On Monday, Australia’s Treasurer Josh Frydenberg disclosed, Canberra will force online giants including Alphabet Inc’s Google and Facebook Inc to share advertising revenue with local media firms.
Australia is set to become one of the firts countries to require digital platforms to pay for content that they use.
The development comes in the wake of failed talks with Facebook and Alphabet which did not yield a voluntary code to address complaints by domestic media players that the tech giants have too tight a grip on advertising – their main source of revenue.
“We understand the challenge that we face, this is a big mountain to climb,” said Frydenberg to reporters in Canberra. “These are big companies that we are dealing with but there is also so much at stake, so we’re prepared for this fight.”
The Australian government has asked the country’s competition watchdog, the Australian Competition and Consumer Commission (ACCC), to frame a mandatory regulatory code of conduct between media outlets and digital platforms.
The Australian government has scrapped its initial plan on coming up with a voluntary code by November 2020. The Australian government has asked ACCC to submit its draft mandatory code by July 2020, which will be passed into legislation shortly thereafter, said Frydenberg.
The mandatory code will include data sharing rules, ranking and display of news content, as well as revenue sharing generated from such content. The new rules will also establish penalty and binding dispute resolution mechanisms.
Australia’s online advertising market is worth around $5.72 billion (A$9 billion) a year and has grown more than eight-fold since 2005.
According to an ACCC report on digital platforms published in June 2019, for every A$100 spent on online advertising in Australia, excluding classifieds, nearly a third goes to Google and Facebook.
In December 2019, Australia had said Google and Facebook will have agree to new rules to ensure that they do not abuse their market power and damage competition, failing which the government would impose new controls.
“We’re disappointed by the government’s announcement, especially as we’ve worked hard to meet their agreed deadline,” said Facebook.
“We’ve invested millions of dollars locally to support Australian publishers through content arrangements, partnerships and training for the industry,” said Facebook Australia and New Zealand Managing Director Will Easton in a statement.
Google said it would continue to cooperate with plans for the media code of conduct.
“We have sought to work constructively with industry, the ACCC and government to develop a code of conduct, and we will continue to do so in the revised process set out by the Government today,” said Google’s spokesperson.