Google and Facebook to bargain with Aussie news outlets for 'fair' payment terms

 The platforms would be forced to inform news media businesses of algorithm changes that are likely to materially affect referral traffic to news, the ranking of news behind paywalls, and any substantial changes to the display and presentation of news and advertising directly associated with news.

The Australian Competition and Consumer Commission (ACCC) has developed a draft code for how media organisations can bargain with Facebook and Google to secure "fair" payment for news content shown on their respective platforms.

The draft code of practice [PDF] adopts a model based on negotiation, mediation, and arbitration to "best facilitate genuine commercial bargaining between parties, allowing commercially negotiated outcomes suited to different business models used by Australian news media businesses".

Each media business is expected to come to an agreement with the digital platform, with no one-size-fits-all model intended. But the code, as it stands, would allow groups of media businesses to collectively negotiate with the platforms. This could include, for example, regional and community mastheads.

If the news businesses and the digital platforms cannot strike a deal through a formal three-month negotiation and mediation process, then an independent arbitrator would choose which of the two parties' final offer is the most reasonable within 45 business days.

In the first instance, the code would apply only to Facebook and Google. Other digital platforms may be added to the code if they hold a significant bargaining power imbalance with Australian news media businesses in the future, the ACCC said.

"There is a fundamental bargaining power imbalance between news media businesses and the major digital platforms, partly because news businesses have no option but to deal with the platforms, and have had little ability to negotiate over payment for their content or other issues," ACCC chair Rod Sims said.

"We wanted a model that would address this bargaining power imbalance and result in fair payment for content, which avoided unproductive and drawn-out negotiations, and wouldn't reduce the availability of Australian news on Google and Facebook."

Sims said he believes the proposed draft code achieves these purposes.

The code, if approved, would require news media organisations to notify Google or Facebook of their intention to begin bargaining on payment for content, as well as over any other issues they want to negotiate.

The code would also require the digital platforms and news media businesses to bargain in good faith, and provides for a three-month negotiation and mediation process. Within the first 11 weeks, the parties are required to arrange and attend mediation.

If negotiation and mediation does not result in an agreement within three months, news media businesses could elect to bring the dispute to compulsory arbitration, which would only consider payment on a limited number of digital platform services.

The code would also set down minimum standards for governing non-payment related issues between the major platforms and news media businesses. The ACCC said the standards must be met and cannot be negotiated away.

Under these standards, digital platforms would be required to give news media businesses 28 days' notice of algorithm changes that are likely to materially affect referral traffic to news, algorithm changes designed to affect ranking of news behind paywalls, and any substantial changes to the display and presentation of news and advertising directly associated with news.

In addition, the code would require that the platforms give news media businesses clear information about the data they collect through users' interactions with news on digital platforms. For example, how long users spend on an article, how many articles they consume in a certain time period, and other information about user engagement with news content across digital platform services.

The draft code follows the federal government in April announcing its intentions to make tech giants pay for Australian content if it is a source of profit. The ACCC in May then consulted on the format of the code.

The watchdog believes the code is necessary to address the fundamental bargaining power imbalances between Australian news media businesses and major digital platforms.

"This imbalance has resulted in news media businesses accepting less favourable terms for the inclusion of news on digital platform services than they would otherwise agree to," it added.

The ACCC would be responsible for administering and enforcing the code and would have a role in providing submissions as part of compulsory arbitrations conducted under the code. The Australian Communications and Media Authority, meanwhile, would be responsible for determining the eligibility of news media businesses to participate in the code.

The code will commence following the introduction and passage of relevant legislation, with final legislation expected to be introduced to Parliament shortly after the conclusion of the consultation process.

Submissions to the ACCC close 28 August 2020.