By Bronwyn Howell
Recently, Australia’s nonstandard regulatory approach toward internet platform providers such as Facebook and Google has stood out in the international legal and regulatory arenas. While Europe has pursued the platforms in court for privacy and competition-law breaches and imposed explicit regulatory constraints, Australia has preferred a lower-key approach, favoring negotiation and contractual dispute resolution.
Most prominent has been Australia’s high-profile instruction to Facebook and Google last year to negotiate with and pay certain news providers for use of their content — or face mandatory arbitration. (“Use” of content includes platform users’ reposts or shares, along with complex algorithms identifying and prioritizing content based on user interests.) The justification, following a lengthy inquiry by Australia’s Competition and Consumer Commission (ACCC), was for platforms such as Facebook and Google to compensate news providers for lost advertising revenues that historically subsidized news content production. The ACCC found that the platforms did indeed hold substantial market power in Australian advertising markets, so the move killed two birds with one stone — crimping the platforms’ dominance while shoring up the business case for producing public-interest news content.
However, Australia’s courts have lately issued some perplexing rulings on the activities of the news providers themselves. Last year, the High Court of Australia found that Facebook pages managed by the media companies (and, by extension, everyone else) amounted to “publications,” making the news media companies liable for user-generated content. When comments were defamatory, the media companies — not the content posters — were responsible. There thus exists an ironic possibility of news companies paying fines for content they did not generate being posted and reposted on Facebook and Google, using money paid by Facebook and Google to compensate the news firms for revenues lost to Facebook and Google for using that very content.
Will the ‘down under’ approach remain an outlier?
Last month, it was reported that the United Kingdom would follow Australia’s lead via legislation allowing its Competition and Markets Authority’s Digital Markets Unit to oversee agreements between news companies and tech platforms. This was deemed to be a “pro-competition” move that “supports the sustainability of the press.” However, Facebook has countered that it already pays UK press entities tens of millions of pounds to integrate their content into Facebook News. As previously mentioned, Facebook News–type deals are also being negotiated in Australia to avoid mandatory arbitration.
Australian-type rules appear to be spreading. One day after the UK report, it was reported that Canada’s federal government, under the auspices of Heritage Minister Pablo Rodriguez, would introduce legislation “as early as February 3” to compel the likes of Facebook and Google “into binding arbitration if they can’t come to an agreement on a price for news content published on the companies’ platforms.” Rodriguez’ actions fulfill the obligations outlined in the minister’s December 2021 mandate letter instructing him to “swiftly introduce” legislation requiring the platforms to share revenues with Canadian news outlets in order to “level the playing field between global platforms and Canadian outlets.”
Why is Australia’s model catching on?
Though at face value it appears that the UK
and Canada are simply copying Australia’s intervention, it is not clear they
are doing so for the same reasons.
While there were many justifications popularly
espoused for Australia’s move, it stemmed from the aforementioned ACCC inquiry
into digital platforms and competition in advertising markets. The levels of
compensation paid thus likely draw their benchmarks from data relating to this
market, where side payments such as those used for Facebook News were not a
feature. It is not clear that the same pertains to the UK and Canada; indeed,
no detailed inquiries seem to underpin their respective actions.
Despite the pro-competition rhetoric, it is far from axiomatic that the same competition problems prevail in the copycat countries or that the only (or best) option is the one promulgated. Good policy would first establish the existence and magnitude of the “problem” before imposing a solution. It would also examine degree of success, unintended consequences, and anomalies — such as the October 2021 High Court case — to inform subsequent policymaking.
Australia found a problem, but the jury is still out on whether the solution is proportionate or fair. For example, many small local publications that formerly survived entirely on advertising revenues to provide free local news were not cut in to the Facebook and Google payments and have gone out of existence, calling into question the press-sustainability justification. The greatest beneficiaries of Australia’s model have been large media firms with arguably significant power in Australian political spheres. But as the deals are commercially sensitive, there is limited transparency in both advertising markets and the arena of political influence. The least that can be asked is for sound market analysis to precede any calls for the United States to jump on this particular bandwagon.
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