digital platform’s service;
2. The cost to the news business (or news businesses) of producing news content; and
3. Whether a particular payment amount would place an undue burden on the commercial interests of the digital platform.

Minimum standards:

The code also states that there are “minimum standards” that must be met by the digital platforms during the negotiation.

These are:

• Give news media businesses at least 28 days’ notice of:

  a. Algorithm changes likely to materially affect referral traffic to news;

  b. Algorithm changes designed to affect the ranking of news behind paywalls; and

  c. Substantial changes to display and presentation of news, and advertising directly associated with news, on digital platform services;

• Give news media businesses clear information about the nature and availability of user data collected through users’ interactions with news on their services;
• Publish proposals to appropriately recognize original news on their services;
• Provide flexible user comment moderation tools for news media businesses; and
• Allow news media businesses to prevent their news from being included in any individual digital platform service.

Privacy of the users:

According to the minimum standards set by the code, the digital platforms have to pass on all the data they collect from the news content. The code does not require the tech giants to increase sharing user data with the news businesses. Therefore, the code has no impact on privacy protection currently applicable to the users.

The code refers to the sharing of data of the user interactions with the news content of the services. According to the government, this would resolve an asymmetry of data between the digital platforms and the media outlets. This as believed by the government, would help the smaller news agencies to a large extent. However, if the media businesses decide to negotiate about gaining more data, they have to do so per the Australian Privacy Laws.

Non-discriminatory provisions:

The code also prohibits the digital platforms from discriminating against the news businesses “based on their participation of the code”. This might happen if the digital platform acted to disadvantage the news from media outlets that participated in the bargain by artificially lowering their ranking than those who did not participate.

Penalties for noncompliance with the code:

The Acts which would be considered as non-compliance with the code are:

• Bargaining with ill faith during the negotiations. Also refusing to participate in the negotiations, mediation, or arbitration.
• Breach of minimum standards
• Breach of non-discriminatory provisions.

On being found guilty and after the court proceedings have been started, the maximum penalties would be greater of either:

• $10 000 000;
• Three times the benefit obtained from the conduct (if calculable); or
• 10 percent of a digital platform’s annual turnover in Australia in the last 12 months.

Bottom line:

Good journalism is undoubtedly one of the base pillars of democracy. But the Australian government’s road to pursue that aim is absurd. In the past we have seen in Spain and Germany, where when similar rules were imposed, a heavy decline in traffic was found which affected the smaller publishers. Also in France when regulators made Google pay for news snippets had an impact on the traffics.

How the Australian government would monitor it’s news agencies is completely upon themselves but forcing an overseas company to pay for something that they hardly earn from is according to me nothing more than a farcical prospect. According to data posted by Bloomberg, only 4% of Facebook newsfeed is literally news other than updates from families and friends. Whereas in the case of Google only 1% of the total searches made in Australia are related to the current event. On the contrary, the dependency is the other way round. The news agencies of Australia need these platforms to gain traffics which in turn earn them money.

Also, both platforms offer several settings that allow the publishers to choose from and alter if they do not like how their contents are being shown.

On a serious note, according to me monitoring these platforms will have a huge effect on the freedom of opinions from the smaller channels. Essentially, a high risk remains that what news circulates and what does not would come in the hands of the government.

Google has come out strongly opposing the code by the ACCC. They claim that the implementation of this law would provide benefits to the larger media companies who would make unnecessary demands while negotiation. The tech conglomerate has pointed out that they are already paying the outlets money according to the traffic their content sees and has offered to pay more to the licensed contents. They also say that providing the companies with the data and algorithm changes would arise unfair advantage of using them to optimize the posts for a higher ranking in the system. Knowing how the algorithm works there will be nothing that Google can do to stop the “artificial” inflation of ranking. This would make their services worse and would divert traffic which is against the interest of the people.

The “Open Letter to Australians” from Google:

Google has started to convey the message throughout the country. The posted an “Open Letter to the Australians” alerting them of the unfair changes that the government is forcing them to do. In the letter, they commented that making the change would mean that the users might not see the contents relevant to them. “The law would force us to give an unfair advantage to one group of businesses – news media businesses – over everyone else who has a website, YouTube channel or small business,” the letter added.

They also highlight in the letter that approval of the code would mean that they would need to hand over the data to the news agencies. There will always be a constant risk of loss of privacy as there would be no protection of data.

Offering the news agencies with more money than they gain would mean that the company would require to get the money from the users. This would put a dent in the “free” internet and Google has said that they might need the users to pay for accessing its services if the law is enforced.

Australians, whenever open up the Chrome Web browser, are being alerted by the company about the new “mandatory code of conduct” and the implied effects of the law.

Giving anyone the power over what you as a viewer has to watch is a big hit on the personal freedom of that individual. In this case, it is not only highly unfair to the companies that are being targeted but also is to the people of the country and the content creators. It would be highly easy for the government to suppress the noise of those against its policies and opinions and uphold an artificial synthetic picture of the country which has the potential to have 10 times more effect on its democracy.