Chapter 04

The grand bargain: Australia’s news media bargaining code

Andrea Carson
September 2021

With Australia’s new competition law in place, big tech’s hold over the media industry may be set to change elsewhere in the world.

Cover Image
Aditya Joshi
The grand bargain: Australia’s news media bargaining code

Key Insights

  1. Australia’s News Media and Digital Platforms Mandatory Bargaining Code marks a world first for its use of competition laws to force technology giants to pay for third-party news content on their platforms.

  2. Critics say the code does not adequately account for small media players and startups who are in most need of funding to pay journalists, and that the confidentiality of commercial agreements will make the impact of the code difficult to assess. There is also concern that code funding may not go towards journalism that is in the public’s interest.

  3. The code’s true test will be whether it can tame technology platforms’ power as intended, and if the law or similar laws are adopted elsewhere in the world.

International headlines put the spotlight on Australia in February 2021 when it became the first country to pass competition laws to force technology giants Facebook and Google to pay for third-party news content on their sites. While Germany, France and Spain have sought to have digital platforms pay for news using copyright laws, with mixed results, Australia was first to do so using national competition and consumer law.

International headlines put the spotlight on Australia in February 2021

The national competition watchdog, the Australian Consumer and Competition Commission (ACCC), undertook a major review that found news companies could not compete fairly with the digital platforms to attract online advertising. This was an issue of public importance because advertising is a major revenue source that funds Australian journalism.

In recognition of the importance of public-interest journalism to democratic accountability, the watchdog recommended in 2019 that voluntary codes of conduct be developed to address the imbalance in bargaining between major digital platforms and news businesses.

The code took two years to develop – and not without controversy. Unsatisfied with progress in mid-2020, the Australian government asked the ACCC instead to develop a single mandatory code of conduct with Google and Facebook. This led to a backlash, with both platforms threatening to withdraw their services from Australia at varying times. Countries such as Canada, European Union member states and the United Kingdom have watched closely as events unfolded to see if the law, or parts of it, could be adopted in their jurisdictions. 1

TimelineAustralian news media bargaining code

20182019202020214 December 2017

Then Treasurer Scott Morrison directs the ACCC to conduct an inquiry into digital platforms

10 December 2018

ACCC releases its preliminary report. It contains 11 preliminary recommendations and 8 areas for further analysis as the inquiry continues

26 July 2019

ACCC hands down its final report with 23 recommendations, including the technology platforms (ie Facebook and Google) developing voluntary codes of conduct

20 April 2020

Government instructs ACCC to develop a mandatory code

15 June 2020

Facebook’s director of public policy writes an opinion piece about the code in the Sydney Morning Herald calling for acknowledgement of the value platforms offer news media

31 July 2020

ACCC releases draft legislation of the code and calls for public submissions

7 December 2020

Government announces amendments to the draft Code and converts to a bill

13 January 2021

Google experiments with blocking Australian news sites

17 January 2021

Facebook bans Australian news on its platform

22 February 2021

Emergency Facebook and government talks resolve the ban on Australian news

25 February 2021

Bill passes both houses of parliament to become law

Australia’s media landscape: Rationale for a bargaining code

News Corporation led a global campaign, starting more than a decade ago with private negotiations and public calls from Chief Executive Robert Thomson and others, to address what it saw as a commercial imbalance between digital platforms and media organisations. These calls intensified in Australia in recent years, as News Corp was joined by other major media outlets in a concerted public and political lobbying campaign.

Since the commercialisation of the internet, news media in developed economies have been in a state of flux. On the one hand, media technologies and the internet have made it faster, cheaper and easier to access, share and produce news stories globally. On the other hand, this has come at a significant price. Newsrooms have experienced waves of cost cutting and job losses owing to a steady stream of advertising and audiences migrating to online competitors, namely Google and Facebook. The global financial crisis of 2007–2009 added to media companies’ financial woes and saw many mastheads permanently close their doors or reduce services.

The result has been a net loss of journalists and, in some cases, the loss of competing news outlets in the same markets. This has raised concerns about the ability of the news media to fulfil key democratic functions of holding the powerful to account and informing the public by providing quality, diverse news reporting.

Australia is particularly vulnerable in this changed media landscape. Despite a raft of new entrants in the last decade and a shifting hyperlocal sector, Australia has traditionally seen a highly concentrated media ownership compared to other democracies, with Rupert Murdoch’s News Corp being the largest proprietor. 2 Consolidation intensified when television network Nine merged with Australia’s second-largest newspaper company, Fairfax Media, in 2018.

AUD
3.48
Billion
Estimated losses in classified advertising from 2001 to 2016.
20 %
Reported reduction in reporting staff between 2014 and 2018.

In its review of the effects of digitalisation and digital platforms on Australia’s media, the ACCC reported a serious risk of underinvestment in journalism due to advertising losses. It estimated a loss of AUD 3.48 billion in classified advertising between 2001 and 2016. 3 Media companies reported shedding 20% of their reporting staff from 2014 to 2018. 4 Combined, these events spelled a loss of Australian journalism skill and diversity.

The ACCC concluded that newer online forms of journalism such as podcasts, blogs and citizen journalism could not mitigate the effects on public-interest reporting caused by the sharp decline in the number of professional journalists. Notwithstanding the important work done by Australia’s two publicly funded broadcasters – the Australian Broadcasting Corporation (ABC) and the Special Broadcasting Service Corporation (SBS) – the ACCC’s research found the quantity and quality of local reporting and coverage of regional Australia would likely suffer due to revenue lost to online competitors.

Among its 23 recommendations designed to level the playing field, the ACCC called for the creation of what was to eventually become known as the ‘News Media Bargaining Code’. Since then, the economic pressure on media outlets has intensified as a result of the Covid-19 pandemic.

From a voluntary to mandatory code

For every $100 spent on advertising in Australia,
$53 goes to Google
and $28 goes to Facebook,
according to estimates from the ACCC.

Facebook and Google’s vast market share in Australia’s online search and advertising markets made them ‘unavoidable trading partners for Australian news media businesses in reaching audiences online, resulting in an imbalance in bargaining power’, 5 the ACCC found. Google parent Alphabet’s global revenue has steadily increased since its formation in 2015, recording USD 180 billion in 2020. The ACCC estimated that in Australia, of every AUD 100 spent on advertising, AUD 53 went to Google and AUD 28 to Facebook.

Thus, a new bargaining code would apply only to these digital hegemons, but with a view to it being extended to other digital platform services should a significant imbalance between those platform services and media outlets arise in the future.

The initial recommendation of the ACCC (in July 2019) was for each platform to develop its own code of conduct within nine months. At that point, the public broadcasters were excluded from participating in negotiations. Meanwhile, Google and Facebook maintained that they supported quality journalism and that they alone could not solve the economic hardship facing legacy media outlets. They sponsored various Australian news projects, as well as journalism training programs and conferences, and provided grants for Covid-affected newsrooms.

Major initiatives include the Facebook Journalism Project and Google News Initiative, which have benefitted dozens of media organisations. In the United States, Facebook’s dedicated journalism section, Facebook News, helps news outlets increase audience share. It was expected to expand to the Australian market.

However, the Covid-19 economic downturn was hurting news outlets. The Public Interest Journalism Initiative (PIJI), an Australian public-interest journalism advocacy group, found media advertising had dried up almost overnight, leading to mass newsroom closures. Two-thirds of those occurred in rural and regional Australia. PIJI recorded 164 newsroom closures or suspensions of services during the pandemic’s first three months. 6 In April 2020 the ACCC advised government that the relevant parties were ‘unlikely to reach voluntary agreement’ on developing a code. 7 Therefore, the Australian government directed the ACCC to draft a mandatory code. 8

A draft was released on 31 July 2020. It set out how the parties would share data, the method of how platforms would notify media outlets of changes to the visibility and display of news content (algorithmic changes), and how news companies would be compensated for their content. Among the qualifying recipients who could apply to be a ‘registered news business’, and were thus entitled to bargain with a digital platform, were news outlets with a revenue greater than AUD150,000 per annum (for at least three of the previous five years) that produced ‘core’ news. Core news was content ‘that reports, investigates or explains’ issues relevant to Australians and informs democratic decision-making. 9

Anthony Quintano
Facebook argues it provides ‘billions of opportunities for publishers to monetise their stories, gain new paying subscribers, serve ads, and keep Australians on their websites’

Criticisms and changes to the code

Code drafting decisions drew sharp criticism from media startups and smaller outlets who felt they would be left out of deals because of their size and lack of bargaining power.

But the greatest opposition came from the technology platforms. Chief among their concerns was the concept of value exchange. The draft proposed a one-way exchange, meaning any calculations about how much technology platforms should pay for news did not factor in how much value the technology platforms believed they already provided to news outlets by extending access to new audiences, subscribers and advertisers.

Another sticking point for the technology platforms was the requirement to notify media outlets within 28 days of changes to their algorithms. They argued this was unreasonable as minor changes occur constantly and often automatically. The platforms also disagreed that they should have to share user data as broadly as defined in the legislation, which they argued raised significant privacy and data protection challenges. Facebook also argued that it already makes available a large amount of aggregated user data to news media businesses to assist them in monetising their content and services but that many publishers were ignorant or did not make use of the data insights already accessible to them via Facebook’s platform.

A bigger concern for the platforms was the code’s use of a final offer arbitration model if negotiations failed. This model requires that each party puts their final offer to an arbitrator if a deal cannot be reached after three months. The arbitrator must choose one deal over the other, without considering other factors such as platform running costs. The arbitrator’s decision is final and cannot be appealed.

The Business Council of Australia sympathised with the technology platforms, arguing that using the final offer arbitration model, together with a mandatory code and a one-sided value exchange, set a ‘dangerous precedent’. 10 The Business Council of Australia also objected to the steep penalties for non-compliance with no appeals process.

The platform backlash began in June 2020 in anticipation of the code’s draft release. Facebook’s Australian and New Zealand director of public policy, Mia Garlick, spelled out in the Sydney Morning Herald that Facebook already provided significant value to media outlets with, ‘billions of opportunities for publishers to monetise their stories, gain new paying subscribers, serve ads, and keep Australians on their websites’. 11

Google warning that Australians are at risk
An online campaign launched in December 2020 warns ‘the way Aussies use Google is at risk’.

By August 2020, a month after the draft’s release, Google also reacted. It launched an online campaign warning Australians that ‘the way Aussies use Google is at risk’. When users searched Google or YouTube, a yellow warning sign popped up with a link to an open letter from Google Australia’s managing director, Mel Silva, telling users that new government regulation would ‘hurt how Australians use Google Search and YouTube’.

ACCC Chair Rod Sims fired back, arguing the letter contained ‘misinformation’ and that any changes to Google’s free services would be at the company’s discretion, not because of the requirements of the new law. The war of words did not end there. In September 2020, Facebook threatened to ban all news from Facebook and Instagram if the law passed.

However, by December 2020, the government appeared to have listened. It gave important concessions to the technology companies. Technology platforms’ algorithm notifications would be required only for significant changes, and notice to media companies was cut from 28 to 14 days. The bill simplified what data would be shared. The one-way value exchange was replaced with a two-way calculation. Negotiations would be required to consider the value technology companies provided to media outlets, as argued in the Facebook op-ed months earlier. The public broadcasters were now included in the code.

Media companies, in turn, reacted angrily to many of the concessions. Nine complained that the concessions ‘further entrenches [the technology platforms’] monopoly power and the disparity in regulation between technology and media’. 12

The stakes were raised when Google confirmed reports that it was experimenting with Australian news sites’ visibility on its searches. Media companies suspected Google was practising techniques to remove Australian content from its sites if push came to shove. 13

As the federal government continued to push the bill through the Senate in mid-February 2021, Facebook acted on its threat. Australians woke up to blank pages on their favourite news outlets’ Facebook pages. Facebook had flexed its power and pulled news from Australia, arguing the proposed legislation was unworkable and of little benefit to it. Facebook’s Australia and New Zealand Managing Director, Will Easton, argued, ‘the business gain from news is minimal. News makes up less than 4% of the content people see in their News Feed.’ 14

The Bureau of Meteorology and other unrelated organisations were caught up in Facebook's ban, leaving their pages empty.
The Bureau of Meteorology and other unrelated organisations were caught up in Facebook’s ban, leaving their pages empty.

The ban made international headlines. On talkback radio, Australians reacted angrily. The ban’s effects were far-reaching as Facebook had inadvertently wiped some non-news outlets’ content from its platform. Journalists pointed to misinformation about Covid-19 that remained on Facebook while quality news and health information had vanished. After emergency talks between the Treasurer, Josh Frydenberg, and Facebook’s chief executive, Mark Zuckerberg, the ban was short-lived.

The bill became law on 25 February 2021. An important concession was that the federal treasurer would exercise discretion over whether the platforms would be formally ‘designated’ under the code, a necessary step before the arbitration process would apply. At the time of writing in July 2021, neither Facebook nor Google had been ‘designated’. Rather, both Facebook and Google have avoided arbitration by sealing several multi-million dollar deals with major media companies.

The code offers false hope for many start ups and small media outlets which are exempt due to their size.

Deals done so far

The timing of the deals was key. By doing deals before Facebook ended its eight-day blackout, Google ingratiated itself to government and to legacy media. Google launched its News Showcase product that promotes participating publishers in Australia and signed global three-year deals with News Corp. It struck deals with Nine Entertainment; Seven West Media (owner of The West Australian newspaper and the Seven TV network); Private Media (owner of Crikey); Schwartz Media (owner of The Saturday Paper and The Monthly); Guardian Australia; the regional newspaper network, Australian Community Media; the ABC; community newspaper group, Times News Group; and youth website Junkee Media. Following suit, Facebook signed deals with Schwartz Media, The Conversation, Solstice Media (owner of The New Daily among others), Seven West Media, News Corp, and later also with the ABC, Guardian Australia and Country Press Australia.

The rush to close deals to avoid designation and thus arbitration led one seasoned business journalist, Alan Kohler, to declare, ‘the news bargaining code is dead’. Kohler argued the code had become a bargaining chip for legacy media (Nine and News Corp) to get money from the platforms while at the same time preserving the tech giants’ monopoly power: ‘Google search and Facebook news feed have been quarantined and their monopoly rents untouched.’ 15

International news publishers closely watched the deals unfold, particularly in Canada and the United Kingdom, which have similar media systems to Australia. The United Kingdom has a number of reviews ongoing into digital platforms and is waiting for findings before engaging in any major regulatory reforms. European Union nations such as France and Germany have also followed the events, but their approaches to get platforms to pay for news favours using copyright laws.

The Australian example, however, may have bolstered France’s commitment to ensure platforms pay for third-party news on their sites. In July 2021, France’s antitrust regulator, French Competition Authority, fined Google AUD 805,000 ruling that it had failed to offer fair deals to local publishers for using news snippets in Google search results. Shortly after the fine, Google did deals with news publishers Le Monde and Le Figaro, while other outlets such as Agence France-Presse were in negotiations at the time of writing. 16

Meanwhile, the Chair of News Media Canada and publisher of the Winnipeg Free Press, Bob Cox, told reporters that Canada should also legislate and do it fast as the digital giants had demonstrated they did not sign deals until Australia’s legislation was imminent. Canadian Heritage Minister Steven Guilbeault, a keen observer of the Australian legal precedent, declared his country would in coming months introduce its own ‘made-in-Canada’ rules to force tech giants to pay for news. 17 Even the US Congress has shown interest in Australia’s new law as it debates it’s own Journalism Competition and Preservation Act of 2021, which seeks to allow news media to negotiate terms with online platforms to distribute media content. 18

The Pancake of Heaven!
The Australian code’s success will be linked to whether it can tame the technology platforms’ power as intended, and if the law is adopted elsewhere.

The code’s true test

The news media bargaining code was developed with the intention of correcting power imbalances between digital platforms and news media companies. Its goal was to provide a new revenue source to news media to revitalise public-interest journalism. But, while these legislative intentions are commendable, the code falls short in several ways, providing cautionary lessons for other countries seeking to adopt similar laws.

First, the Australian law does not legally ensure code funding is linked to public-interest journalism, which is at odds with its core purpose. Only the ABC has given voluntary public assurances that funds derived from the code would be used to support public-interest journalism.

Second, startups and small media outlets are the most in need of funding to pay journalists. The code offers false hope for many as some are exempt due to size, while others may undertake collective bargaining if they can get the tech giants to the negotiating table. However, in July 2021, the Treasurer had not used this power to ‘designate’ Facebook or Google. The Treasurer’s discretionary power offers little comfort to smaller media players whose likelihood of forcing the platforms to negotiate is minimal without the clout of ministerial ‘designation’.

Third, the deals are, by their commercial nature, confidential. While necessary, this makes it a difficult and opaque process for media outlets to know if they have achieved a decent result compared to rivals. Further, shorter deals (1 year compared to Facebook’s 10-year deal with Country Press Australia) have the disadvantage of tying up resources and time for both sides of the negotiation process. Again, this might be a disincentive to participate for smaller outlets.

Finally, given the platforms were supporting Australian journalism in various ways prior to the code, it is unclear if the law has achieved much more than was already in place. Content-sharing deals between larger media companies and platforms have existed globally since at least 2015. That said, Canada’s Bob Cox might be correct to identify political pressure as the catalyst to get the US-based companies to focus on closing media deals in far-flung Australia.

The flex of might by Facebook, when it temporarily banned Australian news content from its platform, and Google’s experiments to remove some news outlets’ visibility in its user searches, suggests that the platforms will resist unwelcome international precedents when it threatens their core business. Tellingly, Facebook Vice President for Global News Partnerships, Campbell Brown, said Facebook reserved its right to take Australian news content down again in the future. 19

The Australian code’s success will be linked to whether it can tame the technology platforms’ power as intended, and if the law is adopted elsewhere. The French regulator’s fine against Google suggests governments do have an appetite to take on the platforms. The key question for Australians is whether the code will result in more journalists being hired to undertake reporting that strengthens democratic accountability.

References

  1. 1

    Theano Karanikioti, ‘Following in Australia’s footsteps: EU to make Google and Facebook pay for News?,’ The Platform Law Blog, 12 February 2021, https://​theplatformlaw.​blog/​2021/​02/​12/​following-​in-​australias-​footsteps-​eu-​to-​make-​google-​and-​facebook-​pay-​for-​news/​.

  2. 2

    Franco Papandrea and Rodney Tiffen, ‘Media ownership and concentration in Australia’ in Eli M Noam (ed) (2016), Who Owns the World’s Media?: Media Concentration and Ownership Around the World (Oxford: Oxford Scholarship Online).

  3. 3

    ACCC (Australian Consumer and Competition Commission), Digital Platforms Inquiry – Final Report, ACCC website, June 2019, p. 17, https://​www.​accc.​gov.​au/​publications/​digital-​platforms-​inquiry-​final-​report.

  4. 4

    Ibid, p. 18 (figures adjusted for inflation by ACCC).

  5. 5

    ACCC, ‘News media bargaining code concepts paper’, ACCC website, 19 May 2020, p. 4, https://​www.​accc.​gov.​au/​focus-​areas/​digital-​platforms/​news-​media-​bargaining-​code/​concepts-​paper.

  6. 6

    Public Interest Journalism Initiative, ‘Submission to the Senate Standing Committee on Environment and Communications inquiry into media diversity in Australia’, January 2021, https://​piji.​com.​au/​wp-​content/​uploads/​2021/​02/​piji-​submission_​senate-​committee_​media-​diversity-​inquiry.​pdf.

  7. 7

    Reuters Staff, ‘Events leading to Facebook’s dramatic unfriending of Australian news outlets,’ Reuters, 19 February 2021, https://​www.​reuters.​com/​article/​us-​australia-​media-​facebook-​timeline-​idINKBN2AJ0HE.

  8. 8

    Parliament of Australia, ‘Treasury Laws Amendment (News Media and Digital Platforms Mandatory Bargaining Code) Bill 2020 [Provisions] Chapter 1’, Parliament of Australia website, https://​www.​aph.​gov.​au/​Parliamentary_​Business/​Committees/​Senate/​Economics/​TLABNewsMedia/​Report/​section?​id=​committees%2Freportsen%2F024648%2F76038#footnote7ref.

  9. 9

    Parliament of Australia, Treasury Laws Amendment (News Media and Digital Platforms Mandatory Bargaining Code) Bill 2021: Digital Platforms and Australian News Businesses Schedule 1, p. 3, https://​www.​legislation.​gov.​au/​Details/​C2021A00021.

  10. 10

    Business Council of Australia, ‘Submission to the Australian Competition and Consumer Commission on the draft news media bargaining code’, p. 5, August 2020, ACCC website, https://​www.​accc.​gov.​au/​focus-​areas/​digital-​platforms/​news-​media-​bargaining-​code/​submissions-​to-​exposure-​draft.

  11. 11

    Mia Garlick, ‘Media rules must help news providers harness digital platforms’ value’, Sydney Morning Herald, 15 June 2020, https://​www.​smh.​com.​au/​business/​companies/​media-​rules-​must-​help-​news-​providers-​harness-​digital-​platforms-​value-​20200614-​p552f4.​html.

  12. 12

    Max Mason, Natasha Gillezeau and John Kehoe, ‘Nine opposes concessions for Google and Facebook’, Financial Review, 8 December 2020, https://​www.​afr.​com/​companies/​media-​and-​marketing/​facebook-​google-​may-​strike-​deals-​with-​media-​companies-​20201208-​p56lhr [subscription required].

  13. 13

    Miranda Ward, ‘Google blocks Australian news in “experiment”’, Financial Review, 13 January 2021, https://​www.​afr.​com/​companies/​media-​and-​marketing/​google-​blocks-​australian-​news-​in-​experiment-​20210113-​p56tqd [subscription required].

  14. 14

    William Easton, ‘Changes to sharing and viewing news on Facebook in Australia’, Facebook, 17 February 2021, https://​about.​fb.​com/​news/​2021/​02/​changes-​to-​sharing-​and-​viewing-​news-​on-​facebook-​in-​australia/​.

  15. 15

    Alan Kohler, ‘The news bargaining code is dead. Long live the news bargaining chip.’ The New Daily, 17 March 2021, https://​thenewdaily.​com.​au/​news/​2021/​03/​17/​alan-​kohler-​news-​bargaining-​code-​dead/​.

  16. 16

    Sam Schechner, ‘Google Fined $593 Million in France Over Treatment of News Publishers,’ Wall Street Journal, 13 July 2021, https://​www.​wsj.​com/​articles/​google-​fined-​593-​million-​in-​france-​over-​treatment-​of-​news-​publishers-​11626164916.

  17. 17

    CBC [Canadian Broadcasting Corporation] News, ‘Australia’s standoff with Facebook has lessons for Canada, publisher says’, CBC website, 25 February 2021, https://​www.​cbc.​ca/​news/​business/​facebook-​australia-​canada-​1.​5927830.

  18. 18

    David Oxenford, ‘Making the tech giants pay to use traditional media news content – looking at the legislative issues’, Broadcast Law Blog, 29 March 2021, https://​www.​broadcastlawblog.​com/​2021/​03/​articles/​making-​the-​tech-​giants-​pay-​to-​use-​traditional-​media-​news-​content-​looking-​at-​the-​legislative-​issues/​.

  19. 19

    Will Jackson, ‘Australian news sites reappear on Facebook after government agrees to amend media bargaining laws’, ABC website, 26 February 2021, https://​www.​abc.​net.​au/​news/​2021-​02-​26/​australian-​news-​sites-​reappear-​on-​facebook-​media-​laws/​13195100.

Image of the author Dr Andrea Carson

Dr Andrea Carson is a political scientist and an Associate Professor (journalism) in the Department of Politics, Media and Philosophy at La Trobe University. Her research focuses on media’s role in democracy, media business models and public policy. Her latest book, Investigative Journalism, Democracy and the Digital Age, examines investigative journalism in democracies. She teaches courses in journalism and political communication drawing on her research and experience as an award-winning journalist (The Age, ABC).

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