Laws are just the start: Australian watchdog warns Google, Facebook

Google and FB will be subject to mandatory price arbitration if a commercial agreement on payment for Australian media cannot be reached

Australia’s competition regulator has warned that planned laws to make the country the first in the world to force Google and Facebook to pay for news content were likely just the start of more regulation for digital platforms.
 
The Australian government announced legislation last month after an investigation it said showed the tech giants held too much market power in the media industry, a situation it said posed a potential threat to a well-functioning democracy.
 
Under the code, Google and Facebook will be subject to mandatory price arbitration if a commercial agreement on payment for Australian media cannot be reached.

 

“This bargaining code is a journey, if we see market power elsewhere, we can add them to the code,” Australian Competition and Consumer Commission Chairman (ACCC) Rod Sims said in an interview for Reuters Next.
 
Digital platforms face fines of up to A$10 million ($7.7 million) if they do not comply with the decision.
 
At the heart of the planned Australian regulation is a “two-way value exchange” to be used by an arbitrator to make a binding decision. That requires Facebook and Google to consider the value they receive from using Australian media content. It also requires local media companies to consider the value they receive from Facebook and Google users viewing their content.

 
Some Australian media organisations are unhappy with the two-way aspect of the code, and critics have noted that other players like Facebook’s Instagram and Google’s Youtube are not part of the legislation. Google, meanwhile, has declared the code unworkable, citing in particular a requirement to provide publishers with two weeks’ notice of certain changes to algorithms and internal practice.
 
Sims said the regulatory code was the best approach to ensure a level playing field, noting that competition laws around the world had failed to stop Facebook and Google gaining significant market power. “Let’s see how it goes; no point trying to optimise now,” Sims said in an interview on Dec. 21 that was broadcast at the event on Tuesday.

 
The Australian law is expected to be voted on in parliament early this year, was formulated after an ACCC inquiry that found for every A$100 of online advertising spend, $53 goes to Google, $28 to Facebook and A$19 to other media companies.