JANUARY 24 — The Australian government has proposed legislation that will ensure major search engines/social media companies pay news organisations for the news content they display on their platforms.
Currently Google and Facebook display and link to news articles. These articles drive traffic to their platforms but the revenue Facebook and Google receive from views of these news articles are not shared with the original publishers.
This has led to arguments from many places in the world that Google and Facebook benefit from news content but don’t pay for it.
In fact as more and more people consume their news on social media platforms, the revenue of news outlets has plummeted.
Since 2005, the revenue of Australian print and electronic media has fallen by over 75 per cent. Meanwhile, the revenue of companies like Google and Facebook has increased exponentially over the same period.
The Australian government argues the fall in revenue at news outlets can be attributed to the dominance of social media and that declining revenues at news organisations is hurting the quality of journalism in Australia, thereby causing harm to citizens.
The government contends that only legislation compelling Facebook and Google to pay for news content can help stop the financial decline of traditional news media producers.
Google and Facebook have responded with considerable hostility to the proposed law.
Earlier this week, Google said that any such legislation would compel the world’s leading search engine to effectively pull out of Australia.
On the face of it, the government’s demands seem reasonable; powerful companies that benefit and profit from news content should pay for it.
However, Google and Facebook argue that a system of direct payments to established news houses would be unworkable and ultimately make the internet a less free and fair place.
They point out that while paying for articles sounds good in principle, in practice how would the value of the articles be determined?
Would only articles from official, registered news sources be paid for and how would you account for quality? Also once Google and Facebook begin paying for articles shouldn’t they be allowed to edit them — wouldn’t this ultimately increase their power and make news outlets more dependent on them?
Of course, the powerful internet companies know that these payments would set a global precedent and this would massively increase costs.
So the Silicon Valley behemoths are not backing down and the United States government is standing by them. The US argues the Australian government’s proposals would violate the terms of Free Trade Agreements between the countries.
The Australian government, however, has said it will not back down. Prime Minister Scott Morrison said the country makes its rules for “things you can do in Australia.”
It’s a fascinating conflict between a powerful nation (Australia is the world’s 13th largest economy) and very powerful corporations.
In the past, government legislation could deal devastating blows to businesses but in this battle, Google and Facebook may hold the upper hand.
Google, in particular, controls essential internet infrastructure; its search engine, browsers and email are key parts of most people’s interactions with the internet.
Ultimately, Australia generates only a small percentage of Google’s revenue and the search engine is essential to many businesses and people in Australia.
Still, who is right? The powerful corporations or the powerful government?
It seems clear that someone has to push back against corporations which have expanded their operations globally — but do not seem accountable to governments and therefore, ordinary citizens.
But on the other hand, these internet companies have delivered real benefits to billions of people.
Better searches, more storage, e-commerce and social interactions across the world have benefited. The companies would argue they’ve been able to achieve this because they aren’t subject to excessive government interference.
In the end, finding the right balance between corporate power, innovation and government regulation will be challenging.
In fact, legislating and managing this space will be one of the great challenges of the 21st century — and we will all be affected by the outcome.
*This is the personal opinion of the columnist.