Ten Points about the ACCC Mandatory Code for Google and Facebook
On Monday April 20, the Australian Federal government announced that it would be asking the Australian Competition and Consumer Commission (ACCC) to develop a mandatory code for Google and Facebook, requiring them to share advertising revenues with news media companies for content they created which is distributed across these global platforms.
The development of such a Code was a key recommendation of the ACCC’s landmark Digital Platforms Inquiry Final Report, which was released in June 2019, and to which the Morrison Government formally responded in December 2019. In the Report, the ACCC found considerable evidence that Google and Facebook possessed substantial market power in search and social media, and that news publishers found themselves at a significant competitive disadvantage in their dealing with these tech giants. This was identified as having adverse social consequences and implications for democracy, including the decline in public interest journalism, the reduction in journalism jobs, the crisis facing regional news services, and diminution of the quality of information available to Australian citizens to make informed choices in the public sphere.
While the intention to respond — albeit modestly — to the ACCC’s recommendations had been flagged by the government, the COVID-19 pandemic has accelerated the need to act. News media businesses, and media industries more generally, are facing a precipitous decline in advertising revenues as the economy shrinks and sectors they had been strongly reliant upon for advertising, from travel to tourism and hospitality go into virtual lockdown, laying off thousands of workers. The crisis has hit local and regional newspapers hardest, with News Corporation announcing the closure of 60 community newspaper titles in late March 2020. Paradoxically, this comes at a time when consumption of news by Australians has increased significantly, as up-to-date information on COVID-19 and social distancing laws are sought, and as Australians are increasingly working from home.
General coverage of the Federal government’s announcement of a mandatory code can be found in several places, including here, here and here. I want to step back from the immediate details to consider some of the wider dimensions of the contest between the traditional media companies and the government on the one hand, and the digital platform companies on the other. This is because there are similar inquiries taking place around the world, such as the Cairncross Review on the Future of Journalism in the UK, and because, as Margaret Simons has observed, the “game of chicken” between the traditional and digital media giants is “playing out on the international stage”.
Here are ten points that need consideration as this contest plays out in Australia over the next few months:
1. The Federal government have, to their credit, committed to acting on the ACCC’s recommendations. The Digital Platforms Inquiry was a comprehensive and meticulously researched report, which went beyond simply reporting the views of competing stakeholders, and grappled with complex questions such as the economic value of data and the nature of monopoly in the provision of ostensibly free goods and services. With inquiries going on around the globe into the power of digital platforms, and with there being a long history of Australian media inquiries simply being buried by governments if the recommendations are politically contentious (as with the 2012 Convergence Review), the commitment to action is welcome.
2. Part of the reason why action has been forthcoming has been the energetic commitment to the Inquiry from ACCC Chair Rod Sims. Perhaps recognising that government agencies that went too far down the path of “soft law” and “responsive regulation” risked failing to adequately regulate the industries they were responsible for — as the Financial Services Royal Commission found with the Australian Prudential Regulation Authority (APRA) — Rod Sims has been positioning the ACCC as a “cop on the beat” and an activist regulator. He has also been a high-profile commenter on matters relating to the power of digital platforms, both in Australia and internationally.
3. A key factor in Australia has been the power of News Corporation as the dominant player in the commercial news media market. News Corporation has been an aggressive participant in the policy process, both through its submissions to the ACCC Inquiry, and the reporting on the inquiry and its recommendations. As News Corp is well connected to the government, this has no doubt assisted in giving a sense of urgency to the issue. At the same time, such partisan advocacy is the key weakness facing journalists and news media organisations generally.
4. In terms of the politics of introducing a new mandatory code, the politics should be favourable to the government. Both Labor and the Greens have indicated support for the ACCC recommendations, and rural and regional MPs generally are well disposed to measures that can save their local news outlets.
5. How Google and Facebook are likely to respond can be predicted by how they have responded to similar proposals in other countries. One approach, which was seen when Spain introduced a “link tax” on Google News, was simply to stop carrying stories from Spanish newspapers. At the same time, Rod Sims has expressed confidence that this would not happen in Australia, as somewhere between 8 and 14 per cent of news content on these platforms comes from the main news media publishers, and they will continue to want this professionally produced news content.
6. Google and Facebook are also likely to argue that they are not, strictly speaking, news distributors, but rather the conduits for carrying news content that is driven by their users. This platform/publisher distinction, enshrined in US communications law under Section 230 of the 1996 Communications Act, has provided companies such as Google and Facebook with considerable legal protection with regards to the content accessed from their sites, even if it has been suggested that the claim that they are “not media companies” is largely a legal fiction.
7. Even if the argument that Google and Facebook should pay news publishers for their content that they produce is accepted, the question of what would be an appropriate price for the use of such content remains. As consumers do not pay — at least directly — for the content they access from digital platforms, the issue is less one of a market price, or a return set through copyright arrangements, but a mutually accepted notion of a “just price” for news content. As economists, philosophers, theologians and many others have noted for centuries, the challenge of determining a just price is complicated, and will certainly occupy the ACCC, governments, lawyers and many other market participants.
8. The other big issue is the lack of trust in established news media. While not as marked as in the US, there are considerable concerns expressed about lack of accountability, undeclared conflicts of interest, and media outlets declaring themselves to be self-interested players in public debates rather than neutral reporters on competing viewpoints. A recent survey I was involved with about trust in news among Australians found the ABC and the SBS to be the most trusted. Among commercial media, some of the most trusted outlets, such as the Australian Financial Review, operate behind hard paywalls, and very little of their content is available through Google and Facebook.
9. The crisis of trust in news media is pervasive, and hard to tackle. A four-country survey of attitudinal change after COVID-19 identified that media were less trusted in the countries surveyed (US, UK, Germany and Sweden) than they were before the pandemic, while trust in almost all other institutions and sectors surveyed (including government) had gone up. If the debate is cast in terms of protecting jobs in journalism, it will come up against the hard buffer of public mistrust of how news is currently being reported. While news on social media is trusted less than that of traditional news media outlets, winning over the public to the proposition that Google and Facebook needs to pay News Corp and Nine so that the public will get more reliable and trustworthy news is likely to be a hard call.
10. The final issue is of course whether the lifeline being thrown to the traditional news media businesses is too little, too late. Google and Facebook currently account for 70 per cent of the digital advertising market in Australia, which accounts for over 50 per cent of all advertising in Australia (and growing). The value of this advertising was estimated at $6 billion by the ACCC in 2018. One per cent of these revenues would be $60 million, which would be OK for an industry in crisis, but is hardly going to turn around the landscape for journalism jobs. Indeed, the Federal government has already made comparable allocations to Australian news organisations, through the Regional and Small Publishers Jobs and Innovation Package, which was allocated $60m in 2018, and most recently with the recently announced $50 million Public Interest News Gathering (PING) program. Google and Facebook also themselves administer programs to support local news and journalism initiatives, such as the Google News Initiative.
Over the longer term, it may be that advertiser supported journalism is going to give way to other funding models, including subscription driven models, philanthropically-supported and non-profit journalism, and publicly funded media. All of these have pros and cons. But the biggest issue is going to be that of restoring trust in news media, and in that respect policy measures to support existing journalism jobs can only do so much, whether funded through general taxation or through levies on the very powerful digital platforms. Both the January 2020 bushfires and the COVID-19 pandemic have illustrated the importance of high quality, independent and accurate news to Australians. But the question of who pays for it remains an open one, even while acknowledging the important work the ACCC has undertaken in this regard.
