The takeaways
- The Australian government recently set forth proposals requiring revenue sharing between digital hosting platforms and original news producers regarding news content.
- Ad market leaders Facebook and Google have responded by stating that their businesses generate little revenue in the Australian market.
- The proposals have attracted global interest due to the wider implications for the media landscape.
What happened?
In April, Australian Treasurer Josh Frydenberg announced that the Australian government would introduce a mandatory code of conduct requiring Google and Facebook to share any revenue generated from news content they use, in any way, with its original publishers. The plans date back to December 2019 when they were first publicly disclosed by Australian Prime Minister Scott Morrison. Yesterday, Facebook responded that its reliance on news content is marginal and that while they believed in a “workable” code, in essence, they already gave publishers “significant control over how they unlock value from Facebook”.
Facebook’s blog post, written by Mia Garlick, Facebook’s Director of Public Policy, Australia and New Zealand, elaborates that “the absence of news on Facebook would mean publishers miss out on the commercial benefits of reaching a wide and diverse audience”. The blog post also details Facebook’s previous financial impact on Australian news organizations via click referrals and their other investments into the country’s economy.
Mel Silver, Managing Director and VP of Google Australia, previously weighed in on May 31. In a post titled “A fact-based discussion about news online”, he described both Google’s direct and indirect economic value from news content searches as “very small”. He also disclosed that in 2019 the company generated approximately AU$10 million in revenue through ad clicks against possible news-related queries in Australia and that “queries with commercial intent” drove the majority of revenue.
What does this mean?
Both Facebook and Google had been identified by the Australian Competition and Consumer Commission (ACCC) as subject to the country’s competition law due to their leading positions in the global advertising market. As such, they have emerged as the highest profile digital companies that would be affected by the proposed code.
The stances taken by both indicate to media viewers that they will not abide by the code and simply no longer make news content available on the Australian versions of their platforms. Garlick describes news content as “highly substitutable” and that “Most users do not come to Facebook with the intention of viewing news”, while essentially warning that the code would make news harder to access for “millions of Australians.”
Australia’s two biggest media companies, Rupert Murdoch’s News Corp and Nine Entertainment, are backing the proposals. No immediate payment from Facebook or Google to news companies has been announced.
