Google claims ‘unfair’ payment code encourages news businesses to make ‘unreasonable and exorbitant financial demands’

Google remains on the offensive in its back and forth with news publishers, calling the arbitration process set out in the Australian Competition and Consumer Commission’s (ACCC) News Bargaining Code “so unfair that no company should be asked to accept it”.

In a further blog post on the issue – following last week’s open letter and the rolling out of ‘warnings’ on both Google and YouTube – the tech giant said the negotiation and arbitration arrangement is “extremely one-sided and unfair” and “set up to encourage news businesses to make unreasonable and exorbitant financial demands”.

“Under this law the arbitrator is not required to take into account the value we provide news businesses,” the blog post, published yesterday, read.

“Google Search referred more than 3 billion visits to news businesses’ websites last year, which is estimated to be worth around $218 million—and this doesn’t include the many other ways we support publishers. The arbitrator is also not required to look at the significant costs we incur in providing our services, or the value of comparable deals, which would be the starting point for any standard arbitration.

“All it looks at is the news organisation’s costs, its content’s value to Google, and whether the payment would put an undue burden on the digital platform. That means bigger news organisations with higher costs and more content will get paid more. Because of all this, the law is set up to encourage enormous and unreasonable demands.”

In an article prepared on Google’s behalf for consultation over the code – which would enable news businesses to bargain with Google and Facebook, attempting to get them to pay for news -US economists Carl Shapiro, John Hayes and Hitesh Makhija dug further into the company’s issues with this arbitration process.

“We are concerned that the asymmetric nature of this part of the Draft Bargaining Code will cause arbitral panels to ignore the value that news publishers derive from the news media referrals they receive from Google,” they wrote.

“If that happens, these panels’ decisions will likely depart from what economists would expect from a negotiation between parties with similar bargaining power and are unlikely to achieve the ACCC’s objective of fair remuneration for news content.”

The warning Google began to show on its pages last week

Google drew attention to licensing deals it reached with news publishers just before the draft code was released by the ACCC, adding: “We’re happy to pay more to license content, and want to support journalism as it transitions to a digital future, but a fair negotiation or arbitration should factor in the value both parties provide.

“News queries account for just over 1% of our total search queries in Australia. We have news partners in other countries, as well as countless other categories of websites and content that people search for. It simply isn’t viable for us, or any digital platform, to pay unreasonable and exorbitant amounts to one group in one country.”

The ACCC labeled last week’s open letter as ‘misinformation’, and chair Rod Sims said earlier this month that the rare form of arbitration is “well-suited to this issue, given the difficulty of quantifying benefit that news provides to digital platforms”.

The code was developed following the ACCC’s 600+ page report detailing the findings of its Digital Platforms Inquiry, which was backed up by a further five-year inquiry into the digital platforms, and an inquiry into the ad tech supply chain. Both inquiries are currently underway, with the preliminary report due next month for digital platforms, and December for ad tech.

According to Sims, “since the report’s publication [last year], the size and influence of the digital platforms has continued to expand”.

Since debate around the payment code itself began, the industry has questioned whether Google’s response to the code would result in Google shutting down its ‘News’ tab, like it did in Spain. The search engine giant addressed that issue in the latest blog post, explaining that the code’s complexities make that response impracticable.

“This proposed law is written extremely broadly. If we show Australians any content from any ‘news publisher’ (defined to include any ‘website’) in the world, we must also show all news content of news businesses registered under the Code,” it said.

“For this purpose, ‘news’ is defined very broadly – way beyond what most of us would consider ‘news’. This includes covering issues that are of ‘interest to Australians’, including foreign news and citizen journalism – which go well beyond traditional journalism to capture all kinds of information, blogs, videos and websites.

“That means we’d have to undertake a mass cull of content globally to stop them being visible to Australians – we’d have to remove all foreign newspapers, bloggers, YouTube citizen reporters, but also sports reporting, discussions of global health issues, tweets about current events, and literally endless other types of content from all sources around the world.”

The ACCC currently has two court cases on foot against Google, including proceedings related to allegedly misleading consumer over location data, and a matter commenced recently over the way the company used sensitive data, allegedly without properly informing consumers.

“These enforcement actions are about holding powerful digital platform businesses accountable for their representations to consumers and ensuring consumers are fully aware of the price they pay, through their data, for the supposedly free services they receive,” Sims said.


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