A Media Game of Cat and Mouse: Australia’s News Media Bargaining Code

By Albert Chang

Could digital conglomerates be threatening the existence of journalism? Australia certainly thinks so. On February 25, 2022, Australia enacted the News Media Bargaining Code (“NMBC”) to support public interest journalism against digital conglomerates like Google and Facebook.[1] The NMBC governs commercial relationships between Australia news businesses and designated digital platforms “who benefit from a significant bargaining power imbalance.”[2] In a vacuum, the new law requires digital platforms over a certain size to contract with smaller journalism companies to display news on its platforms, or undergo arbitration to determine a fair price for the content.

The NMBC is the first legislation enacted in the world that seeks to protect the interests of local news outlets against tech giants.[3] The legislation could serve as a model for countries like Canada, the United Kingdom, and the United States, who all share the same concern for their journalism industries.[4] However, the legislative process in Australia suggests that such regulation may result in an extended game theory chess match between the digital companies and the governments.

The legislative process of the NMBC began on April 20, 2020, when the Australian Government tasked the Australian Competition and Consumers Commission (“ACCC”) to develop a mandatory code of conduct to address the bargaining power imbalances between Australian news media businesses and digital platforms.[5] Moreover, the Australian Government was not shy about who exactly the concerns were directed at, as they explicitly implicated Google and Facebook.[6]

The concerns directed at the two companies were evidently justified. Together, Google and Facebook accounts for seventy-six percent of Australia’s online advertising revenue.[7] Prior to the enactment of the NMBC, as is the case in other countries currently, Google and Facebook are driving users to their websites with news articles of other outlets without paying to display the articles. Consequently, global and local news outlets have complained for two decades now that internet companies — like Google and Facebook — are getting rich at their expense when internet companies sell advertisements linked to their articles without sharing revenue.[8]

The initial legislative action incited strong reactions from internet companies. In a news release, Facebook claimed the Australian Government misunderstood “the dynamics of the internet and ignores important facts about the value publishers receive from Facebook.”[9] Facebook claimed the Australian Government ignored the benefits news businesses receive from having their contents displayed on Facebook, and argued that such external intervention is detrimental to the commercial relationships between Facebook and news businesses.[10] Ultimately, Facebook threatened to stop allowing publishers and users in Australia from sharing news on Facebook and Instagram.[11]

Facebook still does not have a commercial contract with many of the major Australian public interest news journalism businesses. Courtesy Rick Rycroft/AP

In a similar manner, Google, at one point, threatened to pull its services from Australia unless a more favorable version of the Code is enacted.[12] Such a threat is arguably more destructive to Australians than Facebook’s threat because of Google’s dominant market share. During testimony in front of the Australian Senate, Mel Silva, managing director of Google Australia and New Zealand, claimed that ninety-five percent of searches performed in Australia are through Google.[13] According to Silva, the legislative move would be “a bad outcome not only for [Google], but also for the Australian people, media diversity, and the small businesses who use [Google’s] products every day.”[14]

The NMBC version ultimately enacted was one that Google favors relatively more than the one the company expressed adverse reactions towards. The bill enables the Australian Government to appoint arbitrators that decide on the final price that digital platforms have to pay Australian news publishers if a commercial deal cannot be reached in private dealings between the two parties.[15] More importantly, the bill provides that before the Australia Treasurer can designate a company like Google as one “who benefit from a significant bargaining power imbalance,” the Treasurer must first consider whether the company has “significant contribution to the sustainability of the Australian news industry through agreements relating to news content of Australian news businesses.”[16] Google has avoided designation under this bill thus far by demonstrating their investments in the journalism industry and by contracting with Australian news businesses quickly, rather than having to undergo arbitration.[17]

Facebook, on the other hand, is taking a wait-and-see approach that currently shields them from committing to expenditures. The company still does not have a commercial contract with many of the major Australian public interest news journalism businesses.[18] It remains to be seen what the Treasurer will do with Facebook’s reluctancy to commit to private commercial contracts. It seems, however, as only a matter of time before Facebook is designated as a business of interest under the NMBC, which makes Facebook undergo arbitration. Despite the enactment of the NMBC, Google and Facebook continue to illustrate a classic exchange of game theory with the Australian Government.

The two companies face a similar threat in Canada. Bill C-18 is currently out for comments after its first reading in the House of Commons in April 2022.[19] Commonly known as the Online News Act, Bill C-18 will require certain metrics to be met in private contracting between journalism businesses and digital platforms.[20] If those conditions are not met, the parties will have to undergo arbitration just like Australia’s NMBC.[21] Because the bill is still in the early stages of the legislative process, Facebook and Google have not yet publicly made serious threats as they had in Australia. Instead, both have issued statements of concerns with the proposed bill.[22]

The NMBC has the potential to become a model for other countries. Between contracts already agreed to and revenue determined under arbitration, the ACCC predicts the Code will generate a surplus of $200 million annually for news businesses in Australia.[23] If true, this will entice other countries who share the same concerns about digital conglomerates to enact their own legislation that seeks to protect journalism. However, the process of enacting the NMBC has shown that, regardless of regulations, digital conglomerates will continue to attempt to minimize the cost for using local journalism content.

[1] Diana Bossio et al., Australia’s New Media Bargaining Code and the Global Turn Towards Platform Regulation, P&I 14 Pol’y & Internet 1 (2022), https://onlinelibrary.wiley.com/doi/full/10.1002/poi3.284.

[2] News Media Bargaining Code, Australian Competition & Consumer Comm’n (last visited Oct. 5, 2022), https://www.accc.gov.au/focus-areas/digital-platforms/news-media-bargaining-code.

[3] Nick Baker, Why Australia Has Taken on Google and What This Means for the Future of the Internet, NBC News  (Feb. 10, 2021), https://www.nbcnews.com/tech/tech-news/australia-taken-google-means-future-internet-rcna274.

[4] Rod Sims, The Logic Behind Australia’s News Media Bargaining Code, EU Vox (June 24, 2022), https://new.cepr.org/voxeu/columns/logic-behind-australias-news-media-bargaining-code.

[5] News Media Bargaining Code, supra note 2.

[6] Id.

[7] Joe McDonald, Explainer: What’s up Between Google, Facebook, and Australia?, AP (Feb. 18, 2021), https://apnews.com/article/google-facebook-australia-explained-55ce7a524855c2cdabdf8ca82ad2c8cd.

[8] Id.

[9] Facebook’s Response to Australia’s Proposed News Media and Digital Platforms Mandatory Bargaining Code, Facebook (Sep. 2020), https://about.fb.com/wp-content/uploads/2020/08/Facebooks-response-to-Australias-proposed-News-Media-and-Digital-Platforms-Mandatory-Bargaining-Code.pdf.

[10] Id.

[11] Id.

[12] Nick Perry, Google Threatens to Pull Search Engine in Australia, AP (Jan. 22, 2021), https://apnews.com/article/international-news-australia-new-zealand-scott-morrison-bills-06e735a2f7670c35c4000ec8059cdced.

[13] Id.

[14] Id.

[15] Saheli Roy Choudhury, Australia Passes New Media Law That Will Require Google, Facebook, to Pay for News, CNBC (Feb. 24, 2021), https://www.cnbc.com/2021/02/25/australia-passes-its-news-media-bargaining-code.html.

[16] Rod Sims, Australia’s News Media Bargaining Code Led the World. It’s Time to Finished What We Started, The Conversation (Aug. 11, 2022), https://theconversation.com/australias-news-media-bargaining-code-led-the-world-its-time-to-finish-what-we-started-188586.

[17] Id.

[18] Id.

[19] Online News Act, S.C. 2021, c-18 (Can.).

[20] Ismail Shakil, Canada Introduces Legislation to Compel Facebook, Google to Pay for News, Reuters (Apr. 5, 2022) https://www.reuters.com/world/americas/canada-lays-out-details-proposed-law-compel-facebook-google-pay-news-2022-04-05/.

[21] Id.

[22] Sabrina Geremia, Our Concerns with Bill C-18, the Online News Act, Google Canada Blog: Public Pol’y (May 16, 2022), https://blog.google/intl/en-ca/our-concerns-with-bill-c-18-the-online-news-act/; Anja Karadeglija, Facebook Could Block News in Canada Over Revenue-Sharing Bill, Exec Says, Nat’l Post (Apr. 26, 2022), https://nationalpost.com/news/politics/facebook-could-block-news-in-canada-over-revenue-sharing-bill-exec-says.

[23] Sims, supra note 16.