Facebook recently blocked all news on its platform in Australia sending shock waves around the world. The ban came during the debate in the Australian Parliament over the highly contentious news media bargaining code formally titled Treasury Laws Amendment (News Media and Digital Platforms Mandatory Bargaining Code) Bill 2021 (“Code”) that would force tech giants like Facebook and Google to negotiate a fair remuneration to pay news publishers for using or displaying their content.
The Code arose out of a request by the Australian Government to the Australian competition regulator to develop a mandatory code to address a perceived bargaining power imbalance between digital platforms and Australian news businesses. It is believed that this power imbalance has resulted in news media businesses accepting less favourable terms for the inclusion of news than they would otherwise agree to. This was thought to pose a risk to a strong and independent media which is essential to a well-functioning democracy.
A joint statement from the Australian Treasurer Josh Frydenberg and Communications Minister Paul Fletcher says “the code will ensure that news media businesses are fairly remunerated for the content they generate, helping to sustain public interest journalism in Australia”.
Facebook has now restored news to Australian pages after the Australian Government agreed to make further amendments to the Code in return for Facebook agreeing to negotiate paid deals with Australian news businesses.
The key element of the Code is to create a framework for registered news business corporations and designated digital platform corporations to negotiate in good faith for financial remuneration for the use of, and reproduction of, news content. If the parties are unable to reach an agreement, they must participate in a mediation, failing which there will be a compulsory arbitration.
The Code does not automatically apply to all news businesses and digital platforms operating in Australia.
- Registered News Business Corporations
A corporation must apply to the Australian media authority for registration of itself, its news business and for endorsement as the registered news business corporation for its news business. To be eligible for registration, the corporation and its news business must meet all of the following requirements:
- (content test) the primary purpose of each news source of the news business is to create content that reports, investigates or explains (1) issues or events that are relevant in engaging Australians in public debate and in informing democratic decision-making or (2) current issues or events of public significance for Australians at a local, regional or national level;
- (Australian audience test) every news source of the news business operates predominantly in Australia for the dominant purpose of serving Australian audiences;
- (professional standards test) every news source of the news business is subject to the rules or code of practice specified in the Code and it has editorial independence from the subjects of its news coverage;
- (revenue test) the annual revenue of the corporation exceeds A$150,000; and
- (connection between the corporation and the news business test) the corporation, either by itself or together with other corporations, operates or controls the news business.
- Designated Digital Platform
The Australian Government decides whether or not a digital platform will be designated under the Code.
Following the discussions with Facebook after the historic news ban, the Australian Government made a number of amendments to make it clear that:
- a decision to designate a digital platform under the Code must take into account whether a digital platform has made a significant contribution to the sustainability of the Australian news industry through reaching commercial agreements with news media businesses; and
- a digital platform will be notified of the Australian Government’s intention to designate prior to any final decision.
It is reported that both Google and more recently Facebook have reached or are in the process of reaching commercial arrangements with Australian news media businesses to avoid them being designated under the Code.
The other key elements of the Code are:
- designated digital platform corporations must provide registered news business corporations with a range of information including advance notification of planned changes to an algorithm that will have a significant effect on referral traffic to, or advertising associated with, covered news content;
- where a commercial bargain is negotiated outside of arbitration the parties would not need to comply with the general requirements, bargaining and compulsory arbitration rules under the Code; and
- digital platform corporations may make standard offers to news businesses, which are intended to reduce the time and cost associated with negotiations, particularly for smaller news businesses.
The Code raises a number of potential key issues, which will be watched closely:
- Given the dominance and political influence of news content providers in Australia, would the Code be introduced in countries where news businesses are not in such a dominant market and political position?
- Will the Code protect small news businesses and public interest journalism?
- Will this encourage digital platforms to generate their own content?
- Could Facebook ban news in Australia again if the Australian Government later decides to designate Facebook under the Code? (Negotiations with news businesses were reportedly held up by Facebook’s demand for a so-called “poison pill” clause allowing Facebook to scrap any deal struck with news businesses at any time, including after the passage of the Code.)
- Will Australian consumers be forced to pay more for news as a consequence of being asked to pay a premium for news services on digital platforms?
A major step forward
Following the Code becoming law, it is reported that Google has reached or is in the process of reaching commercial arrangements with Australian news media companies worth tens of millions of dollars. The amounts under discussion by Google are reportedly “multiple times” the size of agreements signed in other parts of the world.
Commercial negotiations are apparently continuing between Facebook and Australian news businesses. Reportedly, Facebook’s key concerns are around termination clauses and notice periods.
Nevertheless, the Code is seen as a major step in reforming the news media businesses in Australia and may offer a model for other countries across the globe in addressing similar issues.