Distribution dispute

Media and tech giants need to find a common ground

Should online giants like Google and Facebook be compelled to pay for the news items they publicise by sharing links? There are strong arguments to be made for and against such a practice. This debate has been on for several years and it has led to controversial actions in France and Spain. Now, Australia says it will legislate a code making it mandatory for Google and Facebook to share ad revenue with media. According to the Australian treasurer, Josh Frydenberg, the Australian Competition Commission has been tasked with drafting revenue-sharing regulations. This will include provisions related to value exchange and revenue sharing, transparency of ranking algorithms, access to user data, presentation of news content, and penalties for non-compliance. The draft law will be released for comments by the end of July, and it could be passed by November. The Covid lockdown has impacted media revenues badly and the crisis may have precipitated this action. But Australia’s policymakers had been trying to persuade the online giants to adopt a voluntary ad-revenue sharing system for a while, before resorting to legislation. 

Australia’s competition commission says over 98 per cent of searches on mobile in Australia are with Google and 17 million Australian (out of a population of 25 million) connect to Facebook for at least 30 minutes daily. It estimates that, out of every Aus$100 spent on online advertising, $47 goes to Google, $24 to Facebook and $29 to all others combined. The two platforms have similarly dominant positions elsewhere. Across the world, Google and Facebook are the two biggest media platforms and news aggregators. Snippets of relevant articles with headlines and photos are visible on Google on every search. The search engine’s news service also posts news related content. Facebook users also post links to news. It is true that Google and Facebook only display headlines and snippets. But both Facebook and Google live off the advertising revenues they earn. Neither shares ad-revenue with the media houses which create the content they link to. The media houses on their part say that Google, Facebook, and similar entities would not receive either traffic, or ad-revenues, without access to the content they display and link. On their part, the platforms argue display on their platforms guarantees high visibility and volume of traffic, which content-creators are welcome to monetise in any way they can. They also say content creators can voluntarily opt out of their content being shared on the online platforms. 

France and Spain have tried to impose similar ad-revenue sharing schemes on the online giants. Neither has been very successful. In France and Spain, Google simply stopped offering news services with local links. That caused a crash in traffic volumes for local media. There are apparently chances of legal action targeting Google in France on the grounds that it has abused its monopoly status by shutting down links to local media. France is said to be also debating a new law to try and force revenue-sharing. 

Both sides in this debate obviously have some logic backing their arguments. It is also obvious that this is a symbiotic relationship. The outcomes in France and Spain have been “lose-lose” because a compromise that suited both sides could not be reached. In the broader context, Google, Facebook, Twitter, and their competitors such as other social media sites and search engines, have disintermediated the advertising industry. Ad can now reach the reader via Google or Facebook, without needing to go through a media site. If media cannot keep a slice of that ad-revenue, it suffers and in that case, content creation may also decline, with an eventually negative impact on the online platform. However, forcing revenue-share via legislation seems like a blunt instrument. Any model of revenue-sharing should ideally, develop by consensus with online platforms, media and advertisers, all recognising what they can respectively bring to the negotiating table.