Context: 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. Now, Australia is joining France and other governments in pushing Google, Facebook and other internet giants to pay. That might 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. Google, a unit of Alphabet Inc., has announced agreements to pay publishers in Australia while Facebook said Thursday it has blocked users in the country from viewing or sharing news. Facing a proposed law to compel internet companies to pay news organizations, Google has announced deals with media houses. 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 the world. 
Key Points

• A dispute over a planned law that would force tech giants Facebook and Google to pay for news content in Australia is being keenly watched worldwide.
• The world-first law aims to address the media's loss of advertising revenue to US tech firms.
• If passed, the law could have global consequences for tech firms and how we access news online.
• But the tech firms have pushed back, with Facebook restricting news content in Australia.
• Facebook blocks news content in Australia
• Google to pay Murdoch's News Corp for stories

What is Australia’s media bargaining law?

• Australia’s new media bargaining code was introduced in parliament in December 2020.
• It requires big tech companies like Google and Facebook to enter into agreements with news outlets that result in a commercial contract for showing the latter’s content on their platforms.

Why does Facebook have an issue with the code?

• Google and Facebook have engaged in desperate attempts to avoid regulation under the Australian government’s proposed mandatory news media bargaining code.
• The code would force them to pay Australian news companies for content that appears on their platforms.
• It also requires they abide by certain minimum standards, including informing media companies about the type of data collected through users’ interactions with news, and providing advance notice of any algorithmic changes that affect news content.

How does the deal impact Facebook?

• Not much, as Facebook says that news makes up less than 4% of the content people see in their news feed.
• Over the years, Facebook has been less interested in news as it has moved towards softer and more engaging video content that could drive conversations within a network.
• Also, its experience with the way news feeds were gamed during the 2016 US presidential elections has made it wary of becoming a large platform for news.

What does this mean for the rest of the world?

• Facebook and Google rightly fear the action in Australia could trigger similar laws across the world.
• They might move towards making the inflow of news into its platforms more contractual.

How did we get here?

• There have long been concerns about the market dominance of tech firms over media organisations.
• Google is the dominant search engine in Australia and has been described by the government as a near-essential utility, with little market competition.
• And social media is a key source of news.
• According to the Reuters Institute Digital News Report 2020, 52% of Australians questioned in a survey used social media as a source of news. Facebook ranked top as a social media news source, followed by YouTube and Facebook Messenger.
• In 2018, an Australian government regulator launched an inquiry into the impact of Google and Facebook on competition in media and advertising.

Australia plans to make tech giants pay for news

• The inquiry by the Australian Competition and Consumer Commission (ACCC) found an imbalance of power between tech firms and the media.
• Given this, the regulator recommended introducing a code of conduct that it said would level the playing field.
• In July last year, the Australian government unveiled a draft law to enforce the code, provoking threats from Facebook and Google to withdraw services in the country.

What is the draft news code?

• The draft calls on tech companies to pay for content, though it does not define what it is worth.
• The law would enable news companies to negotiate as a bloc with tech firms for content which appears in their news feeds and search results.
• If negotiations fail, the matter could be arbitrated by the Australian Communications and Media Authority.
• Penalties could be up to A$10m (£5m; $7m) per breach, or 10% of the company's local turnover.
• The government says the code will initially focus on Google and Facebook, but could be expanded to other tech companies.

Why is Australia pushing this law?

• The government has argued that tech giants should pay newsrooms a "fair" amount for their journalism.
• In addition, it has argued that the financial support is needed for Australia's embattled news industry because a strong media is vital to democracy.
• Media companies, including News Corp Australia, a unit of Rupert Murdoch's media empire, have lobbied hard for the government to force tech firms to the negotiating table amid a long-term decline in advertising revenue.

Facebook, however, argues "the value exchange between Facebook and publishers runs in favour of the publishers", according to its manager for Australia and New Zealand, William Easton, and generates hundreds of millions of dollars of revenue for the media.

• "Publishers willingly choose to post news on Facebook, as it allows them to sell more subscriptions, grow their audiences and increase advertising revenue," he adds.
• But Australia's competition watchdog - cited by the AFP news agency - says that for every $100 spent on online advertising, Google captures $53, Facebook takes $28 and the rest is shared among others, taking revenue away from media outlets.

Meanwhile, Google's revenues have increased markedly in the same period, amounting to more than $160bn (£117bn) globally in 2019.
What does this mean for rest of the world?

• Facebook and Google rightly fear the action in Australia could trigger similar laws across the world. Google, for instance, is already inking deals with publishers in countries like France. 
• This might also expedite Facebook’s plans to rollout Facebook News in other geographies, and thus make the inflow of news into its platforms more contractual.

Road Ahead

• Technology can be a major disruptor and we need to have laws that keep up with technology as well. If tech giants are not reined in and are not bound by some kind of rules that they will devour everything in their path. Some norms that the publishers are bound by need to be applied to tech giants as well because they too are in the buisness of content. We need to be careful of monopolies going forward and ensure that we give everyone a level playing field. What we will see going forward once we have these rules in place, we will see quality news because this will ensure that the tech giants are little more careful with the kind of content that they put up on their platforms we could possibly see fake news being reined in.