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Nuances of democracy. Why Australia wants to oblige Google and Facebook to pay media for news content

The Australian Parliament is soon planning to pass a Commercial Code requiring Google and Facebook to pay local journalists for news content that users post on their platforms.

Thus, Australian officials are trying to help local media, in particular, independent journalism, to survive in an unequal battle with tech giants.

A year and a half of market research by Australian government officials has shown that Google and Facebook have "too much" of bargaining power in the media industry, creating unequal bargaining power over the advertising revenue distribution.

The main reform promoter, Chairman of the Australian Competition and Consumer Protection Commission, Rod Sims, even stated:

Quote"The situation poses a potential threat to a well-functioning democracy."

If the code is passed, both companies will have to calculate the profits from journalistic materials appearing on their platforms and give these funds to local publishers and broadcasters, in advance agreeing with them the amount of payment. In the event that the parties do not come to an overall acceptable figure, the dispute will be decided by an arbitrator appointed by the government.

In addition to fees for links impressions and news snippets in feeds, platforms will also be required to notify news companies 28 days in advance of algorithm changes that could significantly affect news referral traffic, algorithm changes designed to affect paid-access news ratings, and any other significant changes in impression.

Tech giants, in turn, said that the code is dysfunctional because it is "unfair" and puts the Australian segment of the search engine at risk. Google believes that the proposed arbitration process ignores the real value their search engine provides to news publishers and opens up huge and unreasonable claims:

Quote"This will create an unprecedented and distorting experience in which Google will have to pay to link to news websites in search results. The obligation to pay for links will violate the principles of search engines and the Internet for all."

Facebook also disagrees with the code. The social network representatives threatened to remove the news entirely from its Australian platform and reminded local officials that they estimated the commercial value of news content in Australia to be virtually nil.

Quote"This eliminates the possibility for genuine bargaining, forcing Facebook to make payments that are not related to true commercial value calculations, and forcing news publishers to make unfounded claims. This distorts our existing advertising relationship with publishers."

The only acceptable option Google identified was paying materials in the "News" section of the search engine, as well as an easing of the rule about informing the media about changes in search algorithms:

"This provision should be changed to require only reasonable notification of material changes to Google's algorithm requiring important measures enactment."

Never give up

Last December, after months of lively debate, it dawned on the Australian government that links to journalists’ articles on Google and Facebook benefit not only these platforms, but the media themselves by increasing their audience.

Quote"To be honest, we never thought this value was very high, because if the platforms weren't there, we believe people would go straight to the news media website anyway," said Rod Sims.

However, the obvious had to be admitted, and the changes to the code had to be made—now the calculation of the benefits will be two-way—both for platforms from materials and media for transitions to their sites. And everything will be taken into account—right down to how much time users spend on the media pages, how many articles they read, how much time they need to read one material, and so on.

Naturally, this turnaround caused outrage among local media that were originally promised significant revenues from Google and Facebook. However, despite the fact that now the draft code does not satisfy both parties and does not at all correspond to the originally stated goal, the officials decided not to stop.

Quote"Let's see how it goes. There is no point in trying to optimize it now," Sims said.

Hidden multimove game

This behavior of Australian officials is easy to explain, according to legal experts.

Helping media is not the main goal of the new code, but rather a beautiful wrapper. The reform’s leitmotif is to force the giants to reveal their algorithms, Oleh Prostybozhenko, head of the Civil Law and Process Committee of the Ukrainian National Bar Association, said in a comment to The Page.

The question is how much it is possible to calculate the increase in benefits and who has it higher. To determine such an increase, the draft law provides for the need for Google and Facebook to disclose their algorithms and codes, and that would make it possible to calculate this increase. Actually, this is the main idea of the Australian government. If we compare this with things more familiar to us, then an analogy can be drawn with the merchandising services provided by supermarkets to goods manufacturers. Even 10-15 years ago, no one in Ukraine knew about the existence of such a service and the need to pay for it, considering it part of the routine work of a supermarket. It seems to me that the Australian government's long-term plan is also to tax this service.

Oleh Prostybozhenko

Oleh Prostybozhenko

Head of the Civil Law and Process Committee of the Ukrainian National Bar Association

Meanwhile, US officials urged their Australian counterparts to stop. And continue to research the market. And if necessary, introduce such a code, but on a voluntary basis.

Quote"The US government is concerned that an attempt to regulate legally the competitive position of specific players ... is clearly detrimental to two American companies and could lead to disastrous consequences," US Trade Assistants Daniel Bahar and Karl Ehlers said in a statement.

Is this possible in Ukraine?

The current Ukrainian government pays a lot of attention to the digital sector—to implement the "State in a Smartphone" concept, we even created the Ministry of Digital Transformation. In December, the Verkhovna Rada adopted the Law "On Electronic Communications", that establishes the legal basis for activities in this area. Another, more controversial draft law "On Media" is under development.

Despite this, there is no need to wait for such Australian steps in Ukraine in the near future, experts say. The reason for this is our mentality.

At the moment it's like a flight to Mars for us—if, for example, a lawyer comes to court demanding that Google reveal the code, they will look at him as at the strange person. Western thinking is different, it is considered normal practice there. The Australian project wants to legalize this practice and set a precedent.

Oleh Prostybozhenko

Oleh Prostybozhenko

Head of the Civil Law and Process Committee of the Ukrainian National Bar Association

If this experience turns out to be successful, then its repetition in Europe, the USA, or Ukraine is only a matter of time, the expert explained to The Page.

Later, such an approach will be introduced in authoritarian states where there are government-controlled social networks or their own segments of the Internet—in Russia, China, Iran and others, Prostybozhenko added.

The ice has broken

In any case, the process is running. Australian officials are on the verge of making the first daring move in the war against the world's digital giants to disclose their algorithms. The authors of the bill, that they expect to pass early this year, openly declare that this is an experiment.

Quote"Let's see how it goes," said Joe Sims.

And their ambitions clearly go beyond the "green continent": "I hope that not only Australia, but also companies around the world will benefit from what we discover here."

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