The Australian government is implementing a mandatory code of conduct to force tech giants to pay news publishers AUD 600 million annually (USD 411 million) – 10% of their annual gross revenues – for their content.
Spearheaded by Treasurer Josh Frydenberg, the initiative seeks to correct “an imbalance in bargaining power,” given that “Facebook and Google have each become unavoidable trading partners for Australian news media businesses in reaching audiences online,” according to a government statement.
The ACCC, Australia’s competition regulator, plans to release a draft mandatory code by the end of July. The code aims to “promote competition, enhance consumer protection and support a sustainable Australian media landscape in the digital age.”
However, the controversial move has been met with substantial resistance from industry giants. Google issued a statement on 31 May denying that news has any substantial economic value to its platform: “We don’t run ads on Google News or the news results tab on Google Search. […] The bulk of our revenue comes not from news queries, but from queries with commercial intent.”
Google argues that news-related queries “accounted for just over 1% of total queries on Google Search in Australia” and claims that their news-related ad revenues accounted for AUD 10 million (USD 6.9 million) last year. The tech behemoth, whose parent company Alphabet surpassed USD 1 trillion in market value in January, fields an estimated 3.5 billion searches globally every day.
Facebook, too, has responded in kind, asserting that “If there were no news content available on Facebook in Australia, we are confident the impact on Facebook’s community metrics and revenues in Australia would not be significant,” in a written reply published on 5 June. Instead, they are quick to point out that Facebook actually benefits, rather than hurts, publishers: “Facebook’s News Feed generated approximately 2.3 billion organic referrals to Australian news publisher domains from January through May 2020, which we estimate to be worth AUD 195.8 million to Australian publishers.”
Both companies acknowledge the immense social value that reputable, high-quality news brings to Australian consumers – clearly, the value of news is not in question. Rather, they dispute who should foot the bill for the continued production of news, given that the positive externalities of news production lie outside their primary revenue streams. “It is not healthy nor sustainable to expect that two private companies, Facebook and Google, are solely responsible for supporting a public good and solving the challenges faced by the Australian media industry,” Facebook asserts.
However, even as COVID-19 has driven readership to unprecedented levels, advertising revenue, even in major news publications, has continued to drop, in part consumed by the Facebook-Google duopoly. News publishers have seen a swathe of deep staff cuts recently – 155 staff at Vice Media, 80 at Quartz and 100 at Condé Nast have been laid off, with journalists bracing for more dismissals. In contrast, Google’s total annual advertising revenue reached USD 134.8 billion in 2019, a 16% year-on-year increase and Facebook raked in USD 20,736 in annual advertising revenue in 2019, a 25% year-on-year increase.
Digital platforms such as Facebook have also come under fire for spreading fake news – and have morphed into an increasingly politicised environment, as demonstrated by Facebook’s highly publicised failure to censor or flag Donald Trump’s posts on the George Floyd protests, which appeared to contravene Facebook’s own policies on appropriate posts, earlier this month. Civil rights protesters have even called for a Facebook advertising boycott, in response to Facebook’s inaction.
Google News, Google’s AI-driven news aggregator, has also been widely criticised for creating personalised “filter bubbles” that reinforce existing user prejudices and beliefs, although the platform has released subsequent feature updates in an attempt to correct the issue.
Although it is unclear how this impasse between the Australian government and Google and Facebook will unfold, it is apparent that failing monetisation models within news publications are in desperate need of reform – and that Facebook and Google have played their part in this decline.