The Australian deal with Google and Facebook does not encourage innovation

The past few weeks have been a bit of a rollercoaster for news publishers in Australia as the battle to strongarm the biggest internet proprietors got real. For those unfamiliar with the situation, the Australian government has been working on a media bargaining code for three years. The premise is that Google and Facebook have built such a great mousetrap that they should now pay news publishers for linking to their articles in search results or Facebook’s news feed, even when those very publishers are the ones posting the links into the feed. The code supports an arbitration model to negotiate this.

So why the fuss? Well, Google decided to play ball and “settle” with some news publishers that have been pushing this angle for a decade. Facebook initially raised the middle finger, cutting off all access to news content for Australians. After some late-night haggling, Facebook got the Aussie government to bend on a few aspects of the code and said it would open the news taps again so hard news could intersperse the standard feed of bigotry, drunk uncle posts and food porn. But what does this all mean for journalism?

Well, that’s hard to say. We know this is good news for the Sith Lord, Rupert Murdoch, and his cabal of climate-change-denying, populist-politician-enabling media companies. They were the ones with pockets deep enough and political connections greased enough to force the Aussie government into making the code a reality. Because the agreements are done on an individual basis, it’s unclear how this will affect the smaller publishers who don’t have a team of devil’s advocates on speed dial. This effort was wrapped up in the sheep’s clothing of protecting journalism, whereas it really seems to protect the interests of people like Murdoch and legacy media houses intent on salvaging what’s left of the status quo.

For Google and Facebook, these publisher settlement amounts are rounding errors to the fines they pay annually, and should rather be seen as appeasing a few irritants that can be silenced with a bit of hush money. (Fun fact: Google paid more in fines in 2018 than it did in taxes.)

Google reportedly agreed to pay Nine Entertainment (owner of the Sydney Morning Herald and other prominent titles) $30-million per year to use its content in various news products. This agreement keeps them out of the risky arbitration process and doesn’t cover search links, although Nine will probably be on a cloud with this deal.

As many of the world’s governments and news publishers observe the Australian developments with interest, we should not get carried away by the headlines or what this will ultimately mean for journalism. Google and Facebook are bigger economies than most countries, so maintaining the right to negotiate individually with publishers or, in Facebook’s case, the right to pull out of Australia if they don’t like what they see, is a big win for them. They will always have the upper hand and it’s highly likely that the little guys without fancy lawyers will be short-changed and NewsCorp content gets to flourish on their news products.

The Australian model is nowhere near the best outcome for an industry struggling to find its place in the digital world, and Tim Berners-Lee, the father of the internet, agrees. Paying a small group of content creators goes against the ideals the open web was founded on. It doesn’t encourage innovation and deals like this favour sharks like Murdoch. A better model would be taxing the giants on their local earnings and using that to bolster the news industry, focusing on diversifying investments, training and innovation. The British government, for example, introduced a 2% digital services tax in April 2020, aimed at search engines, social media and online marketplaces. (Getting our government to ringfence and manage that properly is a different rant.)

To put it into perspective: Google made $4.3-billion in Australia in 2018, on which it paid just $26-million in local taxes, thanks to Singaporean and Irish tax breaks. They may have lost this skirmish but they are still winning at everything else.

Styli Charalambous is the publisher and CEO of Daily Maverick.