In January, Google threatened to make its search engine unavailable in Australia if the government approved legislation that would force tech companies to pay for journalism shared on their platforms. The government went ahead with its plans anyway but Google has now blinked first.
Australia’s novel legislation is expected to pass before the end of February and Google is trying to blunt the impact by striking deals of its own with media companies, according to a New York Times report.
Some of the deals negotiated are worth tens of millions of dollars a year including one with Australian media mogul, Rupert Murdoch’s News Corp.. The deal announced on Wednesday is a three-year arrangement that includes content from The Wall Street Journal, Barron’s, MarketWatch, and The New York Post.
The meteoric rise of social media has driven eyeballs and advertising revenue to social media sites where users curate and share news content which starves media companies of critical revenue.
While media companies have long railed against this development, tech giants such as Facebook and Google have ignored their complaints as they continue to cram profits from the content they did not create.
However, Microsoft Corporation has been an exception. The company said it is supporting the legislation in Australia pitting it against Google division of Alphabet Inc. and Facebook. Additionally, Microsoft advocates the passage of similar legislation in other countries, including the United States
“As the 21st century began, the internet eroded the news business as dotcoms like Craigslist disrupted advertising revenue, news aggregators lured away readers, and search engines and social media giants devoured both. Many other factors have been at work and there is a pressing need for innovation across the news sector. But one thing is clear – the internet and social media have not been kind to the free press.”
“Since 2000, newsroom revenue in the United States has fallen by 70 percent and employment has been cut in half. More than 2,000 newspapers have closed entirely. In many places, local news has been decimated. News deserts – communities with no local paper at all – have spread across the country, with terrible effects,” Microsoft said on its blog.
Australia’s new law is a watershed moment in reining tech companies. This law has enjoined the support of government officials in Canada and Europe and could soon begin taking actions of their own.
Google’s decision to back down will have an impact on its bottom line. It has agreed to pay news publications in France under an agreement that is likely to lead to more deals across Europe.
The Australian legislation under consideration includes a code of conduct that would allow media companies to bargain individually or collectively with digital platforms over the value of their news content.
The code is intended to address “bargaining power imbalances” between the two sides, partly by forcing disputes into a final arbitration process. It would apply at first only to Facebook and Google, though other digital platforms could be added.
The bill follows the Australian Competition and Consumer Commission draft news media bargaining code to address the imbalance between the digital platforms profiting from the news and the diminishing number of organizations that produce the content.
Though the code did not specify how news organizations will be paid, it sets up procedures for media companies to enter negotiations with tech companies.
This legislation goes right to the existential threat tech companies presented to both media organisations and even democracy.
Analysts say an independent and free media ecosystem is key to democracy but traditional media organizations, particularly local news outlets, are under threat of extinction.
Between 2004 to 2015, nearly 2,000 newspapers have been closed and from 2008 and 2017, a Washington Post report shows, about 45 percent of newsroom staff in the United States were laid off
This reality is the same for traditional media outlets in Africa, which are losing revenue streams as readers and listeners shift toward free digital content. As audiences migrate to other news venues, traditional media’s influence and, by extension, advertising revenues diminish.
By siphoning ad revenue, tech giants are doing more harm to the media ecosystem than repressive and corrupt governments in Africa who are keen to silence the media and destroy democratic values.