Platform giants Facebook and Google will be forced to share advertising revenue with Australian media companies under a new mandatory code of conduct with binding penalties announced by the federal government today. 

Australia joins France in being among the first countries to force the tech giants to directly pay for the content which helps attract billions of users and advertising dollars to their platforms while traditional news media companies have struggled to remain profitable. 

The move has been welcomed by major media publishers and the opposition, while Facebook and Google say they are disappointed in the government’s decision.

In response to the ACCC’s landmark Digital Platforms Inquiry last year, which proposed sweeping reforms, the government asked the competition regulator to develop a voluntary code of conduct with the platforms to address bargaining power concerns between digital platforms and media businesses.

But the government says progress on the code between the regulator and the companies has been “limited” and the original timeline – the voluntary code was to be finalised no later than November 2020 – needed to be accelerated because coronavirus is adding strain to a media sector “already under significant pressure”.

A draft mandatory code will be released for consultation by the ACCC before the end of July, with a final code to be settled “soon thereafter” according to the government.

According to digital advertising industry association IAB Australia, at least 78 per cent of brands have decreased or paused their online advertising spend because of the impacts of COVID-19.

Declining ad revenue during the pandemic has also forced dozens of regional newspapers to stop printing.

Communications minister Paul Fletcher called on the platform giants to do more to support traditional media.

“Digital platforms have fundamentally changed the way that media content is produced, distributed and consumed,” he said.

“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.”

The code

Like the voluntary code, the mandatory code will require platforms to negotiate in good faith on how to pay publishers for the use of their content. But the new code will also establish “appropriate enforcement, penalty and binding dispute resolution mechanisms”.

As well as terms for the monetisation and sharing of advertising revenue, the code will also cover data sharing and the ranking and display of news content. The latter would potentially reveal some aspects of Google and Facebook’s closely guarded news feed ranking algorithms.

An interdependence has long existed between publishers and social and search businesses. On one hand, the platforms allow publishers to grow their audiences and visits can be monetised through subscriptions and advertising. However, structural conditions in the online advertising ecosystem and changes to algorithms mean publishers have struggled to find long term financial security through the platforms.

Industry reacts

Facebook managing director Australia and New Zealand Will Easton said he was disappointed by the government’s decision to impose a mandatory code of conduct and accelerate the timeline.

“We’re disappointed by the Government’s announcement, especially as we’ve worked hard to meet their agreed deadline,” Easton said in a statement.

“We believe that strong innovation and more transparency around the distribution of news content is critical to building a sustainable news ecosystem. We’ve invested millions of dollars locally to support Australian publishers through content arrangements, partnerships and training for the industry and hope the code will protect the interests of millions of Australians and small businesses that use our services every day.” 

A spokesperson for Google Australia said the company was progressing on the voluntary code and would continue to be part of the process.

“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. 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.”

Hugh Marks Nine CEO said, “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.

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

Labor, which has been pressuring the government to accelerate its response to the Digital Platforms Inquiry in response to the coronavirus pandemic’s impact on local media, welcomed today’s announcement.

In a joint statement with fellow shadow Ministers, shadow communications minister Michelle Rowland said Australians deserve a strong, independent media landscape.

“Australian media companies must get a decent return for their investment in public interest journalism from digital platforms such as Google and Facebook.

“There is still much to work through before this code of conduct will operate to support the news media, and still much on the media reform to-do list – which the Minister’s so-called roadmap doesn’t canvass.”

The Press Council, which represents major Australian publishers, also welcomed the news.

“The Press Council welcomes the announcement of a mandatory code between digital platforms and news media businesses, including the sharing of revenue generated from news, as a step forward in recognition of the content produced by the Press Council’s members.”

IAB Australia CEO Gai Le Roy told Which-50 her association welcomes initiatives that lead to a healthy and sustainable online advertising industry but would await the draft code to comment further.

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