Australia passes law forcing Facebook, Google to pay for news

Australia’s parliament passed a world-first law to force digital giants such as Facebook Inc. and Google to pay local publishers for news content — a move that may unleash more global regulatory action to limit their power.

The legislation was passed Thursday and will ensure “news media businesses are fairly remunerated for the content they generate,” Treasurer Josh Frydenberg said in a statement.

“The code is a significant microeconomic reform, one that has drawn the eyes of the world on the Australian parliament,” he said.

Regulators around the world have been closely watching the legislation as they grapple with the advertising dominance of Facebook and Google, who now face the prospect of similar measures cascading around the world. Prime Minister Scott Morrison has said he’s discussed the new law with the leaders of India, Canada, France and the U.K.

The U.S. technology giants negotiated hard with the Australian government to extract concessions.

Alphabet Inc.-owned Google last year said it would shut down its search engine in Australia if the law was enacted. Meanwhile Facebook blocked news on its Australian platform in opposition to the legislation, a dramatic move that drew condemnation from Morrison.

After 11th-hour talks with Facebook CEO Mark Zuckerberg, the government agreed to amend the legislation and the social-media platform said it would switch the news back on.

Among key concessions, the government said it would take into account commercial deals Google and Facebook reach with news companies before deciding whether they are subject to the law, and would also give them one month’s notice. The platforms also won more time to reach deals with media publishers before they’re forced into final-offer arbitration as a last resort.

Google has independently struck deals to pay a string Australian publishers for news, including News Corp. and Facebook is doing the same.

Frydenberg said the “government is pleased to see progress by both Google and more recently Facebook in reaching commercial arrangements with Australian news media businesses.”

The new law will be reviewed by Treasury within one year to ensure it is working as intended.