‘They don't want to lose control’
Rod Sims on Australia’s fight with big tech
Rod Sims, the serious and sometimes feisty head of Australia’s competition and consumer authority, takes a liking to a comparison offered up to describe the battle playing out in his country between news publishers and big tech platforms controlled by Alphabet Inc.’s Google and Facebook Inc. News is like toothpaste: Consumers want and need it and would clearly suffer if the dominant distributors squeezed suppliers so much that it could no longer be made.
“Anything that’s leading to a potential under-provision of journalism is a very important issue," Sims, chair of the Australian Competition and Consumer Commission, told the Financial Post in an interview.
“It’s not creative destruction like the car taking over the horse and buggy. Google and Facebook have not replaced news. They don’t make news.”
Sims is certainly not the first to recognize the pressure the rise of big tech has put on traditional media sources, but if a landmark mandatory bargaining code making its way through Australia’s Senate is confirmed, he may be one of the first to regulate it in order to share the wealth.
The code would force the platforms to negotiate fair terms for news content through two key mechanisms: non-discrimination provisions so the platforms can’t choose to negotiate with some media companies but not others, and binding arbitration.
It has made Australia something of a test case for addressing the market dominance of Big Tech, one that is being closely watched in Canada and around the world.
Heritage Minister Steven Guilbeault has stated his interest in studying what’s being done in Australia as Ottawa pursues a “madein-canada” formula to address what his office called a “clear market imbalance between those who create content and those who benefit from it.”
Guilbeault has talked with Sims, who has presided over Australia’s competition and consumer watchdog since 2011 after a decades-long career in both government and the private sector.
“He’s arranged two chats with me,” the 70-year-old Sims said, as he discussed the progress and pitfalls of Australian’s first-of-its-kind bargaining code of conduct.
“We get the sense they want to work very closely with us and with other countries that are wanting to achieve the same things .”
The Australian policy emerged following months of market study that revealed that the playing field between publishers who are anxious to showcase their wares online and the platforms that dominate search and social media, is far from level, said Sims.
“The media as a group is needed by Google and Facebook, but not individually and that created the bargaining imbalance,” he said.
“Media companies didn’t feel they had any sway at all, (and they) were just given take it or leave it arrangements.”
In addition, he notes, Google controls many of the avenues to online advertising, further determining how much publishers get for their content.
The toothpaste analogy is “what the code is meant to deal with,” ensuring new content that is more in demand than even continues to be sustainably produced, Sims said.
Given the massive size and market power wielded by the tech giants, there has been significant blowback. Most recently, Google threatened to pull its dominant search function from Australia entirely if the new code is passed into law this spring as anticipated.
On Friday, Google’s managing director for Australia and New Zealand, Mel Silva, told an Australian Senate committee hearing that the proposed news media bargaining code is “unworkable” and could not be imposed without “breaking” the company’s search business.
The requirement to pay for links and snippets of news that appear in Google search “would set an untenable precedent” for the search giant and the digital economy, she said, adding that the plan is “not compatible with how search engines work, or how the internet works.”
It may not look good to outsiders, but Sims, whose background includes a stint as Economic Adviser to Australia’s Prime Minister, and as a corporate strategy adviser to the CEOS and boards of some of Australia’s top 50 companies, said the pushback and posturing isn’t unexpected.
“In a sense that’s not surprising. They’re being forced to do something they don’t want to do,” he said.
“Whether they will leave the country or not, I don’t know,” he added, “but we were never going to come up with a code that they were happy with — because the only code they were happy with was one where they stayed in control.”
Australia’s code leaves the tech platforms with only a couple of extreme options if they don’t want to comply, he said: leave the country or continue to operate there with no traditional news content.
“I mean, they don’t like arbitration, they don’t want to lose control of this bargaining,” Sims said. “So it was always going to be something they would be uncomfortable with,” he said.
Asked if the tech platforms might soften their response, but try to get around the rules by relying on non-traditional news sources such as blogs, Sims said that could happen but the competition authority would then have the option to challenge it in court.
“There is going to be room for interpretation, but it would be up to the ACCC to determine whether to take them to court, and then it’s a court that would make the ruling,” he said. “So, yes, I accept that it’s not going to be straightforward in the definition, but … we’ll cross that bridge when (we) get to it.”
Sims said the significant power imbalance between the tech platforms and traditional media companies — even large, powerful ones such as Rupert Murdoch’s News Corporation — made this a unique fight and one worth having. He rejected the notion put forward by some that the remedies will bleed into other parts of the economy.
“We took the view that this one mattered because of the importance of journalism,” he explained. “It plays a fundamental role in democracy.”
Sims has already tangled publicly with the tech platforms, notably when he suggested somewhat controversially that the dominance of certain traditional news organizations is no longer a problem.
“I made that comment ... because Google was out there giving the impression that News Corporation was big business attacking poor little Google,” he told Financial Post. “And I said, well, News Corporation worldwide is one per cent of Google. I mean, hello, let’s get some perspective here.”
Sims said the groundwork laid in Australia could be used by countries around the world that are seeking to establish a more symbiotic relationship between global content creators and the digital platforms based in the United States, even if they don’t adopt the exact model.
On the issues of sharing expertise, he noted that a key component of the Australian model — final offer arbitration — was influenced by a Canadian regulator.
“We learned a lot from the Canadian Radio-television and Telecommunication Commission because they’ve had a long experience with final-offer arbitration,” he said. “So we gained a lot of practical tips in talking to them in great detail about how all that could work.”
Guilbeault’s office is so far noncommittal on where the Australia model to handle digital platforms and news media fits in with Ottawa’s plans.
Heritage spokesperson Camille Gagné-raynauld said the federal government is studying models in both Australian and France, which is seeking compensation remedies grounded in copyright rather than fair bargaining. What is clear, she said, is that “one-off initiatives, such as those proposed by digital platforms, won’t be enough” to offset the imbalance.
“Our position is clear: publishers must be adequately compensated for their work,” Gagné-raynauld said.
Sims is strongly in favour of the approach taken by Australia, which began as a recommendation from his commission that was embraced by the government. But he says it may not be the best course for every country dealing with these issues.
“My understanding is Canada’s looking for some form of regulation to deal with this issue and I think that’s appropriate,” he said.
“I think Canada should look around the world and decide what works best for Canada.”
THE ONLY CODE THEY WERE HAPPY WITH WAS ONE WHERE THEY STAYED IN CONTROL.