Media payments push could spark Google, Facebook revolt

Press/Media: Expert Comment

Description

Economists are warning the Morrison government that plans to force digital giants to pay publishers for news content must be carefully designed to avoid Google and Facebook leaving the market altogether.

The Australian Competition and Consumer Commission is pushing ahead with plans for a new code to govern the commercial arrangements between media companies and Google and Facebook, but economist and chairman of the Public Interest Journalism Initative Allan Fels says a tax on technology giants may need to be enforced to avoid a revolt that could see them roll back Australia operations.

“Whilst they may consider [exiting] Australia, the government has a very big stick," Mr Fels, a former chairman of the ACCC, said. "They face the prospect of a tax, a serious digital tax if they don't do something, if they don't play ball. How should the tax be assessed? All of these questions are really difficult but...I think a possible starting point would be for the ACCC to assess the loss of revenue of newspapers to the digital firms and to use that as the base calculation.

"The digital firms will probably reluctantly agree to play ball with the ACCC rather than face attacks."

Previous efforts to force tech giants to pay publishers for content have been largely unsuccessful. Google decided to close its news service in Spain in 2014 in response to legislation which required online platforms to pay publishers for use of headlines or snippets of news. When France attempted to make Google pay for publishers content last year after a "link tax" was introduced by European parliament, the tech giant said it would instead change the way articles appear in search results.

Treasurer Josh Frydenberg said on Monday the government would not "bow" to threats the platforms would roll back their operations.

"We understand the challenge that we face, this is a big mountain to climb," Mr Frydenberg said. "These are big companies we are dealing with. But there is also so much at stake so we are prepared for this fight."

Macquarie University’s head of applied finance, Tom Smith, said no measure put in place would stop the platforms from rolling back operations or refusing payment.

“They'll just walk away from us, they are not making any money from us, they are providing us with a service," Professor Smith said. "Facebook doesn't get anything out of having Australian content, we are tiny to them. The best way to do it is to allow individual news organisations to make agreements with Google or Facebook."

Professor Smith disputed the creation of a mandated code of conduct, arguing it would backfire on publishers. "Google’s likely reaction is to enter into individual agreements with individual news organisations where they offer their content for free and in return continue to have web traffic sent their way," he said. "If individual agreements cannot be reached than Google will simple drop its Google News Australia service."

Period21 Apr 2020

Media contributions

1

Media contributions

  • TitleMedia payments push could spark Google, Facebook revolt
    Degree of recognitionInternational
    Media name/outletSydney Morning Herald
    Media typePrint
    CountryAustralia
    Date21/04/20
    DescriptionEconomists are warning the Morrison government that plans to force digital giants to pay publishers for news content must be carefully designed to avoid Google and Facebook leaving the market altogether.

    The Australian Competition and Consumer Commission is pushing ahead with plans for a new code to govern the commercial arrangements between media companies and Google and Facebook, but economist and chairman of the Public Interest Journalism Initative Allan Fels says a tax on technology giants may need to be enforced to avoid a revolt that could see them roll back Australia operations.

    “Whilst they may consider [exiting] Australia, the government has a very big stick," Mr Fels, a former chairman of the ACCC, said. "They face the prospect of a tax, a serious digital tax if they don't do something, if they don't play ball. How should the tax be assessed? All of these questions are really difficult but...I think a possible starting point would be for the ACCC to assess the loss of revenue of newspapers to the digital firms and to use that as the base calculation.

    "The digital firms will probably reluctantly agree to play ball with the ACCC rather than face attacks."

    Previous efforts to force tech giants to pay publishers for content have been largely unsuccessful. Google decided to close its news service in Spain in 2014 in response to legislation which required online platforms to pay publishers for use of headlines or snippets of news. When France attempted to make Google pay for publishers content last year after a "link tax" was introduced by European parliament, the tech giant said it would instead change the way articles appear in search results.

    Treasurer Josh Frydenberg said on Monday the government would not "bow" to threats the platforms would roll back their operations.

    "We understand the challenge that we face, this is a big mountain to climb," Mr Frydenberg said. "These are big companies we are dealing with. But there is also so much at stake so we are prepared for this fight."

    Macquarie University’s head of applied finance, Tom Smith, said no measure put in place would stop the platforms from rolling back operations or refusing payment.

    “They'll just walk away from us, they are not making any money from us, they are providing us with a service," Professor Smith said. "Facebook doesn't get anything out of having Australian content, we are tiny to them. The best way to do it is to allow individual news organisations to make agreements with Google or Facebook."

    Professor Smith disputed the creation of a mandated code of conduct, arguing it would backfire on publishers. "Google’s likely reaction is to enter into individual agreements with individual news organisations where they offer their content for free and in return continue to have web traffic sent their way," he said. "If individual agreements cannot be reached than Google will simple drop its Google News Australia service."
    Producer/AuthorZoe Samios
    URLhttps://www.smh.com.au/business/companies/media-payments-push-could-spark-google-facebook-revolt-20200420-p54lje.html
    PersonsTom Smith