[This two-part post has been authored by Soham Chakraborty, a third year student at NALSAR University of Law, Hyderabad. Part I can be found here.]
Part 1 of the article looked at the arguments being made by news publishers and news aggregators. It also looked at various laws passed by different countries in the past and their impacts in the respective countries. This part will attempt to analyze the Australian law in light of the history of such agreements and also tries to make some policy suggestions going forward.
Examining the law
The Treasury Laws Amendment (News Media and Digital Platforms Mandatory Bargaining Code) Bill, 2020 (hereinafter “Australian Code”), proposes that online search engines and news aggregators should pay the news publishers for displaying their content in the search results. The Code provides that news publishers will be able to negotiate with online platforms for proper remuneration for displaying their content. If negotiations break down, the Code provides for compulsory arbitration where the arbitrator will decide on the “proper” remuneration to be received by the news publishers. This will be done after taking into account various considerations including the bargaining imbalance that exists between online platforms and news publishers. Besides this, the internet entities will also be required to inform news publishers of any change in their algorithms 14 days in advance to allow news publishers to adapt to these changes.
The proposed Bill – perhaps unsurprisingly given its radical methods – has elicited mixed responses. While Microsoft has supported this move and has proposed to carry out the mandate of the law through its search engine Bing, others like Facebook responded by blocking users from sharing and viewing news. Google too had threatened to pull out of the Australian market altogether. It has put forward Google News Showcase as an alternative to paying news publishers for organic search results. It has also claimed that provisions like informing news publishers of changes in algorithms will result in a situation where news publishers are given preference over others who will be similarly affected by the change in algorithm.
What consequences does the Bill portend?
As seen in Part I, the Australian Government is not the first government to try and make online search engines and news aggregators remunerate news publishers for displaying their content online. In the past countries like Germany, Spain and France experimented with their own laws which extended neighboring rights in copyright law, which previously was extended to only performers, producers of phonograms and broadcasters, to news publishers for their press publications. After the introduction of the Australian Code, it is possible that other countries use it as a precedent for devising their own laws. Thus, it is important to consider the experiences gained from the countries which have implemented similar laws in the past to aid and guide policy decisions in the future.
Following the implementation of the Spanish law which made the rights of remuneration inalienable, Google News decided to shut down in the country. Studies on the effects of Google News’ shutdown in Spain show different result for different types of news publishers. Large media houses like El País, El Mundo have largely overcome the effects of the shutdown and many of them have also reported an increase in traffic overtime. However, smaller news organizations and organizations with a low percentage of international visitors have been adversely affected. Studies conducted on advertisement revenue and advertising intensity after the exit also showed a decrease in both advertisement revenue and intensity. These studies point to the fact that news publishers are not a homogenous group and thus having a common policy for all publishers without taking into account their differences can be counterproductive to the aims and objectives behind such laws.
Google recently entered into deals with large news media organizations in Australia which will allow it to use their content for Google News Showcase. Similar deals were struck with publishing houses in France. Prominent publishing houses were able to negotiate deals for themselves without the requirement or involvement of any law mandating news aggregators to pay news publishers for using their content. However, what needs to be seen is how fair initiatives like Google News Showcase have been for smaller news outlets. On the one hand, most outfits do not have the bargaining power or the financial resources which large news outlets possess. As a result, they rely primarily on news aggregators and online search engines for visibility in order to build a dedicated reader base; and for such outlets, it may be the case that they benefit from the presence of aggregators as opposed to the position taken by the powerhouses in the sector. The Australian Code provides that in case the negotiations break down, the remuneration will be decided on a case by case basis by an arbitrator who will take into considerations factors like the benefits which both the news publishers and the online news aggregators accrue to each other. In such circumstances it is difficult to imagine how the Australian Code will benefit these media outlets in getting a fair compensation for their content.
Facebook, in response to the Australian Code, has taken the decision to block Australian users from viewing or sharing news. It is evident that this move will hurt smaller news organizations more than prominent and established ones, similar to what happened following Google News’ exit from Spain. Similarly Google has threatened to exit the Australian market if the law is implemented in its current form. It is clear that in case of such an eventuality the Australian government’s move to level the playing field between news publishers and news aggregators will have backfired completely resulting in a scenario where the market is skewed in favor of larger media houses. In addition to all of this, the Australian Code also does not take into consideration other benefits which the presence of the likes of Google and Facebook bring in the form of innovations and new products, jobs, investments and so on. This figure stands out to be around AU$53 billion dollars in Google’s estimate. While this figure is open to debate it is evident that it is not only small news outlets that stand to lose from the implementation of the Australian Code.
There is no doubt that there are some companies which enjoy a dominant position in the online space and it is this dominance which creates an imbalance in the bargaining positions between news publishers and online platforms. Facebook’s decision to block users from sharing and viewing news have been criticized by many considering the important function that news organizations play in tackling fake news online and providing access to reliable news specially during a pandemic. However, the Australian Code does not seem to be the right step forward in this regard. A one size fit all strategy cannot be the answer to tackle the dominant positions enjoyed by these companies. Governments must have due regard to the heterogeneity existing among news outlets and the consequences of their actions on different groups of publishers before making any policy decision which impact the online viewing and sharing of news.