A symbiotic relationship

Tech giants and media must have a revenue-sharing model

A year-long argument between the Australian government and tech giants Google and Facebook is coming to a head. Australia has come up with a law that asks Google and Facebook to pay Australian media for the content used in search, and social media. Google says this sets an “untenable precedent” and has threatened to withdraw its search engine from Australia. This follows similar negotiations in France, where Google recently signed an agreement to pay accredited French media organisations. Several other EU nations are looking at similar arrangements on the back of changes in pan-EU copyright laws in 2019. However, Google did pull its local search engine out of Spain in 2014, rather than agree to a revenue-sharing deal.

The details were different in these cases. Australia and earlier Spain proposed payments if Google carried links to content. Australia also proposes that Google give local media 14 days’ notice of future search-algorithm changes. In France, Google will pay publishers only when it carries snippets of content. The agreement covers 120-plus French publishers at present. But all publishers certified under a French rating system, the IPG, are eligible for revenue-share. A withdrawal of the “.au” search engine would lead to loss of local content in Australia. Local businesses rely on region-specific search engines. In addition, if Google withdraws other services such as its GPS mapping and locational services, this would cause a lot of disruption. But Australian policymakers say that other search engines would enter that space and revenue-sharing arrangements could then be discussed with Yahoo, Bing, Duck-DuckGo, etc. There are also other players in the GPS location and mapping space.

Google Australia derived Aus$4.8 billion in 2019 revenues (around $3.7 billion) and declared Au$134 million in profits. This is not a huge market, given $160 billion in 2019 global revenues. But Google holds overwhelming market share, driving over 90 per cent of all Australian media traffic. Australia’s competition commission says over 98 per cent of searches on mobile are with Google and also 17 million Australians (in a population of 25 million) connect to Facebook at least 30 minutes daily. It estimates that, of every $100 spent on online advertising, $47 goes to Google, $24 to Facebook, and $29 to all others. Meanwhile, print ad-revenues have dropped 75 per cent in the past 15 years. The two tech giants have similar dominance everywhere they operate. They are trying to push initiatives like Google News Showcase and Facebook News, which would further cement their dominance. Both are trying to avoid legally mandated revenue-share arrangements. But if France sets a trend in the EU, their hand will be forced.

There is a symbiotic relationship between the tech platforms and media. The former depend on traffic and ad-revenues from the content they display and link. Neither shares ad-revenue with the media houses creating that content. But the platforms argue they guarantee high visibility and traffic volume, which content-creators are welcome to monetise. Google subsidiaries such as YouTube, Blogger, and Wordpress do share ad-revenues with content creators. By analogy, organised media has a point in asking for revenue share for curated content coming from credible sources. Ideally, any revenue-sharing model should develop by consensus between the platforms, the content creators, and advertisers, with all stakeholders recognising what they respectively bring to the table. But since that hasn’t happened, legislation may force the tech platforms into reviewing their revenue-share policies.