Following in Australia’s footsteps: EU to make Google and Facebook pay for news?

Members of the European Parliament are eager to follow in Australia’s footsteps and force Google and Facebook to pay for news, the Financial Times reported. MEPs working on the Digital Services Act (“DSA”) and the Digital Markets Act (“DMA”) could consider amending these instruments to reflect aspects of the proposed Australian News Media and Digital Platforms Mandatory Bargaining Code. 

If this were to happen, it would deliver a massive blow to Google and Facebook, and represent an important win for news publishers.

The Australian News Media and Digital Platforms Mandatory Bargaining Code

On 9 December 2020, the Treasury Laws Amendment (News Media and Digital Platforms Mandatory Bargaining Code) Bill 2020 was introduced to Parliament. The purpose of this Mandatory Code is to address the bargaining power imbalances between Australian news media businesses and Google and Facebook. 

If the legislation is adopted, Google and Facebook will be required to negotiate a fair remuneration with news publishers for using their content, putting an end to the “exploitation” of news publishers by these Tech Giants. If media companies and the digital platforms cannot reach an agreement, an arbitrator is set to determine the level of remuneration. The Code will also oblige Google and Facebook to give news publishers a 14-days’ advance notice of deliberate algorithmic changes that are likely to significantly affect either referral traffic to their news content (whether free or paywalled), or advertising distribution directly associated with registered news business’ news content.

Media companies and advocates of public interest journalism hailed this Code. Microsoft, provider of the Bing search engine, recently reinstated its full support to the Code, recognising its invaluable importance in “address[ing] the bargaining power imbalance between digital platforms and Australian news businesses”:

“Microsoft recognizes that the media sector and public interest journalism currently face many challenges from the digital era, including changing business models and evolving consumer preferences. That is why Microsoft has long supported the Australian Competition and Consumer Commission’s (ACCC) efforts to analyse these issues and propose world-first solutions.

Microsoft fully supports the News Media Bargaining Code. The code reasonably attempts to address the bargaining power imbalance between digital platforms and Australian news businesses. It also recognises the important role search plays, not only to consumers but to the thousands of Australian small businesses that rely on search and advertising technology to fund and support their organisations. While Microsoft is not subject to the legislation currently pending, we’d be willing to live by these rules if the government designates us.”

As expected, Google and Facebook strongly opposed the draft legislation, threatening with repercussions if the Bill were to be adopted into law. Mel Silva, Managing Director for Google Australia, published an “Open letter” to all Australians arguing that the “code creates an unreasonable and unmanageable financial and operational risk to our business” and threatening to stop providing Google Search in Australia if it is passed into law:

“If the Code were to become law in its current form, we would have no real choice but to stop making Google Search available in Australia. That is the last thing I or Google want to have happen—especially when there is a way forward that allows us to support Australian journalism without breaking Search. We think that would be a bad outcome not just for us, but for the millions of people and businesses across Australia who use Google Search every day.”

Facebook also reacted strongly, threatening that if the Code is implemented, it “will reluctantly stop allowing publishers and people in Australia from sharing local and international news on Facebook and Instagram.”

But with the EU stating that it is eager to impose Australian-like obligations to these companies, forcing them to pay news publishers and requiring them to increase transparency as to algorithmic changes that affect the news publishers’ business, Google and Facebook get a strong message that their threats do not intimidate Regulators around the world. 

And other online platforms will be there to provide their services within the fair environment the Code (and similar regulatory instruments) seeks to create as observed by Microsoft:

“One thing is clear: while other tech companies may sometimes threaten to leave Australia, Microsoft will never make such a threat. We appreciate what Australia has long meant for Microsoft’s growth as a company, and we are committed to supporting the country’s national security and economic success.”

The European context 

In the EU, the new Copyright Directive, adopted in 2019, created a new right for news publishers in relation to the use of their content by online service providers and strengthened their position to negotiate and be remunerated for the online exploitation of their content by digital platforms. 

While the Copyright Directive is a step in the right direction to create a stronger negotiating position for news publishers, the regime may still be too weak. The Australian rules, for example, go beyond this Directive, in that they provide for mandatory arbitration if agreement cannot be reached between news publishers and digital platforms – an option not currently envisaged in the EU context. There is therefore still room for stronger Australian-style rules in the EU. 

In this regard, the recent example of France (which was the first Member State to transpose the Copyright Directive) shows that, while the Directive (and implementing national legislation) lays down some rules that aim to address the imbalance of power that exists between news publishers and Big Tech companies, it may not be sufficient to put an end to Google or Facebook’s abusive practices towards news publishers. Last April, the French Autorité de la concurrence adopted an interim measures decision against Google, ordering it to enter into good faith negotiations with publishers to agree on their remuneration for the reproduction of their copyright-protected content by the Tech Giant (you can read about this decision here). After losing an appeal against this decision, Google had little choice but to negotiate with French news publishers – negotiations that led to an agreement, marking the “effective recognition of the neighbouring rights of press publishers and the beginning of their remuneration by digital platforms for the use of their online publications”, said Pierre Louette, presidence of L’Alliance de la Presse d’Information Générale (APIG), which represents the interests of around 300 political and general information press titles in France.

But while this case was ultimately a win for publishers in France, the fact that the matter had to be referred to a Competition Authority and undergo an appeal in court in order for Google to be forced to negotiate and give publishers the remuneration they are entitled to on the basis of the Directive, shows that there is a real need for stronger rules regarding the obligation of Big Tech to pay for news in the EU.

The two EU digital regulations currently making their way through the legislative process may also provide the right space to introduce Australian-style obligations for Big Tech companies to inform publishers in advance about changes in their algorithms that affect the ranking of news stories on their sites. Arba Kokalari, a Swedish MEP and shadow rapporteur for the DSA, said in this regard that measures such as the right for publishers to know when tech companies tweaked their algorithms, affecting the ranking of news stories, “is something that I think we need to address in the DSA.”

Such rules would not be the first attempt to regulate the way digital platforms engage in algorithmic ranking. The EU has addressed practices that providers of online intermediation services adopt as to the ranking of content made available through their platforms in the Platform-to-Business Regulation. This Regulation requires them, inter alia, to set out in advance, in their terms and conditions, the main parameters determining ranking and to provide information as to the possibility to influence ranking against any direct or indirect remuneration paid by business users or corporate website users. While the P2B Regulation has imposed transparency requirements, including as to the ranking of content, introducing Australian-style obligations – that would require online platforms to inform publishers in advance about algorithmic changes that would affect their business – would be a positive move for news publishers in Europe. 

While only time will tell whether Europe will ultimately introduce provisions that echo Australia’s Mandatory Bargaining Code in its new digital regulations (we can expect some intense lobbying from Google and Facebook against this move), the fact that MEPs are vocal about their eagerness to amend the Commission’s Proposal to further deal with the power imbalances between Big Tech and news publishers can only be seen as a positive sign. At the very least, it shows that there is a significant problem that (sooner or later) must be addressed.

[Image source: Wired]

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