Australia will force tech titans like Google and Facebook to pay news publishers for content. Similar efforts in Europe show it can be a tough battle.

Google offices
Photo by Olly Curtis/Future via Getty Images
  • The Australian government has announced it has ordered the establishment of a mandatory code of conduct compelling companies like Facebook and Google to share advertising revenue with news publishers.
  • The European Union and several individual European countries have attempted in the past to force Google to pay publishers for displaying their content – with generally bad results.
  • ACCC chairman Rod Sims says he thinks Australia will be able to chart a different path.
  • Visit Business Insider Australia’s homepage for more stories.

The Australian government announced on Monday it has ordered the Australian Competition and Consumer Commission (ACCC) to put together a mandatory code of conduct which would compel tech giants like Google and Facebook to pay Australian media companies for publishing their stories.

A voluntary code of conduct along these lines, to be agreed upon between the parties, was recommended by the ACCC as part of its Digital Platforms Inquiry, which sought to identify ways to control the influence of these enormous companies on Australia’s local digital landscape.

However, the voluntary negotiations has fallen apart, as media companies and the ACCC allege Facebook and Google have not been seriously engaging in the conversation. The government will now seek to make the code of conduct mandatory.

“It’s only fair that those that generate content get paid for it,” Frydenberg said.

“The ground-breaking report prepared by the ACCC into digital platforms was world-leading and now paves the way for a mandatory code of conduct requiring payment for content. This will help to create a level playing field.”

“Internationally, the ACCC’s Digital Platforms Inquiry was arguably the most comprehensive investigation into the creative destruction caused by these tech media platforms to a national traditional media landscape,” said Associate Professor Timothy Dwyer, who researches the media industry at the University of Sydney.

“Now this mandatory code of practice is evidence of the need to up the ante to save the traditional media sector. It’s a serious attempt to address the imbalance that has forced media companies to close, and to redirect revenue to the sector for their news content.”

While this move is being touted as a “world-first”, it isn’t the first time governments have attempted to eke out revenue from US tech giants for their local media companies, who have seen devastating financial impacts from shifts in digital advertising and content .

Though not identical to what Australia setting out to do, European efforts at implementing a “link tax” show the lengths tech companies will go to in order to avoid giving up slices of the pie.

Europe passed a framework for a “link tax” – but it has already run into roadblocks

In March 2019, the European Parliament passed a Directive on Copyright in the Digital Single Market, a broad series of measures intended to preserve “a well-functioning marketplace for copyright” across its member states.

One of the measures within the directive, Article 11, provided for a “link tax” – a mechanism by which publishers could charge Google for displaying snippets of their content, like in link previews or Google News articles.

The ultimate goal of the measure, which passed despite fierce opposition from tech companies and internet freedom groups, is similar to what Australia is setting out to do: have companies like Google pay for publisher content.

But Google won’t play ball.

The first member state to actually ratify the EU’s directive, France, saw an immediate response: Google announced it would simply change the way search results were displayed within the country.

“When the French law comes into force, we will not show preview content in France for a European news publication unless the publisher has taken steps to tell us that’s what they want,” the company said at the time.

This meant that links from French publishers would no longer display either a thumbnail image or preview text – a change which would have a significant effect on site traffic.

In a blog post from September 2019, the company’s vice president of news, Richard Gingras, elaborated on the company’s reasoning for not paying publishers.

“Search results must be determined by relevance – not by commercial partnerships,” Gingras wrote.

“That’s why we don’t accept payment from anyone to be included in search results. We sell ads, not search results, and every ad on Google is clearly marked. That’s also why we don’t pay publishers when people click on their links in a search result.”

Other link tax efforts in Europe also failed

The EU’s move to implement a link tax followed two local efforts in Germany and Spain, both of which ended disastrously.

In Germany, publishing giant Axel Springer – which lobbied aggressively for the law – ended up walking it back after Google removed its websites from search, causing traffic to plunge, Reuters reported.

In Spain, Google responded to the passing of a link tax in 2014 by delisting Spanish publishers from Google News and no longer offering the service within the country.

More than five years later, Google News remains unavailable in Spain.

Both examples show the fraught relationship publishers across the world have with platform owners. Companies like Facebook and Google have created a new business environment which has delivered significant financial hits to media companies – but publishers have also come to rely on them for the revenue scraps that are left.

What does this mean for Australia’s effort?

On Monday, the Australian Financial Review quoted ACCC chairman Rod Sims in saying he believed the Australian effort would be different to the unsuccessful attempts in Europe – saying it was “unlikely” Google would pull out of the country.

“I’d be surprised if Google want to run a platform that just doesn’t have any access to media content at all,” Sims told the AFR.

“They might, but I think that’s unlikely. I think there is a different value relationship that’s there to be put in place. We’ll have to be working hard in close contact with the platforms and with the media companies to pull this together,” he said.

It will be difficult to know what the European example may mean for Australia’s own efforts until we have a clearer picture of how the ACCC intends to implement its revenue-sharing measures.

In a statement to Business Insider Australia, a Google spokesperson denied it had not productively engaged on the voluntary code of conduct, and said it would continue to liaise with the government on the mandatory code.

“We’ve worked for many years to be a collaborative partner to the news industry, helping them grow their businesses through ads and subscription services and increase audiences by driving valuable traffic,” the spokesperson said.

“Since February, we have engaged with more than 25 Australian publishers to get their input on a voluntary code and worked to the timetable and process set out by the ACCC. We have sought to work constructively with industry, the ACCC and Government to develop a Code of Conduct, and we will continue to do so in the revised process set out by the Government today.”

Will Easton, managing director of Facebook Australia and New Zealand, told Business Insider Australia that he was “disappointed” in the government’s announcement.

“COVID-19 has impacted every business and industry across the country, including publishers, which is why we announced a new, global investment to support news organisations at a time when advertising revenue is declining,” he said.

“We believe that strong innovation and more transparency around the distribution of news content is critical to building a sustainable news ecosystem.”