Google, a unit of Alphabet Inc., has announced agreements to pay publishers in Australia while Facebook said Thursday it has blocked users in the country from viewing or sharing news.

For two decades, global news outlets have complained internet companies are getting rich at their expense, selling advertising linked to their reports without sharing revenue.

Now, Australia is joining France and other governments in pushing Google, Facebook, and other internet giants to pay. That might channel more money to a news industry that is cutting coverage as revenue shrinks. But it also sets up a clash with some of the tech industry’s biggest names.

Google, a unit of Alphabet Inc., has announced agreements to pay publishers in Australia while Facebook said Thursday it has blocked users in the country from viewing or sharing news.

WHAT IS HAPPENING IN AUSTRALIA?

Facing a proposed law to compel internet companies to pay news organizations, Google has announced deals with Rupert Murdoch’s News Corp. and Seven West Media. No financial details were released. The Australian Broadcasting Corp. is in negotiations.

Google accounts for 53% percent of Australian online advertising revenue and Facebook 23%, according to Treasurer Josh Frydenberg.

Google had threatened to make its search engine unavailable in Australia in response to the legislation, which would create a panel to make pricing decisions on the news.

On Thursday, Facebook responded by blocking users from accessing and sharing Australian news.

Facebook said the proposed law “ignores the realities” of its relationship with publishers that use its service to “share news content.” That was despite Frydenberg saying this week Google and Facebook “do want to enter into these commercial arrangements.”

WHAT IS HAPPENING IN OTHER COUNTRIES?

Australia’s proposed law would be the first of its kind, but other governments also are pressuring Google, Facebook, and other internet companies to pay news outlets and other publishers for the material.

In Europe, Google had to negotiate with French publishers after a court last year upheld an order saying such agreements were required by a 2019 European Union copyright directive.

France is the first government to enforce the rules, but the decision suggests Google, Facebook, and other companies will face similar requirements in other parts of the 27-nation trade bloc.

Google and a group of French publishers have announced a framework agreement for the American company to negotiate licensing deals with individual publishers. The company has dealt with outlets including the newspaper Le Monde and the weekly magazine l’Obs.

Last year, Facebook announced it would pay US news organizations including The Wall Street Journal, The Washington Post, and USA Today for headlines. No financial details were released.

In Spain, Google shut down its news website after a 2014 law required it to pay publishers.

WHY DOES THIS MATTER?

Developments in Australia and Europe suggest the financial balance between multibillion-dollar internet companies and news organizations might be shifting.

Australia is responding to complaints internet companies should share advertising and other revenue connected to news reports, magazine articles, and other content that appears on their websites or is shared by users.

The government acted after its competition regulator tried and failed to negotiate a voluntary payment plan with Google. The proposed law would create a panel to make binding decisions on the price of news reports to help give individual publishers more negotiating leverage with global internet companies.

WHAT DOES THIS MEAN FOR YOU?

Google’s agreement means a new revenue stream for news outfits, but whether that translates into more coverage for readers, viewers, and listeners is unclear.

The union for Australian journalists is calling on media companies to make sure online revenue goes into newsgathering.

“Any monies from these deals need to end up in the newsroom, not the boardroom,” said Marcus Strom, president of the Media, Entertainment and Arts Alliance. “We will be pressing the case for transparency on how these funds are spent.”

In the meantime, access occasionally could suffer: Facebook’s move Thursday initially blocked some Australian commercial and government communications pages.

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Google has rejected demands it pay hundreds of millions of dollars per year in compensation to Australian news media under a government-imposed revenue sharing deal.

The company's top executive in Australia said Google made barely Aus$10 million (US$6.7 million) per year from news-linked advertising, a fraction of a government watchdog's estimates for the sector.

In an effort being closely watched around the world, Australia is set to unveil plans to force major internet firms to share advertising revenue they earn from news featured in their services.

The country's competition regulator, the ACCC, has estimated that Google and Facebook together earn some Aus$6 billion (US$4 billion) per year from advertising in Australia.

Leading news publishers have demanded the two companies pay at least 10 percent of that money each year to local news organisations, which they say have lost the vast majority of their advertising revenue to the global technology giants.

Mel Silva, Google's managing director for Australia, dismissed such figures as wildly unrealistic.

"We all agree that high-quality news has great social value, but we need to understand the economics as well," Silva said in a blog post Sunday.

She said Google last year earned just Aus$10 million in revenue from clicks on ads placed next to news-related search queries.

"The bulk of our revenue comes not from news queries, but from queries with commercial intent, as when someone searches for 'running shoes' and then clicks on an ad," she said.

Silva also denied ACCC arguments that the tech firms gain significant "indirect benefits" from displaying news since the content draws users to their platforms.

News "represents only a tiny number of queries" on Google, accounting last year for barely one percent of actions on Google Search in Australia, she said.

- Job cuts -

The Google executive said her company on the other hand provided Australia's news media with "substantial" value by sending people to their websites.

"To put it plainly, a lot of people (Australians and beyond) click from Google through to Australian news websites, which gives publishers the chance to make money by showing them ads or turning them into paying subscribers," she said.

She said Google search accounted for 3.44 billion visits to large and small Australian news publishers in 2018, valuing those referrals at more than Aus$200 million per year for the news companies.

Google's position bodes ill for negotiations which the ACCC hopes to pursue between Google, Facebook and Australian media companies over a mandatory "code of conduct" governing issues such as revenue sharing, curbing disinformation and protecting user privacy.

The regulator suggested last month that Australian publishers might need to organise a "collective boycott" of Google and Facebook if voluntary negotiations on the code of conduct fail.

Silva said Google was prepared to take part in the process, but added that "it's important to base decisions on facts, not inaccurate numbers and unfounded assertions".

The ACCC has until the end of July to draw up the final code, which the government has said it will quickly implement.

Google and Facebook have had a huge impact on media companies across the globe as they capture the lion's share of online advertising spending.

In response to falling revenues, exacerbated by the economic impact of the coronavirus pandemic, Australian outlets have permanently or temporarily closed more than 150 newsrooms, slashing more than 20 percent of jobs in the sector since 2014.

Facebook Inc (FB.O) on Tuesday said it would stop Australians sharing news content on its platforms if a proposal to make it pay local media outlets for their content becomes law, escalating tension with the Australian government.

Under Australia’s closely watched internet reform, the country will become the first to make the social media behemoth and Alphabet Inc’s (GOOGL.O) Google pay for news sourced from local providers under a royalty-style system.

Facebook’s plan to block the sharing of news on Australian user accounts, rather than pay royalties, puts the firm broadly in step with Google on the matter and pushes the prospect of an agreement with the government further out of reach.

“Assuming this draft code becomes law, we will reluctantly stop allowing publishers and people in Australia from sharing local and international news on Facebook and Instagram,” Facebook Australia Managing Director Will Easton said in a blog post, referring to two Facebook-owned platforms.

“This is not our first choice - it is our last. It is the only way to protect against an outcome that defies logic and will hurt, not help, the long-term vibrancy of Australia’s news and media sector”.

Australian Treasurer Josh Frydenberg on Tuesday said the proposed law was in the national interest, followed 18 months of a public inquiry, and would create a more sustainable local media industry where the original content was paid for.

“We don’t respond to coercion or heavy-handed threats wherever they come from,” Frydenberg said in an emailed response to Reuters’ request for comment.

Australian Competition and Consumer Commission (ACCC) Chair Rod Sims, who is overseeing the proposed law, said Facebook’s response was “ill-timed and misconceived”, and that the proposal “simply aims to bring fairness and transparency to Facebook and Google’s relationships with Australian news media businesses”.

“As the ACCC and the Government work to finalize the draft legislation, we hope all parties will engage in constructive discussions,” Sims said in a statement.

Bridget Fair, chief executive of Free TV Australia, a lobby group for free-to-air broadcasters, said Facebook’s plan amounted to “bullying” and that the U.S. firm would “say and do anything to avoid making a fair payment for news content”.

“Australian Facebook users are being held to ransom as a tactic to intimidate the Australian government into backing down on this issue,” she said in a statement.

The proposed law was “the only reasonable way to even up the bargaining power between Facebook, Google, and Australian News Media Businesses,” Fair said.

Facebook’s Easton in his blog post called the proposed law “unprecedented in its reach”, and said the company could either remove news entirely or agree to pay publishers for as much content as they wanted at a price with no clear limits.

“Unfortunately, no business can operate that way,” he wrote.

Like in most countries, Australia’s traditional media companies in recent years have seen their mainstay advertising income streams eroded by online competitors, and consumers shy away from paid subscriptions.

Last month, Google began an advertising campaign using pop-up ads on its main search page that said its free service would be “at-risk” and users’ personal data could be shared if the firm is made to pay news organizations for their content. The ACCC called the statements “misinformation”.

Source: Reuters

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