‘Harmful outcomes’: The US has urged Australia to ditch its plan to force Facebook and Google to pay for news

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  • US trade representatives say Australia’s draft media bargaining code is “fundamentally unbalanced”, with consequences that could “significantly harm Australian consumers”.
  • Separately, the US Chamber of Commerce states the current proposal “explicitly targets and discriminates against US companies”.
  • The draft proposal would allow news publishers to seek remuneration from Facebook and Google for hosting their content, with unresolved discussions heading to mandatory arbitration.
  • Visit Business Insider Australia’s homepage for more stories.

The United States has come out swinging at Australia’s proposed media bargaining code, calling on legislators to “suspend” draft laws it claims are “fundamentally unbalanced” against US internet giants and allegedly stand in violation of free trade agreements.

In a submission to a Senate inquiry on the code, Assistant US Trade Representatives Daniel Bahar and Karl Ehlers called on Australia to further revise the landmark legislation before passing it into law, saying the current proposal “may result in harmful outcomes.”

Under letterhead of the Executive Office of the President, the pair say there may be “long-lasting negative consequences for U.S. and Australian firms, as well as Australian consumers” should the legislation pass in its current state.

The proposed legislation comes by way of the Australian Competition and Consumer Commission, which hopes to establish a bargaining system for publishers to be remunerated for the news content displayed on platforms like Google Search or Facebook.

Under the current proposal, news outlets would be allowed to individually or collectively bargain with those internet giants over the value of hosting that content. Should those deliberations stall, the matter would be settled by mandatory arbitration.

The system would dramatically alter the power dynamic between news outlets, which have watched advertising revenue dwindle for years, and platforms like Google and Facebook, which command an overwhelming majority of the digital ad market.

Facebook and Google have both voiced their opposition to the proposal. The former has threatened to outright ban Australian users from sharing news content, should the laws come to pass. Google itself ran a massive publicity campaign against the proposal, and last week operated ‘experiments’ where it vanished some Australian news content from users’ Search results (The company said versions of those experiments occur each year).

The US government appears to be singing from the same digital hymnbook. The proposed legislation would “regulate the competitive positions of specific players… to the clear detriment of two U.S. firms,” the trade representatives say, adding that the oversight currently prescribed to the arbiter would be “fundamentally unbalanced” against Google and Facebook.

In an apparent reference to the potential for Facebook and Google to simply stop hosting news content in Australia, the letter states, “denying Australian consumers access to international news would significantly harm Australian consumers”.

“Accordingly, we respectfully request the Government of Australia suspend its consideration of a legislative solution to the identified concerns, to allow further time for efforts to further study the markets and, if appropriate, develop a voluntary code,” they added.

The US Chamber of Commerce has also issued its own blistering rebuke of the proposed laws on Monday, saying amendments to the draft code don’t go far enough.

“Nevertheless, and unfortunately, our fundamental concern with the proposed Code of Conduct remains unchanged,” its submission states.

The draft legislation does “not establish objective criteria for determining who is subject to the code; rather, it explicitly targets and discriminates against US companies.”

The letter also alleges the proposal violates “non-discrimination obligations” Australia agreed to as part of the Australia-US free trade deal, along with World Trade Organisation guidelines.

Submissions to the inquiry closed on Monday, with its first public hearing set for this Friday.