Facebook and Google have been ordered to pay Aussie media companies for publishing their news, in a world first

AAP Image/Lukas CochTreasurer Josh Frydenberg

Facebook and Google will be forced to pay Australian media companies for publishing their news stories, under a world-first mandatory code of conduct, after negotiations with the two global digital giants failed.

Treasurer Josh Frydenberg and Communications Minister Paul Fletcher ordered the Australian Competition and Consumer Commission to draw up a mandatory code of conduct to correct the imbalance of bargaining power between local media companies and global technology platforms.

This follows complaints from local media companies that Facebook and Google did not genuinely engage in negotiations over a voluntary code.

The government was motivated to act by the collapse in advertising caused by the coronavirus-induced economic downturn, which put further pressure on the viability of media companies.

The new code being drawn up by the competition watchdog, headed by Rod Sims, will include enforcement, penalties and ways to sort out arguments between the global platforms and local media companies.

It will include sharing of revenue generated from news, ranking and display of local news content on Facebook and Google’s sites as well as data sharing.

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

The government initially ordered Facebook and Google to negotiate with local media businesses on a voluntary code of conduct by November.

The ACCC has reported that the tech groups had dragged their feet over the matter of paying for content generated by news organisations.

“We congratulate the government for taking swift and decisive action on this important issue. Now, more than ever, it’s important the global technology companies take some responsibility for contributing to our society through financially supporting the creation of quality Australian content,” Nine chief executive Hugh Marks said.

“We look forward to working constructively with the government to get the settings in place for this to operate in a simple manner.”

Facebook and Google have a stranglehold over the digital advertising market and benefit greatly from the content of news publishers on their platforms, social media, search queries and digital video.

The ACCC found a significant portion of search queries on Google – 8 to 14 per cent – led to the appearance of the company’s Top Stories results page, indicating a value of news content because of the amount of searches.

Biggest critique

A University of Canberra study found that 46 per cent of surveyed consumers used social media such as Facebook for news and 18 per cent said it was their main source of news.

However, the non-distribution of revenue for that content has been one of the biggest critiques of Facebook and Google by media organisations across the world.

“Digital platforms need to do more to improve the transparency of their operations for news media providers as they have a significant impact on the capacity of news media organisations to build and maintain an audience and derive resources from the media content they produce,” Mr Fletcher said.

“Australia needs a strong and sustainable news media ecosystem and the government recognises the importance of public interest journalism. Digital platforms have fundamentally changed the way that media content is produced, distributed and consumed.”

Earlier this month, France’s competition watchdog ordered Google to negotiate with news publishers over the use of news snippets on its websites.

The ACCC has been directed to come up with a draft conduct code before the end of July, with an agreement to be finalised soon after.

The coronavirus pandemic played a key role in the government moving to rush forward with the mandatory code of conduct.

“Media companies are facing significant financial pressure and COVID-19 has led to a sharp downturn in advertising revenue across the whole sector,” Mr Fletcher said.

Media companies are reeling from advertiser cancellations despite record audiences for news and entertainment content across platforms. Companies have been forced into radical cost cuts to deal with the crisis.

News Corp Australia has suspended the printing of 60 community newspapers across the country due to the financial pressures of the crisis. The company will also make several people redundant and its executives are taking pay cuts.

Antony Catalano’s Australian Community Media will suspend printing all non-daily newspapers and will close some printing plants.

Nine, publisher of The Australian Financial Review, suspended printing of a range of sections, including the Financial Review’s BOSS magazine, Sophisticated Traveller, and The Sydney Morning Herald’s Good Food Magazine, Executive Style and Traveller.

Seven West Media will cut the pay of full-time staff who earn between $80,000 and $200,000 by 20 per cent during the crisis until June 30. The executive team was also subject to the pay cuts and will continue to work five days a week.

This article was originally published by the Australian Financial Review. Read the original here, or follow the AFR on Facebook.

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