Two weeks ago, we detailed our concerns with the arbitration system proposed in Australia’s draft News Media Bargaining Code. We also announced a US$1 billion global investment to license content for a new product, News Showcase, which is rolling out first in Germany and Brazil. We signed several agreements with Australian publishers for this product in June, and were hoping to launch it here soon. We have had to put these plans on pause for now as we don’t know yet if a product like News Showcase would be viable under the code.
The agreements we have signed in Australia and around the world show that not only are we willing to pay to license news content for a new product, but that we are able to strike deals with publishers without the draft code’s onerous and prescriptive bargaining framework and one-sided arbitration model.
We don’t oppose a code, and a system for resolving disputes between parties. But the arbitration system outlined in the draft is unworkable. In addition to the issues we raised on September 27, we have concerns about its unfair payment conditions and unclear definitions and obligations.
We believe these conditions could be amended to make it a fair and workable code: a code that can work together with commercial deals and programs like News Showcase.
An unreasonable ‘must include, must pay’ system
The draft code proposes, in effect, a ‘must include, must pay’ system, something that’s extreme and unprecedented. It essentially forces Google to provide a benefit to Australian news businesses and to pay them to receive that benefit.
A ‘must include’ regime is rare. And when this type of system is used, parties have a right to be included, but not a right to be included for free — let alone be able to demand payment to be included.
Under the draft code, if we ‘make available’ news content (by providing links to news websites when you search online, we assume, though this isn’t defined in the code) we have to negotiate payments to that company—even though analysis shows they benefit more from the links than we do. In 2018, the value we provided publishers was estimated to be more than $200 million a year (while news on Google generated just $10 million in revenue—not profit). As we have said, none of the value we bring to the negotiating table would be considered by the arbitrator.
What’s particularly concerning is that it’s not just one unequal negotiation. We would be forced into these one-sided negotiations with all registered news businesses in Australia that earn more than $150,000 per year.
That means we could face extreme and uncommercial claims for payment—which is not financially sustainable for any company. The draft code would set a dangerous precedent in Australia, as a similar one-sided, forced-dealing regime could be imposed in other industries, impacting other companies.
Unclear obligations which carry enormous fines
The code is extremely broad and lacks vital definitions. This makes it difficult to know how to comply with its many provisions, and it carries potentially enormous financial penalties. We could be fined up to 10 percent of our Australian revenue for a single breach. No business in Australia should have to manage the huge risk that comes with such severe penalties for such uncertain provisions.
In fact, no other code in Australia carries such huge penalties. Penalties for breaches of other codes that carry penalties (and many of them don't) are a maximum of $66,000.
Right now, these issues—and the others we’ve raised—mean the code is unworkable for us. We want to find a way through and we believe the solution should involve bringing News Showcase to Australia, which would help publishers grow their audiences and contribute to their ongoing sustainability. We’ve proposed changes to the ACCC and the Government, and we’re continuing to engage with them constructively so we can get to a fair code for everyone.