Tech giants Facebook and Google are expected to put up a fierce fight to avoid paying for news in Australia.
Tech giants Facebook and Google are expected to put up a fierce fight to avoid paying for news in Australia.

Facebook and Google set for senate showdown

Facebook and Google are preparing for a bitter showdown with media companies and a grilling from senators Friday as they threaten to halt the future Australian investments if they are forced to pay for news.

The Senate hearing comes just weeks after Google - which has described proposed laws "unworkable" - revealed it had begun hiding some news stories and news outlets from web search results in Australia in an "experiment" on users.

The platform giants are appearing before a Senate committee that includes Government senators who are pushing for the code to pass and independent Senator Rex Patrick who this week accused Google of behaving like the Chinese Communist Party with its "experiment" that was burying search results. Federal Treasurer Josh Frydenberg's earlier response had been to tell Google to find ways to pay for news, not hide it.

The new threats from the multibillion-dollar US firms have been branded as "bullying tactics" by Free TV Australia, and Nine Entertainment said the powerful digital monopolies were showing they would not share revenue from news with Australian outlets "without regulation".

The Senate hearing into the News Media and Digital Platforms Mandatory Bargaining Code will hear from Facebook, Google, the Australian Competition and Consumer Commission, government agencies and news media organisations today in the first of two public hearings.

The proposed laws - first recommended after an 18-month investigation into digital platforms - would see Google and Facebook required to share revenue with Australian media outlets for the use of their content.

If the parties could not reach commercial agreements, they would be forced into "final offer arbitration," also known as baseball negotiation.

Late changes to the laws would allow the tech giants to include the value of web traffic delivered to news organisations in their negotiations, and would also allow public broadcasters SBS and ABC to fall under the code.

 

Threats made by Google have been labelled “bullyinh”. Picture: iStock
Threats made by Google have been labelled “bullyinh”. Picture: iStock

The laws would see Australia become one of the first countries in the world to force tech giants to reimburse news organisations for the use of their products, and Federal Treasurer Josh Frydenberg said they were designed to create a level playing field for news outlets.

"This is comprehensive legislation that has gone further than any comparable jurisdiction in the world," he said.

"This is the product of three years of work, and it is a very significant development and it will ensure that or media landscape is more sustainable and more viable than otherwise would have been."

But Facebook and Google - the two companies subject to the new rules - have issued new action and threats against the proposal.

In a blog post, Facebook Australia managing director Will Easton said the laws would force the company to create multiple "commercial arrangements" in Australia, and the company would not roll out its own news service in the country unless the "right rules" were introduced.

Facebook has threatened to remove all news content from its platform in Australia to evade the laws. Picture: iStock
Facebook has threatened to remove all news content from its platform in Australia to evade the laws. Picture: iStock

"Unfortunately, the latest version still fails to acknowledge the commercial and technical realities of how publishers use Facebook and the value we provide to them," Mr Easton said.

"It also prevents us from introducing new products unless we roll them out to everyone, which seriously inhibits our ability to bring Facebook News to Australia."

Facebook has previously threatened to remove all news content from its platform in Australia to evade the laws.

Google is also seeking major changes to the news code in its Senate submission, which calls the proposed laws "unworkable," and recently launched an "experiment" in which it hid selected news stories and entire media outlets from some Australian users.

A Google spokesman said the trial would continue until February.

But Free TV chief executive Bridget Fair said Australian media would fight moves to water down the legislation, saying the tech giants were displaying "bullying tactics" designed to prevent fair payment for news content in Australia and overseas.

"What Google and Facebook are both trying to do is to make sure it's not successful because they don't want that to become a precedent for other jurisdictions around the world. It's a bullying tactic to try to intimidate news media businesses and the government," Ms Fair said.

 

"It's consistent with the reaction they've had the whole way along which is to try to intimidate Australians to stop going down this path to address the impact of these platforms with significant market power."

A Nine Entertainment spokeswoman said the news code was drafted after "extensive consultation and investigation" by Australia's competition watchdog and should be passed without major changes.

"Broadly, we will be reminding the committee of the monopoly position of the global platforms who operate businesses that are worth the equivalent of the entire Australian Stock Exchange and have used our content, quality journalism to gain the trust and acceptance of the Australian people without spending a cent on it," she said.

"And they have shown that without regulation they won't enter into negotiations in any meaningful way."

News Corp is expected to continue to support the news code.

The Senate Committee is due to finalise its report by February 12.


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