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Australia’s news bargaining code is unworkable – and could break the internet as we know it

24 January 2021

7:00 AM

24 January 2021

7:00 AM

America is the most innovative country globally because American businesses hustle to innovate and create new products and services. Competition is the key element to always strive for excellence and quality.

No government should be able to pick winners and losers. Unfortunately, Australia does not like competition.

In 2020 the Australian Competition and Consumer Commission (ACCC) published draft regulation that will force American tech companies such as Facebook and Google to subsidise traditional Australian media companies by giving newspapers a significant portion of their revenue. Treasurer Josh Frydenberg then announced the revised code in December — that will also see monies flowing to the ABC and SBS despite the fact that they are funding by the taxpayer — and the bill was then introduced in the Australian parliament. Currently, the bill is in the Senate Standing Committees on Economics for review.

The ACCC has published draft regulation that would force American tech companies like Google and Facebook to subsidize traditional Australian media companies like newspapers with a significant portion of their revenue. 

The code is premised on the notion that Facebook and Google are “stealing” content from local news publishers, but nothing could be further from the truth. 

The allegedly “stolen” content is so called “snippets” — links to stories and articles that appear in Google search results or the Facebook NewsFeed. Facebook and Google are not stealing this content—they’re putting it in front of millions of readers and viewers in Australia and around the world. In fact, it does not hurt news outlets or their revenue but significantly helps to increase viewership and reach more readers than ever before. 

Ultimately, these measures will result in the opposite of their intention: a decrease in the visibility and access to traditional Australian news outlets and websites. That has been the result in Germany and Spain after those countries have imposed similar measures — traffic to news sites reduced drastically and significantly harmed smaller publishers. That is why the largest publisher in Germany, Springer, quickly decided to reverse the change as traffic to their websites and products declined drastically.  

Another fact that shows how biased the design of the code is is the proposed arbitration model. The News Media and Digital Platforms Mandatory Bargaining Code imposes an unfair arbitration model that does not require the arbitrator to consider similar market arrangements to determine a market price based on evidence. A balanced assessment of the value exchange between platforms and publishers is also not required. The arbitration provision assumes that the internet has never required payments for links because of ‘bargaining power imbalance.’ The biased and unbalanced arbitration provision also requires the decision-maker to choose between two ‘final offers’.

This is an extremely unusual arbitration model that denies fundamental principles of fairness and good faith in the process, and it appears to be specifically designed to guarantee that an arbitrator will always determine that revenue should be transferred from American tech companies to publishers and Australian traditional news outlets. There will be no downside or risk for Australian news publishers to force negotiations to arbitration, knowing their strong position to make payment demands.

The Australian parliament’s mandate is to protect and promote competition and Australian consumers, but the code will do the exact opposite. 

Perhaps no industry in history is as dynamic and as innovative as today’s tech industry. In the current global pandemic, users rely on these products and services even more, to stay informed and stay connected to colleagues, family, and friends.

Like digital taxation proposals and efforts to “reform” antitrust laws, the code exclusively targets and discriminates against American companies. These efforts are part of an increasingly global campaign to tax American technology companies and erect barriers to free markets. These tactics and discriminatory laws are expected to come from countries like China, but certainly not from Australia. 

The Australian parliament risks a spiral of retaliation in trade and a worsening of the relationship with the United States. 

The code is misguided and dangerous. The costs of getting this wrong are too high, and the Australian parliament should reevaluate their code. 

Andreas Hellman is International Advocacy Manager at Americans for Tax Reform.

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