On 31 July, the ACCC published an exposure draft of the Bill aimed at forcing Google and Facebook to pay news businesses for the use of their news in services like Google Search, Google News and Facebook News Feed and Tab.
News media businesses claim that Google and Facebook make anywhere from $600 million to $1 billion a year from “using” the news the news media businesses publish.
When Spain introduced a law to redress this “value gap”, Google responded by not including Spanish news in its services. Germany introduced a similar law, but publishers had to opt into the scheme, not out. Apparently, none did.
Last year, the EU introduced a press publisher’s right as part of its Digital Single Market (DSM) Directive. When France implemented this (adopting the Spanish model), Google once again withdrew. The French Competition authority, however, has intervened.
Meanwhile, in Australia, the ACCC published the Final Report for its Digital Platforms Inquiry in July 2019.
Amongst other things, it concluded that Google and Facebook had become unavoidable trading parties for news media businesses wishing to reach audiences online. This created a significant imbalance in bargaining power.
In December 2019, the Treasurer directed the ACCC to facilitate negotations between the news businesses and Google and Facebook to develop a voluntary bargaining code to address this imbalance.
Those negotiations apparently not leading to the desired outcome, on April 2020, the Treasurer directed the ACCC to develop a mandatory bargaining code:
The Government has decided that the original timeframe set out in its response requires 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.
What the bill will do
The Bill will introduce a new Part IVB into the Competition and Consumer Act 2010.
Qualifying news business corporations may apply to the Australian Communications and Media Authority (ACMA) to register under the code: ss 52D and 52E.
Upon registration, designated digital platform corporations:
- must comply with minimum standards of conduct with respect to the registered news business’ “covered news content”;
- must participate in an arbitration to determine the remuneration payable to the registered news business for the use of its “covered news content”; and
- must not discriminate against the registered news business.
Designated digital platform corporations
The Bill will give the Treasurer power to designate by legislative instrument digital platform corporations and digital platform services that will be subject to the mandatory bargaining code: s 52C.
According to the explanatory memorandum, the designated digital platform corporations will be initially Google and Facebook, although other businesses may also be designated: [1.30]
The explanatory memorandum at [1.34] also “expects” that the services which will be designated are:
- Facebook News Feed (including Facebook Groups and Facebook Pages);
- Facebook News Tab (if and when released in Australia);
- Google Discover;
- Google News; and
- Google Search.
News business corporations and news sources
A news business corporation may apply for registration of its news business(es) under the scheme if:
- the news corporation’s annual revenue exceeds $150,000 or exceeded $150,000 in three of the last five financial years: s 52G;
- the news source(s) its seeks to register create and publish online content that is predominantly “core news content”: s 52H;
- the news source(s) operate predominantly in Australia for the dominant purpose of serving Australian audiences: s 52J; and
- the news source(s) adhere to professional quality standards: s 52K.
Once registered, the rights of the news business corporation extend to “covered news content”, not just its “core news content”.
Core news content and covered news content
The definition in s 52A of “core news content” is content that:
(a) is created by a journalist; and
(b) that records, investigates or explains issues that:
(i) are of public significance for Australians; or
(ii) are relevant in engaging Australians in public debate and in informing democratic decision-making; or
(iii) relate to community and local events.
The explanatory memorandum explains at [1.51] – [1.53] that “core” news content can relate directly to matters of public policy and decision making at any level of government such as political, court and crime reporting. The activities of private sector entities may also be included if of sufficient public importance.
Core news content is a subset of “covered news content” which, in addition to “core news content”, also includes:
content that is created by a journalist and is relevant in recording, investigating or explaining issues of interest to Australians.
According to the explanatory memorandum at [1.66] – [1.67] covered news content is intended to extend to:
sports and entertainment related news such as interviews with coaches and players, reporting about the entertainment industry and coverage of reality television.
(This is not intended to be an exhaustive description of what is included.) However, it does not include sports broadcasts or the results or scores of sports, “entertainment content such as drama or reality TV programming” or:
specialty or industry reporting, product reviews, talk-back radio discussions, content produced by academics and documentaries.
Professional quality standards
The Bill proposes two requirements for quality standards: s 52K. The news source:
- must be subject to the rules of the Australian Press Council, the Independent Media Council, the Code of Practice of the Commercial Television Industry or the Commercial Radio industry or the Subscription Broadcast industry, or rules substantially equivalent to these; and
- the news source must have editorial independence from the subjects covered.
The explanatory memorandum explains at [1.58] that the second requirement of editorial independence means the news source must not be controlled by a political advocacy group such as a political party, trade union or lobby group. It also means that the news source cannot be controlled by someone with a commercial interest in the coverage and gives the example of sports coverage owned or controlled by the sport’s governing body.
The minimum standards
Once a news business is registered, the digital platform corporation must comply with the minimum standards: s 52L.
These include, for each digital platform service:
- listing and explaining what data is collected about users of the news business (s 52M);
- explaining how the data about such users made available to the news business differs from the data the digital platform corporation collects about users of its service; and
- explaining how the news business can access that additional data;
- giving the news business notice of any changes to algorithms used by the digital platform service likely to have a significant effect on the ranking of the news content on the platform or specifically directed at the ranking of paywalled content: s 52N, 52O;
- giving notice of other changes to policies or practices likely to have a significant effect on the display and presentation of the news business’ covered news content or advertising directly associated with that content: ss 52P and 52Q;
- if requested, provide the news business with flexible content moderation tools so that the news business can remove or filter comments on the digital platform service about the news content: s 52S; and
- develop a proposal, in consultation with all registered news businesses, to recognise original covered news content when ranking and displaying news content: s 52T; and
- must discriminate between registered news businesses or registered news businesses and news business which are not registered: s 52W.
The arbitration scheme
In addition to the rights afforded it throught the minimum standards, a registered news business may also initiate a bargaining and arbitration process with the digital platform for the use of news content.
The registered news business (or its representative) inititates the bargaining process by giving notice “it wishes to bargain over one or more specified issues relating to its covered news content”: s 52Y.
While the publicly funded ABC and SBS may initiate bargaining, they cannot bargain about remuneration: s 52Y(6).
The parties must negotiate in good faith (s 52ZB) and can demand the provision of information and data relevant to the issues the subject of bargaining, a kind of discovery process: s 52ZC. This includes discovery about the benefits the digital platform derives from use of the news content.
Either party may refer the dispute to compulsory arbitration if:
- there has been at least one day of mediation; and
- the parties have not reached agreement within three months of bargaining starting: s 52FZ
Provided there has been at least a one day mediation, the parties can also agree to refer the dispute to compulsory arbitration after 10 days.
The arbitration itself is particularly interesting. It is “final offer” arbitration.
Although the news businesses can initiate bargaining over “issues”, the arbitral panel must make a determination about the remuneration payable by the digital platform corporation to the news business(es).
Ten days after the arbitration is established, both parties must submit their final offers about the amount of the remuneration. Once submitted, the parties cannot amend or withdraw their respective “final offers”. They may, however, submit a response to the other party’s final offer. The arbitral panel must accept one or other of the final offers: s 52ZO.
The only exception to this requirement is where the arbitral panel considers both final offers are “not in the public interest because they are highly likely to result in serious detriment to the provision of covered news content in Australia or Australian consumers.” In that case, the arbitral panel must adjust one or other of the final offers as required by the public interest.
The final offers must also be provided to the ACCC, which is authorised to provide its comments about the final offers to the arbitral panel before the panel hands down its decision: s 52ZS.
The “final offer” process has the considerable advantage that it avoids the expense and delay usually associated with rate setting proceedings for access to essential facilities or under the licensing schemes overseen by the Copyright Tribunal.
In deciding which final offer to accept, the arbitral panel must have regard to (s 52ZP):
- the direct benefit (whether monetary or otherwise) of the registered news business’ covered news content to the digital platform service;
- the indirect benefit (whether monetary or otherwise) of the registered news business’ covered news content to the digital platform service;
- the cost to the registered news business of producing covered news content;
- whether a particular remuneration amount would place an undue burden on the commercial interests of the digital platform service.
It is striking that the matters which must be taken into account do not include the benefits (direct or indirect) that the news business derives from being carried in the digital platform service.
Once the arbitral determination has been handed down, the parties must enter into a written agreement to ensure the digital platform corporation will pay the news business the remuneration determined in the arbitration: s 52ZT.
The ACCC may issue an infringement notice to a person who contravenes that person’s obligations under this scheme. The penalty for a corporation found to be in contravention is up to 600 penalty units: s 51ACF – i.e., up to $132,000.
In addition, s 76 of the Competition and Consumer Act 2010 will apply so that civil penalties may be imposed up to the greater of:
- $10 million;
- 3 times the total value of the benefits reasonably attributable to the non-compliance; or
- 10% of the contravenor’s annual turnover in the previous 12 months.
EU’s DSM Directive
The EU’s press publisher’s right under the DSM Directive is an obvious inspiration for this new right for news businesses. There are a number of significant differences, in addition to the far greater detail elaborated into the Bill.
For example, unlike the DSM Directive, the Code to be imposed by the Bill is not tied to use of copyright or other (at this stage) recognised property right. Instead, the Bill creates a right to payment for some “intangible value”.
The DSM Directive expressly excludes from the obligation for payment:
- hyperlinking; or
- “the use of individual words or very short extracts of a press publication” – which seems a lot like the snippets returned in a Google Search for example.
At least since the Victoria Park Racing case, the High Court has declared that Australian law does not protect all intangible value, only those sources of value falling within recognised legal rights. Later, in the Blank Tapes case, the High Court struck down a “royalty” imposed on the sale of blank cassette tapes on the grounds it was not a payment for use of copyright and so was invalid as a tax or, possibly, an acquisition of property on other than just terms. It will be interesting to see whether the resort to an access regime – one in which the facility provider pays, not the user – changes the calculus.
Under the DSM Directive, the obligation to pay does not apply to articles or materials published before 6 June 2019. Further, it applies to articles and materials only for two years following publication.
Another difference is that art. 15.5 of the DSM Directive imposes an obligation to ensure that the authors of the press publication receive “an appropriate share” of the remuneration the press publisher receives from the digital platforms.
Google’s reaction has been swift. It has cancelled, or suspended, a licensing deal it had reached with a number of independent publishers. It has come out strongly against the scheme. Now, when one initiates a search on Google or seeks to watch something on YouTube, one is met with the following banner:
Comments should be submitted to the ACCC by 28 August 2020
- For example, Mason and Kehoe, [‘Tech giants should pay media $600m: Costello’][600m]. Google disputes this and claims that the news media business gain much more value from its services than it receives. ?
- Directive (EU) 2019/790 on copyright and related rights in the Digital Single Market and amending Directives 96/9/EC and 2001/29/EC, art. 15. For Communia’s outline and guidelines see here and here. ?
- Treasury Laws Amendment (News Media and Digital Platforms Mandatory Bargaining Code) Bill 2020. ?
- The $ may change as they are included in “curly” brackets. ?
- It presumably being a coincidence that date was the 75th anniversary of the D-Day landings. ?
- Strictly speaking, it is 2 calendar years commencing on 1 January following the year in which the article was published: art. 15.4. ?
- For exmple, here and here. The ACCC has denounced Google’s position as misleading. ?