Australia's Seven West Media deal with Google could have major implications for tech firms, news media

The Australian government is seeking to enact a 'News Media Bargaining Code' before the current session of Parliament ends on 25 February

FP Staff February 16, 2021 17:23:17 IST
Australia's Seven West Media deal with Google could have major implications for tech firms, news media

Representational image. AP

Should search engines and news aggregators pay news websites whose links show up their platforms? That is the key question at the heart of the ongoing tussle between the Australian government and tech giants Google and Facebook.

The controversy becomes increasingly relevant when seen in the context of declining revenues of traditional media companies and the increasing shift of people to online sources of information.

It was in this backdrop that Google announced its 'News Showcase' initiative last year, under which it pays publishers to curate news articles for the service. The service also gives users access to paywalled content. On Monday, Seven West Media became the largest Australian news media business to strike a deal with Google under the News Showcase service.

What is the tussle about?

The Australian government is seeking to enact a 'News Media Bargaining Code' before the current session of Parliament ends on 25 February.

The mandatory code of conduct proposed by the government aims to make Google and Facebook pay Australian media companies fairly for using news content the tech giants siphon from news sites. Google is resisting the Australian plan because it would have less control over how much it would have to pay.

Under the Australian system, if an online platform and a news business can’t agree on a price for news, an arbitration panel would make a binding decision on payment.

On 22 January, the tech giant threatened to make its search engine unavailable in Australia if the government went ahead with plans to make tech giants pay for news content.

The country's prime minister Scott Morrison quickly hit back, and was quoted by The Associated Press as saying, “We don't respond to threats.”

“Australia makes our rules for things you can do in Australia,” Morrison told reporters in Brisbane. “That’s done in our Parliament. It’s done by our government. And that’s how things work here," he said.

Google, on its part, has maintained that code is “unworkable,” and said that the ability to link freely between websites is fundamental to any search engine, as noted by The Indian Express.

It has also objected to a provision requiring it to provide a notice period of 14 days to news publishers informing them about algorithm changes and certain “internal practices”. It has argued that this will lead to delays in updates.

Facebook has also said that the company would remove Australians’ ability to post news content on its platforms if the code is passed.

Implications

The confrontation highlights Australia's leading role in the global movement to push back against the outsize influence of US tech giants over the news business.

The financial woes of the media industry during the wake of the COVID-19 pandemic appear to have pushed the Australian government to take on Google and Facebook. A report by Morgan Stanley has estimated that the average decline in share prices for media companies in 2020 was 52 percent.

There are other indicators of financial distress as well. Last year, magazines such as OK! and Harper's Bazaar, as well as local papers such as The Manly Daily and The Wentworth Courier stopped print editions, as noted by the Sydney Morning Herald. Till May 2020, over 600 people in the country's media industry lost their jobs.

Meanwhile, according to an estimate by the competition regulator, for every A$100 spent on online advertising in Australia, excluding classifieds, nearly one-third goes to Google and Facebook.

Thus, it is no surprise that media companies in the country are hoping to cash in on the mandatory code of conduct that is currently being debated.

With Google having said that it will make its search engine unavailable in Australia, much attention is focussed on whether it will make good its threat if such a situation arises. Google Australia reportedly made A$4.8 billion in revenue and A$134 million in profits in 2019.

However, there is more than money at stake. As noted by an article in BBC, the wider concern is whether Google wants a modern democracy to showcase how its competitors can offer perfectly viable alternatives to its services.

Google does have reason to fear such a scenario. Earlier this month, Scott Morrison said that Microsoft is confident it can fill the void if Google carries out its threat to remove its search engine from Australia.

Microsoft President Brad Smith said in a statement that he and Microsoft Chief Executive Satya Nadella had told Prime Minister Scott Morrison and Communications Minister Paul Fletcher in an online meeting last week that “Microsoft fully supports” the so-called News Media Bargaining Code.

The Australia Institute's Center for Responsible Technology, an independent think-tank, welcomed Microsoft's stance and called on Google to withdraw its threat to close its search services within Australia.

Although Bing is Australia’s second most popular search engine, it has only a 3.6 percent market share, according to web analytics service Statcounter. Google says it has 95 percent .

Swinburne University senior lecturer on media Belinda Barnet said Bing and other search engines could fill the void left by Google and deliver benefits.

“People need to realise it will not be personalised in the sense that Google advertising in searches is, so Bing doesn’t know and frankly doesn’t care that you’re in the market for yoga pants, for example,” Barnet said.

Thus, it is clear that the ongoing controversy around Google and Facebook in Australia could set precedents for the future and have ramifications for the rest of the world as well.

With inputs from AP

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Google has already done deals with News Corp, Nine Fairfax, Seven West Media, The Guardian and regional news company ACM.