Feb 25, 2022 7:00 AM

Australia's Standoff Against Google and Facebook Worked—Sort Of

A year after Australia forced tech giants to pay news outlets for the content they display, other countries want to follow suit.

An illustration of a Facebook branded news stand.

Over Zoom, Australia’s communications minister, Paul Fletcher, has the air of a man in the middle of a victory speech. He credits his team and the country’s competition regulator for succeeding where others had failed: forcing tech giants to pay for news. “There were a lot of people saying you can't really succeed in taking on the global digital giants,” he says, sitting beneath strip lighting in his Sydney constituency office. But Fletcher and Australia’s federal treasurer, Josh Frydenberg, persevered. In 2020, when the Australian government asked the competition regulator to develop a law that would force tech giants to pay for the news that appears on their feeds, Fletcher was aware of the stories others used as warnings. When Germany’s biggest news publisher, Axel Springer, tried to block Google from running snippets of its articles in 2014, it backtracked after just two weeks once traffic plunged. When Spain tried to force Google to pay for news in 2014, the search giant just left—blocking Google News in the country for seven years.

Google threatened Australia with even more drastic action. In January 2021, the tech giant suggested Australians could lose access to its entire search engine if Fletcher and Frydenberg’s “news media bargaining code,” which would force platforms to pay news publishers for links, came into force. Facebook also lobbied hard against the code, arguing that news makes up less than 4 percent of the content people see in their news feed. On February 17, Australians woke up to discover that all news links had been wiped off the platform, leaving the Facebook pages of the country’s biggest media companies completely blank. Traffic to news websites sank 13 percent, illustrating exactly what the government said it was worried about. Facebook’s actions “confirm for all Australians [the] immense market power of these media digital giants,” Frydenberg said at the time.

Still, the government did not back down. According to Fletcher, the code was Australia’s answer to a problem that was first and foremost about competition. The argument was simple—Australia’s news industry should be compensated for helping Google and Facebook attract eyeballs. “What we're trying to do is replicate the ordinary commercial dealings that would occur in a market where there wasn't a huge imbalance of bargaining power,” he says.

But others suspect the code was really an attempt to subsidize the media industry, which was suffering from intense online competition for advertising. Out of every 100 Australian dollars spent on advertising in 2019, AD$53 ($38) went to Google, AD$28 to Facebook, and AD$19 to all other websites including media outlets, according to Australia’s competition watchdog. If this was the reason for the code, Bloomberg editors described it as a misdiagnosis in an op-ed. “Journalism’s business model wasn’t broken by digital platforms,” they said, “[the internet] offered consumers a wealth of free news and opinion and gave advertisers options and audiences that traditional publishers haven’t been able to match.”

Australians experienced this standoff through their Facebook feeds. For eight days, the site featured no news. Then, at 1 am on February 26, 2021, news content started to reappear, reversing users’ feeds to how they always looked. But behind the scenes, tech’s relationship with the media had permanently shifted.

Google and Facebook did not leave; they paid up, striking deals with news organizations to pay for the content they display on their sites for the first time. The code was formally approved on March 2, 2021, writing into law that tech platforms had to negotiate a price to pay news publishers for their content. If they didn’t, an arbiter would step in not only to force the platforms to pay but also to set the price. One year after the media code was introduced, Google has 19 content deals with news organizations and Facebook has 11, according to Fletcher.

Now countries around the world are looking at Australia’s code as a blueprint of how to subsidize the news and stop the spread of “news deserts”—communities that no longer have a local newspaper. Canada is expected to propose its own version in March. Media associations in both the US and New Zealand are calling for similar policies. Reports suggest the UK culture secretary, Nadine Dorries, is also planning to require platforms to strike cash-for-content deals.

The international interest has prompted fierce debate about how well Australia’s code works.

“We know it works, we can see the evidence,” says Fletcher. He points to how the deals are funding journalism in rural areas. Broadcaster The ABC said its deals with Facebook and Google enabled it to hire 50 regional journalists. Google, however, disagrees. It has accused the media code of stifling media diversity by giving media giants a better deal than smaller publishers. “The primary benefactors of such a code would be a small number of incumbent media providers,” Google said in a submission to the US Copyright Office, which is currently reviewing its own media laws.

Australia might have created the blueprint for forcing Big Tech to pay for news, but it hasn’t actually applied it. Only tech companies that are named, or “designated,” under the code by Australia’s treasurer can be forced into the arbitration process with news organizations. But no tech site has ever been designated. Instead, Google and Facebook have been rushing to strike deals with news organizations in private, to avoid the arbitration process, which could end up being more costly. For now, the law functions more like a “loaded gun” to force these companies to make a deal, says Bernard Keane, politics editor at news website Crikey. “I wouldn't call it a threat,” says Fletcher. “What I call it is a mechanism to very strongly encourage commercial negotiation.”

Allowing Google and Facebook to strike these deals behind closed doors means their terms are opaque. The deals are structured as if media outlets are being paid for contributions to products such as Google News Showcase or Facebook's News tab. “The reality is no one's really using those products,” says a source who negotiated on behalf of an Australian publisher, but asked not be named. “They're a mechanism to enable these payments to happen in such a way that doesn't fundamentally affect their business model or create a precedent that applies to other parts of the world.”

The source added these deals can cover around 50 percent of total editorial costs. But there is huge variety in how much outlets are being paid. The Conversation, an outlet publishing academic articles, says its Google deal pays for “one or maybe two” journalist salaries. When WIRED asked News Corp how much its deals were worth, the company pointed to remarks made by CEO Robert Thomson in November that said its tech platform deals contribute more than $100 million in annual revenue.

The criticism of Australia’s system focuses on its lack of transparency, which means that media companies cannot compare notes on the deals they are offered and there is a lack of clarity on which outlets are entitled to negotiate.

Misha Ketchell, editor at The Conversation Media Group, says he’s happy with the deal he struck with Google. But when the outlet approached Facebook for a deal, the platform refused to negotiate, even though The Conversation says it fits the criteria set out in the code. “I think Facebook made a decision about the minimum number of deals they could do to stop the government from designating them under the code,” he says. The Conversation is yet to try collective bargaining, he adds, which gives smaller outlets the option to band together and provides more negotiating weight with the platforms.

The Conversation is not the only publisher that tech companies have rejected. While public broadcaster ABC has deals with Google and Facebook, another publicly funded broadcaster, SBS, does not. Google’s accusation that the code favors incumbent media businesses is being used against it by critics who say Google and Facebook are giving those same media organizations preferential treatment in the deals they are handing out. “There's no reason why the code as it currently works in Australia can't benefit all media companies,” says James Chessell, managing director of publishing at Nine, one of Australia's biggest media groups. “I think it's up to the platforms, though, to ensure that that happens.”

Concerns about the code’s flaws are leaking into Canada, where Justin Trudeau’s Liberal Party is drafting its own Australia-style legislation. “We're locking down the incumbent publishers, and we're locking down Google and Facebook's dominance as opposed to countering the dominance that exists on both sides,” says Dwayne Winseck, journalism professor at Canada’s Carleton University. He also believes Australia’s code is unambitious compared to the scale of the problems facing the news industry. In Canada, revenue fell by more than CA$3 billion between 2011 and 2020, according to News Media Canada, an association that represents more than 500 Canadian publishers.

Yet Canada’s news industry is willing to overlook these limitations because it considers the cash as a lifeline, according to Paul Deegan, president and chief executive of News Media Canada. “What we keep saying to every politician we meet is that given the economic circumstance we're facing, we have a great need for speed,” he says. They are running out of time to save some of the media landscape, he explains—40 newspapers have closed permanently since the start of the pandemic. “We've got a number of titles and even chains of titles that are quite literally teetering on the brink.”

Deegan agrees the code isn’t perfect. This is not a magic bullet, he says, “this is a badly needed Band-Aid.”

Peter Grant, a retired lawyer who drafted a memorandum on behalf of News Media Canada about how to make Australian’s code work in Canada, suggests only minor changes to the template would be necessary. He, too, believes this is not the one-stop solution that will save journalism. “It's not the be all and end all,” he says. “It’s one major component of a general strategy to support journalism.”

Maybe it was only ever possible for a country like Australia—where ex-prime minister Malcolm Turnbull described News Corp as the country’s “most powerful political actor''—to have acted as the world’s guinea pig in the effort to redirect tech profits to the media.

But even critics of the code suggest it could be a useful starting point. Emily Bell, director of Columbia University’s Tow Center for Digital Journalism, says she is concerned by the code’s lack of transparency, but concedes that Facebook and Google have paid more to publishers in Australia than they do under their philanthropic donations elsewhere. “What we do know is that some legislation is better than none.”