Article Australia: New Legislation Establishes Code of Conduct for Negotiations between News Media and Digital Platforms over Payments for Content

(Feb. 26, 2021) On February 25, 2021, the Australian Parliament passed the Treasury Laws Amendment (News Media and Digital Platforms Mandatory Bargaining Code) Bill 2021 (Cth). The bill, which has been the subject of considerable domestic and international discussion, establishes a “mandatory code of conduct that applies to news media businesses and digital platform corporations when bargaining in relation to news content made available by digital platform services.” Upon the passage of the bill, the treasurer, Josh Frydenberg, and the minister for communications, urban infrastructure, cities and the arts, Paul Fletcher, stated that “[t]he Code will ensure that news media businesses are fairly remunerated for the content they generate, helping to sustain public interest journalism in Australia.”

According to news reports, “Australia’s new law could set a precedent for how other countries regulate Big Tech. Countries like France have undertaken some measures to make the tech firms pay for news, while others like Canada and the U.K. are considering their next steps.”

Background

As explained in the Bills Digest, the bill “seeks to address a bargaining power imbalance that exists between digital platforms and Australian news businesses which was identified in the Final Report of the Australian Competition and Consumer Commission’s [ACCC’s] Digital Platforms Inquiry.”

In December 2017, the then-treasurer (now prime minister), Scott Morrison, tasked the ACCC with conducting an inquiry “into the impact of digital platform services on the state of competition in media and advertising services markets.” The ACCC provided its final report to the government in July 2019. It contained 23 recommendations “spanning competition law, consumer protection, media regulation and privacy law, reflecting the intersection of issues arising from the growth of digital platforms.” In a press release regarding the report, the chair of the ACCC explained that the inquiry had “identified many adverse effects associated with digital platforms, many of which flow from the dominance of Google and Facebook,” including the following:

  • The market power of Google and Facebook has distorted the ability of businesses to compete on their merits in advertising, media and a range of other markets
  • The digital advertising markets are opaque with highly uncertain money flows, particularly for automated and programmatic advertising
  • Consumers are not adequately informed about how their data is collected and used and have little control over the huge range of data collected
  • News content creators are reliant on the dominant digital platforms, yet face difficulties in monetising their content
  • Australian society, like others around the world, has been impacted by disinformation and a rising mistrust of news.

As summarized in the press release, recommendation 7 of the report proposed that designated digital platforms be required to “each provide the Australian Communications and Media Authority (ACMA) with codes to address the imbalance in the bargaining relationship between these platforms and news media businesses and recognise the need for value sharing and monetisation of content.”

In December 2019, the government published its response to the final report. As part of its response, the government stated that it would “address bargaining imbalances between digital platforms and news media businesses by asking the ACCC to work with the relevant parties to develop and implement a voluntary code to address these concerns.” The response further stated that “[i]f an agreement is not forthcoming, the Government will develop alternative options to address the concerns raised in the report and this may include the creation of a mandatory code.” The ACCC was required to provide a progress report in May 2020, with a code to be finalized by November 2020.

In April 2020, the prime minister, Scott Morrison, and other relevant ministers issued a press release explaining that the original time frame in the response with respect to the development of a voluntary code required acceleration:

The Australian media sector was already under significant pressure; that has now been exacerbated by a sharp decline in advertising revenue driven by coronavirus. At the same time, while discussions between the parties have been taking place, progress on a voluntary code has been limited according to recent advice provided by the ACCC following a request by the Government for an update. The ACCC considers it is unlikely that any voluntary agreement would be reached with respect to the key issue of payment for content.

As a result, the Government has instructed the ACCC to develop a mandatory code to address commercial arrangements between digital platforms and news media businesses. Among the elements the code will cover include the sharing of data, ranking and display of news content and the monetisation and the sharing of revenue generated from news.

The mandatory code will also establish appropriate enforcement, penalty and binding dispute resolution mechanisms.

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.

The ACCC released a draft code for public consultation on July 31, 2020. Following the consultation, the ACCC developed recommendations to the government, which then developed the bill and introduced it in the Parliament on December 9, 2020. The Senate referred the bill to the Economics Legislation Committee, which released its report on the bill on February 12, 2021.

Summary of the Bill

The bill adds a new part IVBA to the Competition and Consumer Act 2010 (Cth) to establish the news media and digital platforms mandatory bargaining code. It contains six main elements, as explained in the revised explanatory note:

  • bargaining – which requires responsible digital platform corporations and registered news business corporations that have indicated an intention to bargain, to do so in good faith;
  • compulsory arbitration – where parties cannot come to a negotiated agreement about remuneration relating to the making available of covered news content on designated
    digital platform services, an arbitral panel will select between two final offers made by the bargaining parties;
  • general requirements – which require responsible digital platform corporations to provide registered news business corporations with advance notification of planned changes
    that are likely to have a significant effect on covered news content;
  • non-differentiation requirements – responsible digital platform corporations must not differentiate between the news businesses participating in the Code, or between participants and non-participants, or between nonparticipants because of matters that arise in relation to their participation or non-participation in the Code;
  • contracting out – the Bill recognises that a digital platform corporation may reach a commercial bargain with a news business outside the Code about remuneration or other matters. It provides that parties who notify the ACCC of such agreements would not need to comply with the general
    requirements, bargaining and compulsory arbitration rules (as set out in the agreement); and
  • standard offers – digital platform corporations may make standard offers to news businesses, which are intended to reduce the time and cost associated with negotiations, particularly for smaller news businesses. If the parties notify the ACCC of an agreed standard offer, those parties do not need to comply with bargaining and compulsory arbitration (as set out in the agreement).

In terms of the applicability of the code of conduct provision, the bill provides that the relevant government minister “may designate a digital platform corporation and digital services that must comply with the Code. The Minister may only designate a digital platform corporation and services if the Minister has considered whether there is a significant bargaining power imbalance between Australian news businesses and the digital platform corporation’s corporate group.” For a news business corporation to participate, it “must be registered by the ACMA,” which “must register a news business (and the applicant corporation as the registered news business corporation) if the applicant had an annual revenue above $150,000 in the most recent year or in three of the five most recent years, and the news sources comprising the news business:

  • have the primary purpose of creating and publishing core news content;
  • are subject to relevant professional journalistic standards; and
  • operate predominantly in Australia for the dominant purpose of serving Australian audiences.”

After a registered news business corporation (or a collective of such corporations) has indicated its intention to bargain, a responsible digital platform corporation must bargain with the corporation and, if an agreement is not reached between the parties within three months, “the matter will be subject to compulsory arbitration if the news business elects to begin arbitration.”

Reactions to the Bill

The Bills Digest summarizes the various opinions of different stakeholders with respect to the bill, with support for the bill expressed by Australian mainstream media corporations, including News Corporation (News Corp), Nine Entertainment, and Free TV. Strong opposition to the bill came from Google and Facebook, with other “opposing voices” among certain businesses and industry groups.

A representative of Google expressed to the Senate committee that “Google sees the Bill as posing an ‘untenable risk’ in terms of the impacts it may have on Google products, operations, and finances.” She “indicated the company’s most critical concern about the Bill is what she called ‘the requirement to pay for links and snippets in search,’” saying that “this provision would set an ‘untenable precedent’ for Google, and for the digital economy more broadly.” Furthermore,

[i]t’s not compatible with how search engines work or how the internet works. … The principle of unrestricted linking between websites is fundamental to search, and coupled with the unmanageable financial and operational risk, if this version of the code were to become law it would give us no real choice but to stop making Google search available in Australia.

Facebook’s representative expressed to the committee that “Facebook is ‘keen to strike commercial deals’ with Australian news publishers, which he believes will ‘substantially increase investment in the news ecosystem and in journalism …[and] help drive innovation.’ However, he described the bill in its current form as ‘highly prescriptive micro regulation’ which will prevent Facebook from reaching viable agreements with publishers.” As a worst case consequence, “[t]he great majority of people who are using Facebook would continue to be able to do so, but we would no longer be able to provide news as part of the Facebook product.”

On February 18, 2021 (Australian time), following the passage of the bill by the House of Representatives on February 17, and with the Senate set to consider it, Facebook ceased distributing news content in Australia, “[banning] all users from sharing links to Australian news sources, Australian publications’ pages from hosting any of their own content, and Australian users from sharing any news links, Australian or international.” Various non-news sources and pages were also affected, including government sites.

On the other hand, Google was reported to have reached deals with News Corp and Seven West Media in relation to the display of news content on Google’s News Showcase.

On February 22, however, a Facebook representative stated that news on Facebook would be restored in Australia “in the coming days,” indicating that “[a]fter further discussions with the Australian government, we have come to an agreement that will allow us to support the publishers we choose to, including small and local publishers.” On February 23, the relevant Australian ministers stated in a press release that the government would introduce further amendments to the bill to “provide further clarity to digital platforms and news media businesses about the way the Code is intended to operate and strengthen the framework for ensuring news media businesses are fairly remunerated.” According the the statement, “[t]hese amendments will make it clear that:

  • a decision to designate a platform under the Code must take into account whether a digital platform has made a significant contribution to the sustainability of the Australian news industry through reaching commercial agreements with news media businesses;
  • a digital platform will be notified of the Government’s intention to designate prior to any final decision – noting that a final decision on whether or not to designate a digital platform would be made no sooner than one month from the date of notification;
  • non-differentiation provisions will not be triggered because commercial agreements resulted in different remuneration amounts or commercial outcomes that arose in the course of usual business practices; and
  • final offer arbitration is a last resort where commercial deals cannot be reached by requiring mediation, in good faith, to occur prior to arbitration for no longer than two months.”

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Australia: New Legislation Establishes Code of Conduct for Negotiations between News Media and Digital Platforms over Payments for Content. 2021. Web Page. https://www.loc.gov/item/global-legal-monitor/2021-02-26/australia-new-legislation-establishes-code-of-conduct-for-negotiations-between-news-media-and-digital-platforms-over-payments-for-content/.

APA citation style:

(2021) Australia: New Legislation Establishes Code of Conduct for Negotiations between News Media and Digital Platforms over Payments for Content. [Web Page] Retrieved from the Library of Congress, https://www.loc.gov/item/global-legal-monitor/2021-02-26/australia-new-legislation-establishes-code-of-conduct-for-negotiations-between-news-media-and-digital-platforms-over-payments-for-content/.

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Australia: New Legislation Establishes Code of Conduct for Negotiations between News Media and Digital Platforms over Payments for Content. 2021. Web Page. Retrieved from the Library of Congress, <www.loc.gov/item/global-legal-monitor/2021-02-26/australia-new-legislation-establishes-code-of-conduct-for-negotiations-between-news-media-and-digital-platforms-over-payments-for-content/>.