By Yana Milcheva
In July 2020, the Australian government revealed its plan to introduce a new law that would see the tech giants Facebook and Google pay news outlets for the privilege of using their content. This proposal signified a lifejacket for local news organisations, which have been sinking under the pressure of the tech giants’ market monopoly.
According to the Australian Commission Chief Rod Sims, the code of conduct was introduced to amend the “imbalance in bargaining power, the market failure that comes from that, and underpayment for news having a detrimental effect on Australian society”. What started as a concept for a voluntarily code of practice three years ago developed into a mandatory law against tech companies, to balance the growing power of their online platforms.
For years, tech corporations have been establishing a monopoly over the media market. Google, for example, holds about 95% of the search engine market share in Australia and maintains an even greater monopoly in other areas across the world. The shift in consumers’ reading habits, coupled with advertisers being lured to digital platforms as a more lucrative and targeted method of reaching their audience, has forced many local newspapers to cease trading or shift to a digital-only format. While news organisations’ websites do receive some traffic from social media, this does not translate into sufficient financial revenue. Traditional news organisations are faced with the choice of either continuing to produce high-quality journalism and fight for survival, or succumb to the pressure of churning out high-volume, low-quality content in the hopes of attracting enough traffic to their websites.
Are the Big Tech companies playing fair?
The Australian government’s concerns over tech companies’ rapid expansion and hold of the market are not unsubstantiated. Google’s exponential growth over the past two decades has turned the search engine into the unequivocal market leader. Amidst reports that the tech giant has begun to favour its own services at the expense of others, several government antitrust bodies from across the world have launched investigations into Google’s competitive practices. A US antitrust investigation into Google revealed that the organisation was promoting its own services by placing them at the top of search results, while using its algorithms to demote its rivals. Similar revelations have been made by governmental bodies worldwide. In Turkey, regulators have fined Google $25.5 million for allegedly abusing its market dominance in online searches; while in France, Google has already had to negotiate itself out of a deal which would have seen the company paying publishers under an order issued by the European Union Copyright Directive.
Accusations of foul play and monopolising the market have not escaped Facebook either. In the US, the Federal Trade Commission sued Facebook for illegally maintaining a social media networking monopoly through the acquisition of up-and-coming rival companies. Facebook’s monopoly goes even further: a Pew Research Center survey from 2019 revealed that 52% of US adults get their news from Facebook. However, 62% of the respondents also stated that social media has “too much control” over the mix of news displayed on the platform. These findings are supported by reports that Facebook advertisers can completely rewrite the displayed headline for news stories, leading to concerns over the amplification of disinformation on the platform.
Australian code of conduct: the tech giants’ response and implications for the future
In February 2021, the Australian House of Representatives approved the code of conduct compelling internet companies to pay news organisations. This caused a chain reaction among tech corporations, in particular Facebook and Google, who were suddenly faced with a choice: agree to the terms of the code of conduct and set a precedent for the rest of the world, or attempt to derail further regulation attempts by preventing Australian users from accessing their services in some capacity.
Google’s initial response to the code of conduct was to threaten to entirely remove its search engine from Australia. However, following negotiations, Google announced it will sign seven Australian media companies to its News Showcase service and pay them to host their content. Australia’s federal treasurer Josh Frydenberg stated that if Google makes enough deals with enough media organisations, it could become exempt from the code of conduct. However, it is interesting to note that Mr Frydenberg has his own connections to the media: his father is the owner of Seven West Media, one of Australia’s leading media companies. Such connections beg the question of who the real winner of this deal will be: the local news organisations who have been struggling to stay afloat during the COVID-19 pandemic, or the media conglomerates looking to further expand their influence?
Australia’s code of conduct, which has been deemed as “reasonably attempted” by other tech companies including Microsoft, elicited a controversial response from Facebook. Instead of complying with the rules, Facebook blocked Australians from accessing and sharing news via its services, leading to international uproar. However, less than a week later, Facebook announced it would reverse the ban and restore news content to Australian users. It appears that, following Facebook’s initial announcement, the Australian government has negotiated with the social media company and introduced four further amendments to the code of conduct, including one that states the government may not apply the code to Facebook if the company can demonstrate a “significant contribution” to local journalism. Following the negotiations, Facebook has committed to invest at least $1 billion in partnerships with news organisations over the next three years.
Although it has now been diluted somewhat, Australia’s code of conduct presents a path for news publishers to gain back some control over its distribution channels and secure a revenue stream from internet companies. The monopoly that the tech giants have established over advertising, and their influence on audiences’ reading habits, have created considerable challenges for the survival of traditional media organisations – no longer respected for their quality of journalism, but reliant instead on “click-bait” headlines and the number of eyeballs they can attract to their websites. By forcing tech companies to recognise the true value of quality journalism, we may be able to save the industry that represents one of the key pillars of our democratic society.