Forcing Google and Facebook to pay for news could do more harm than good

The government has said it will force Google and Facebook to pay for news content from Australian publishers in a bid to 'even the playing field'. But this might not be the solution the industry craves, warns Rakuten's Stuart McLennan, and it might in fact make the situation worse for publishers.

Treasurer Josh Frydenberg has announced the government’s plan to force Google and Facebook to pay for news content, describing the decision as a “battle worth fighting”.

The new code is an interesting change of focus, moving from the regulator’s previous Digital Platforms Inquiry which solely looked at data protection, to providing much more direct action on publishers’ bottom lines.

However, the government must tread carefully, or there’s a chance it could actually worsen the exact problem it seeks to prevent. Should Facebook or Google decide to restrict local content on their platforms—as they have chosen to do in other markets—the publishers will ultimately be the ones who are penalised.

Frydenberg said the new rules will attempt to “level the playing field”

The problem is clear

It’s startlingly clear that something has to be done to protect the integrity of local journalism. Over the past few years, we have seen a massive increase in fake news spread on social media and whatever your opinion might be on mainstream media, local journalism provides an authentic counterpoint.

Clearly local publishers and media companies have been struggling to monetise their digital content, leading to a reduction in the quality of journalism and a tendency towards click-bait. This has been coupled with significant job losses, which are only accelerating during COVID-19 as we head towards an inevitable recession.

Interestingly, Rakuten Advertising’s own data shows a higher increased demand and appetite for news and content than ever before. Across our affiliate network, content publishers have experienced higher shares of advertiser dollars in response to lockdown orders, with increases of 20% week-by-week.

Despite this, advertisers are tightening purse strings with a rapid decline in ad spend across the industry, and publishers are feeling the pinch.

But is the government’s code the answer?

Unfortunately, I do not expect the code will provide any major positive uplift in revenue for media and news companies. Whilst it’s designed to ensure revenue is distributed fairly between the digital platforms and media businesses, in reality, the impact for Google and Facebook will be minimal—especially given what we’ve seen in other major markets.

The ‘war’ on these larger tech giants has been disguised in many different ways, but every single previous attempt has had little impact on the digital giants themselves, nor on the public’s consumption of them.

While I personally acknowledge how much market share Google and Facebook have, I honestly do not foresee much impact. Australia is far from the first government to try and push regulations like this and they are certainly not the biggest or the most powerful. Facebook and Google have become experts in defending themselves as tech platforms and not publishers.

Even if I’m proved wrong, I don’t think this changes the need for news and media sites to continue to look at diversifying revenue streams. It’s long been a focus of mine to give content producers the ability to monetise their content in different ways. I hope that more scrutiny and focus on this issue will fast-track further developments here.

What impact, if any, will it have?

Rod Sims, ACCC chair, told ABC TV that progress on value sharing or forcing digital platforms to pay for content “seemed unlikely”. Ultimately, Facebook and Google will fight tooth and nail to water down this code. Otherwise, they set a dangerous precedent for other markets to follow.

We have seen similar efforts against Google and Facebook in both Spain and France. When Spain tried to enforce a mandatory publisher payment, Google chose to remove its entire Google News service. The Australian government has gone one step further, specifically mentioning targeting beyond Google News, including the Google search component.

Both Facebook and Google will publicly agree to work with the code. Google’s official response so far has been to state it had worked constructively with the industry, government and ACCC on the draft code, saying: “We will continue to do so in the revised process set out by the government today.”

In turn, Facebook has stated the ACCC’s “unprecedented proposals” will restrict Australians’ access to online services, accusing the ACCC of protecting the interests of a few small media companies, not journalism as a whole. Google and Facebook would argue they provide distribution, discovery and monetisation of online content, offering ample value to news publishers.

Behind the scenes, I have no doubt an army of lobbyists are already pulling together action plans in order to ensure Australia does not become a Pandora’s box when it comes to sharing revenue with publishers globally.

The government must choose their next step wisely, and I have no doubt the entire world is watching to see how it plays out.

Stuart McLennan is the SVP of APAC for Rakuten Advertising


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