Over the past 3 years, Australian regulators have been prepping a new bargaining code to force Big Tech firms to pay for content on their platforms, and matters came to a head this week. Australia has joined France and other governments in pushing Google, Facebook and other internet giants to pay in order to channel more money to a news industry that is cutting coverage as revenue shrinks. But it also sets up a clash with some of the tech industry’s biggest names.
For two decades, global news outlets have complained internet companies are getting rich at their expense, selling advertising linked to their reports without sharing revenue. When it comes to Australia, its media landscape is operated by a handful of big players. They hold significant political sway and have pushed regulators to create a law to force Facebook and Google to directly pay publishers for content.
The process is decided via binding arbitration that “encourages platforms to avoid the process altogether by signing one-off deals with individual publishers.” Facing this new proposed law, Google has announced deals with Rupert Murdoch’s News Corp and Seven West Media to pay for content in Google News Showcase. The deal is a trade-off to make sure news links remain in search results. “Removing links to news stories from Google would break the search engine in Australia, opening it up to rivals,” says tech reporter Casey Newton in The Hustle. No financial details were released and the Australian Broadcasting Corp is still in negotiations.
To put things in perspective, Google accounts for 53 per cent of Australian online advertising revenue and Facebook 23 per cent, according to Treasurer Josh Frydenberg. Google had previously threatened to make its search engine unavailable in Australia in response to the legislation.
On Thursday 18 February, Facebook responded by blocking users from accessing and sharing Australian news. The social media platform said the proposed law “ignores the realities” of its relationship with publishers that use its service to “share news content.” That was despite Frydenberg saying this week Google and Facebook “do want to enter into these commercial arrangements.”
In other words, with only 4 per cent of posts on its networks related to journalism, Facebook decided it won’t go into arbitration with publishers; instead, the linking and sharing of news stories in Australia is simply no longer allowed.
Australia’s proposed law would be the first of its kind, but other governments also are pressuring Google, Facebook and other internet companies to pay news outlets and other publishers for material. In Europe, Google had to negotiate with French publishers after a court last year upheld an order saying such agreements were required by a 2019 European Union copyright directive.
France is the first government to enforce the rules, but the decision suggests Google, Facebook and other companies will face similar requirements in other parts of Europe. Last year, Facebook announced it would pay US news organisations including The Wall Street Journal, The Washington Post and USA Today for headlines. No financial details were released. In Spain, Google shut down its news website after a 2014 law required it to pay publishers.
So, why does this matter? First of all, this development suggests that the financial balance between multibillion-dollar internet companies and news organisations might be shifting. The Australian government acted after its competition regulator tried and failed to negotiate a voluntary payment plan with Google. The proposed law would create a panel to make binding decisions on the price of news reports to help give individual publishers more negotiating leverage with global internet companies.
However, while Google’s agreement means a new revenue stream for news outfits, whether that translates into more coverage for readers, viewers and listeners remains unclear. Australia’s move is meant to support journalism but the code doesn’t actually say that publishers have to allocate money to journalists. It also misunderstands how internet content works—after all, Facebook and Google do link for free.
On top of that, without official publications, Facebook is ripe for more misinformation and conspiracy theories, although this may also be a catalyst for people to find their news in other potentially less toxic channels such as news websites.
Newton suggests more clearly impactful moves such as taxing Big Tech based on revenue, and earmarking some of that money to support journalism as well as creating a bargaining code that forces publishers to create and support jobs.
In the meantime, the union for Australian journalists is calling on media companies to make sure online revenue goes into news gathering. “Any monies from these deals need to end up in the newsroom, not the boardroom,” said Marcus Strom, president of the Media, Entertainment and Arts Alliance. “We will be pressing the case for transparency on how these funds are spent.”
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We all remember the Cambridge Analytica scandal and the Senate investigation into Facebook’s mishandling of our data. It’s hard to shake off the memory of a smug and unperturbed Zuckerberg finagling his way out of culpability and an overwhelmingly tech-illiterate group of senators fumbling through a trainwreck of a hearing. But while we were busy drooling over our social media feeds and surviving a global pandemic, a far more thorough investigation was conducted by US lawmakers into Apple, Google, Facebook, and Amazon. Its conclusion? These companies have been abusing their monopoly power and must be broken up.
Earlier this month, the House Judiciary Committee’s Democratic leadership published a 499-page report that details the transgressions committed by America’s largest tech giants and its recommendations for how to rein them in. The companies are accused by lawmakers of resorting to unscrupulous tactics to maintain their dominance in key markets—from commerce to advertising to information sharing, quashing competition, harming small businesses and consumers, and jeopardising the public’s privacy rights in the process.
Democrats at the helm of the 16-month inquiry recommended breaking up the companies, reforming antitrust laws (which promote market competition), and empowering government agencies that monitor monopolistic behaviours of companies.
In its report, the committee states that the companies “wield their dominance in ways that erode entrepreneurship, degrade Americans’ privacy online, and undermine the vibrancy of the free and diverse press.” The result, the committee finds, “is less innovation, fewer choices for consumers, and a weakened democracy.”
The report’s findings were based on interviews with hundreds of competitors and clients of the tech companies, as well as a July 2020 hearing in which Jeff Bezos, Tim Cook, Sundar Pichai, and Mark Zuckerberg testified via videoconference in front of a panel of senators. During the hearing, lawmakers of both parties grilled the four executives about their companies’ predatory behaviour, albeit with different motives, with Democrats focusing on attempts to stifle competition and vanquish nascent start-ups and Republicans delving into the platforms’ alleged bias against conservatives. While the hearing was intentionally designed as a crowd-pleasing spectacle, it nonetheless emboldened Democrats to dig deeper into these companies’ dealings. “[A]nswers were often evasive and non-responsive … raising fresh questions about whether they believe they are beyond the reach of democratic oversight,” the report states.
Among the accusations levelled against Amazon in the report were claims that the online retail behemoth has established its dominance over numerous industries and has been unfairly promoting its own products over those of independent merchants who utilise its platform—37 per cent of which depend exclusively on Amazon for their income. The company is also accused of mining customer’s data in order to boost sales of home products and of bullying smaller sellers.
Apple is accused of acting as a gatekeeper of the software marketplace by determining which apps get to be featured on its App Store and favouring their own applications. The company has also been chided for charging a 30 per cent commission from sales of certain apps, which, in turn, raises prices for consumers.
As for Google, the report finds that the giant maintains a monopoly in search and search advertising and mines data from third parties in order to keep its edge over other search engines.
Facebook, ever the Voldemort of the tech world, faces multiple accusations, among which is the company’s usage of anti-competitive tactics to ‘entrench’ its monopoly over social networking and online advertising. The report accuses Facebook of systematically acquiring and cloning features of competitors in order to maintain their hegemony, and of violating data and privacy rights as it does so.
“As gatekeepers to the digital economy, these platforms enjoy the power to pick winners and losers, shake down small businesses and enrich themselves while choking off competitors […] Our founders would not bow before a king. Nor should we bow before the emperors of the online economy,” said Representative David Cicilline (D-RI), chairman of the House Judiciary Committee’s antitrust subcommittee, in a statement.
The House Judiciary Committee’s investigation constitutes the most significant attempt to bridle tech companies’ power since the 1990s, when the US government sued Microsoft for antitrust violations. Alas, as all things American these days, conclusions about how to act against these tech giants had split along party lines. While the committee’s Democratic leadership has been unequivocal in its call to enact “structural” changes in these companies and empower federal agencies to monitor their conduct, Republicans rejected some of the report’s findings, instead focusing on the need to tackle tech companies’ muzzling of conservative voices, and were largely opposed to fortifying antitrust legislation and breaking up the companies.
Still, many view this report as a harbinger of change. Advocates for small businesses and figures fighting against tech monopolies believe that the committee has laid the groundwork for future antitrust legislation and have been urging congress to act swiftly.
With the future of our democracies on the line, and global markets (as well as the planet itself) quavering under the pressure of swelling monopolies, a genuine effort to rein in the rising American technocracy is desperately needed.