Making Google and Facebook pay? Comparing the EU press publishers’ right and Australian Draft Media Bargaining Code

A public consultation submission by CREATe and IPRIA

The tension between news media and digital platforms has been growing for years. While going through financial difficulties caused by the adaptation to the new digital reality, news media organisations strongly object to platforms using their content for free. The EU has already made its decision on how to address this tension: in April 2019 it adopted a neighbouring right for press publishers as a part of the new Copyright Directive. Australia is currently in the process of shaping its approach, but we already know it will be different to the European, with the Morrison Government taking a course on competition rather than copyright regulation.

On 31 July, the Australian Competition and Consumer Commission (ACCC) put forward a Draft Media Bargaining Code, opening it for public consultation. CREATe together with the Intellectual Property Research Institute of Australia (IPRIA) has filed a joint submission to the consultation. The submission, prepared by Ula Furgał (CREATe), Rebecca Giblin (University of Melbourne) and Julie Clarke (University of Melbourne) recommends amendments and clarifications to the Draft Code’s text on the following issues:

  • guarantee of remuneration to journalists;
  • criteria for becoming a registered news business, especially a revenue test;  
  • minimum standards, particularly requirements posed by section 52M of the Code;
  • actions covered by the Code and the concept of “making available of new content”;
  • possibility to opt out from having news content included in a platform’s service and its effects on users;  
  • the non-discrimination rule and the must carry obligation it implies as sole legal basis for bargaining;
  • one-size-fits-all approach which does not account for differences between services Code covers.

The full text of the submission can be accessed here.

Origins of the Draft Code: a Digital Platforms Inquiry

Back in December 2017, the ACCC was asked to conduct an enquiry into the impact of platform services on the state of competition in media and advertising services markets, in particular in relation to the supply of news and journalistic content. The final results of this Digital Platform Inquiry were published as a comprehensive report in July 2019 (2019 Report). The report made a number of recommendations on how to address the challenges digital platforms pose to media. One of the recommendations was that selected platforms provide a code of conduct to govern their commercial relationships with media organisations, which would address the imbalance between their bargaining powers.

Following the report’s suggestion, the Australian government tasked the ACCC with overseeing the development and implementation of voluntary codes. The deadline for delivery was set for November 2020, but negotiations between platforms and Australian media organisations were cut short in April 2020. Considering the lack of desired progress, and acting under the pressure of the COVID-19 pandemic, which caused media ad revenues to further decline, the Australian government ordered the ACCC to develop a mandatory news media bargaining code that selected platforms would be obliged to observe.

Following a short public consultation, a draft Mandatory Bargaining Code for News Media and Digital Platforms was released on 31 July 2020. Both Australian and foreign media reacted enthusiastically, calling the Australian effort “world-first action” to make tech giants pay. Google and Facebook, the only two platforms to be bound by the code (at least for now), have vastly different opinions.

Mel Silva, Google’s managing director for Australia, labelled the Draft Code a “heavy-handed intervention”, which would force Google to provide Australians with “a dramatically worse Google Search and YouTube”. The reaction of Facebook was even more harsh, with Will Easton, Facebook managing director for Australia and New Zealand, declaring in an open letter that in case the Draft Code becomes law, Facebook “will reluctantly stop allowing publishers and people in Australia from sharing local and international news on Facebook and Instagram”. The ACCC was quick to respond to both tech giants, by stating that Google’s open letter to its users contains misinformation, and Facebook declarations are ill-timed and misconceived.

In essence, the Draft Code requires Google and Facebook to negotiate with media organisations about the remuneration for making available the news content on their platforms. If the agreement between parties is not reached within 3 months, they are subject to obligatory arbitration. The arbiter makes a choice between final offers put forward by the parties (so-called final price arbitration), and her decision is final, but binding only for a period of one year.

Remuneration is not, however, the only issue addressed in the Draft Code. The Code also sets minimum standards, a set of non-monetary obligations for platforms concerning advance notification of algorithm and display changes which could affect news content, as well as the supply of readers’ data. On top of that, the Draft Code includes non-discrimination requirements to prevent Google and Facebook from favouring non-Australian news businesses in their services.

How does the competition law based approach adopted by Australia in the Draft Code compare to the EU press publishers’ right? Are there any lessons EU Member States implementing the new right can learn from Australia’s efforts?

Bargaining and exclusive rights

Australia and the EU use two different regulatory approaches to achieve the same aim: making platforms pay for the use of news content. The press publishers’ right, which quite uncomfortably sits within the copyright domain, requires platforms to receive publishers’ authorisation for the use of press publications in their services. By requiring this authorisation, the right implies that platforms need to license content from press publishers. Thus ultimately, both Australia and the EU call for news organisations and platforms to sit down at the negotiating table. With an additional threat of biding arbitration on the Australian side.

Compared to the press publishers’ right, the Draft Code focuses more on the bargaining process. It describes the formal steps parties should take to strike an agreement or to have this agreement imposed by an arbiter, as well as on the factors which need to be taken under consideration when the amount of remuneration due to news media organisations is concerned: the benefits which platforms receive and the burden payments might impose. How the benefits which platforms receive need to be calculated still remains unresolved.

The formal justification for the Code is the “bargaining power imbalances between digital platforms and Australian news businesses”. As the 2019 Report explains, nowadays Google and Facebook are must-have venues to display news content, thus news organisations do not have the leverage to negotiate payment for the use of their content with those platforms. At the same time, however, little attention is paid to the legal basis for striking those bargains in a first place: if the code is aimed to correct an existing imbalance this means media organisations should already have a valid basis to ask for payment.

As we pointed out in our submission to the ACCC consultation, the non-discrimination requirement and the must carry obligation it implies, seem to be an entire legal basis on which obligation to bargain pursuant to the Draft Code relies. This, however, still does not explain what had been the legal basis for bargaining prior to the Code’s introduction.

Copyright has been excluded as a legal basis for bargains by the ACCC itself. The 2019 Report quite briefly discusses the use of headlines, snippets and photographs by digital platforms, and reaches the conclusion that pursuant to current case law, use of both headlines and snippets is unlikely to infringe copyright law. What is quite interesting from the EU perspective, is that the issue of links and their copyright status was not mentioned in the 2019 Report, since pursuant to Australian case law the provision of links is not a communication to the public.

The EU law does not provide a clear answer to the question of the copyright status of the use of news content by digital platforms, and the new Copyright Directive does not resolve this conundrum, but simply adds another layer of regulation: a neighbouring right for press publishers. Unlike the Draft Code, the press publishers’ right focuses on providing a legal basis for bargains between press publishers and platforms, whilst leaving the procedural aspect largely unregulated. The only certain issue is that an adequate part of remuneration received by press publishers should be given to the authors. This consideration for journalists distinguishes the EU solution from the Draft Code, which does not factor authors of news content into their bargaining equation, even though the ACCC expressed its concern for decreasing numbers of journalists. As we noted in our submission to the ACCC, this omission should be amended in the final code.

To date only France has implemented the press publishers’ right and comparing to Member States, which already presented their implementation proposals, goes into more detail with regard to negotiation mechanism. French press publishers can either bargain individually or entrust collective management organisations with negotiating on their behalf. Platforms’ payments to publishers are to be based on their revenue from both direct and indirect use of press publications, and takes account of, among others, investments made by publishers, and the importance of the use of press publications to the platform’s service. Those criteria are similar to factors which an arbiter needs to take under consideration when making her decision pursuant to the Draft Code.

Press publication, registered news business and a sustainable press sector

Whereas the EU press publishers’ right focuses on press, the Draft Code goes beyond that, to cover all types of media organisations, including radio and TV (with some exceptions for public service broadcasters, ABC and SBS).

The central concept for the EU neighbouring right is a press publication, with the new right awarded to its producer, regardless of her professional character. The definition of a press publication offered by the Copyright Directive is quite broad, and goes beyond what we would intuitively consider press, to cover content which provides public with information, not necessarily related to news, but also other topics (e.g. entertainment). There is no connection between the Copyright Directive’s understanding of a press publication and press or journalism professional standards.

The Australian approach is vastly different, as it centres on a media producer. Only news media businesses which register with the Australian Communications and Media Authority (ACMA), will be able to benefit from the Code. In order to register, they need to meet four cumulative criteria: 1) revenue test (have more than 150,000 AUD annual revenue); 2) content test (offer core news content produced by a professional journalist); 3) Australian audience test (operate predominantly in Australia for Australian audience); and 4) professional standards test (enjoy editorial independence from the subjects of its coverage and be subject to a professional standards code).

From a comparative perspective, it is interesting to see a distinction between two types of news content: core news content and covered news content. Services offered by a registered news media organisations (e.g. newspaper masthead, radio program, website) need to predominantly offer core news content, which records, explains or investigates issues of public significance, relevant for engaging Australians in public debate, or concerning local and community events. This means that purely entertainment or sports services cannot benefit from the Code, unlike in the EU. However, it is covered news content which is relevant for both the minimum standards and bargaining proposed by the Draft Code. Covered news content is all content created by journalists concerning “issues of interest to Australians”, so also entertainment and sports.

Both Australia and the EU see their interventions as expressions of support for plural and independent media, indispensable for the functioning of modern democracies. However, only Australia requires that media organisations which benefit from the new regulation observe professional standards and codes. The EU is more liberal on that point, only requiring that press publications are prepared under the initiative, editorial responsibility and control of a service provider, which does not necessarily imply any professional standard.

The complexity of the online media environment

The Draft Code is a more comprehensive solution than the press publishers’ right, not only because it deals with all media organisations, but also because it looks beyond payments, to consider the mode of news content use in more detail. It imposes minimum standards which, among others, require platforms to give an advance notification of changes to algorithms likely to significantly affect referential traffic to news organisations’ services as well as changes designed to affect ranking and display of paywalled content.

Those requirements are clearly linked to the 2019 Report findings on media organisations’ dependence on referential traffic from Google and Facebook. Referential traffic is presented as media organisations’ lifeline which they cannot let go of. What is interesting, is that the benefits which media organisations receive thanks to this incoming traffic are not factored into the bargaining process. However, the benefits which digital platforms receive due to the inclusion of news content in their services are. This creates an impression that the relationship between news organisations and digital platforms is beneficial only for the former, which does not seem correct.

While reading the 2019 Report it is clear that remuneration which platforms are obliged to pay pursuant to the Code is intended to compensate for the losses in advertising revenues, with the Australian online advertising market being dominated by Google and Facebook. Advertising revenue is not explicitly mentioned in the Draft Code, however, the exclusion of ABC and SBS from bargaining provisions is justified by the fact that “advertising revenue is not the principal source of funding for public broadcasters”. The Draft Code does not further distinguish between media organisations which rely solely on advertising and those which have other sources of revenue, such as subscription fees or donations. The EU press publishers’ right, since it focuses on a press publication and not its producer, is indifferent towards publishers’ source of revenue.

The Draft Code would not apply to all services offered by Google and Facebook, but only those specified by the Treasurer (a member of the Australian government). The expected list of services provided in the Draft Code explanatory materials includes, among others, Facebook News Feed, Instagram, Google Search and Google Discover. Thus, from the Draft Code’s perspective it is not relevant how the news content made its way into the service: whether by the platform scraping it or by users sharing it. The fact that a service includes news media content is enough. The press publishers’ right takes a different approach. Only service providers which reproduce or make content available are liable under the press publishers’ right. Unless we agree (or more accurately, the CJEU decides) that social media make available news content which is uploaded by users, and not users themselves, Facebook and other similar services do not need to seek authorisation from press publishers to offer their news content.

Copyright, competition or maybe another way?

Even though the EU and Australian approaches differ considerably, ultimately both require media organisations and digital platforms to strike a bargain (even if it is one imposed by an arbiter), instead of imposing top-down tariffs. The solution proposed by Australia in the Draft Code is more straightforward. It clearly states that there are only two platforms, Google and Facebook, which are to pay. In Europe, a press publishers’ right which was designed with Google and its services in mind will have broader consequences, affecting small players and new entrants to the market, potentially hindering innovation. It is, however, quite confusing to see that while obliging platforms and news media organisations to negotiate, the Draft Code does not explain what is the legal basis for striking a bargain.

The Draft Code’s emphasis on the bargaining process can serve as an inspiration for the Member States during the press publishers’ right implementation process. National transpositions can (and should) go beyond mere copying of article 15 into the MS copyright acts, and expand on the form licensing should take. However, as the example of France shows, where the French Competition Authority got involved into enforcement of the press publishers’ right, even a detailed negotiation process might not be sufficient to amend a right which is inherently flawed.  

Both developments in Australia and the implementation process in France and other EU Member States are closely watched globally, as tensions between news media organisations and digital platforms are omnipresent. Canada is the next country in line to decide on its regulatory approach, with a new press publishers’ right possibly incoming in Autumn 2020. None of the solutions thus far adopted or considered satisfies either party, and their benefits to the public are doubtful.

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