Australia fires ‘across the bow’ of Google, Facebook

Revenue-sharing rules for online news will be the first of their kind.

Australia’s competition regulator will this month publish draft rules forcing the U.S. tech giants Google and Facebook to share revenue generated from news with the original publishers, including Rupert Murdoch’s News Corp.

A final version of the code, the first of its kind in the world, is due to follow soon after.

Between them, Facebook and Google have a dominant position in the online advertising market and that has been under intensifying regulatory and political assault in the U.S. and Europe, with Australia now adding another front of attack.

Investors are sitting up, too. Should watchdogs in other markets follow Australia, it would chip away at two of the most wildly successful business models of the 21st century, built largely on content free-for-alls. Facebook and Alphabet have combined market values in New York of about $1.7 trillion.

Australian Competition & Consumer Commission Chairman Rod Sims said he knows of several counterparts overseas who are considering taking similar steps. To Sims, it’s about more than simply forcing businesses on his beat to play fair.

“This one matters because journalism matters,” he said. “The fourth estate is such a fundamental part of what makes our societies work.”

In a 58-page submission to the ACCC last month, Facebook described news as “highly substitutable” content. Even a

complete purge of stories in Australia, Facebook said, would make little difference. “News does not drive significant long-term commercial value for our business,” it said.

Australian news organizations, meanwhile, garnered 2.3 billion clicks from Facebook’s news feed between January and May 2020, Facebook said.

At Google, only a “very small” direct and indirect economic value comes from news in Google Search, Australia Managing Director Mel Silva said in a May blog post. Meanwhile, Google Search accounted for 3.44 billion visits to Australian news publishers for free in 2018, she wrote.

Amid the dispute, it’s not clear what the code will cost the tech giants in Australia. That’s partly because in between the baby pictures and community group posts on Facebook, it’s almost impossible to quantify the subjective appeal of news. “I would say #goodluckregulators,” Rich Greenfield, an analyst at New York-based research firm LightShed Partners, said in an email. “I have no idea how they will determine the value.”

Even Sims warns it will be “extremely hard,” but says “there are always ways to put numbers around things.” And in recent months, publishers appear to have gained ground in the argument.