Australia to require Facebook, Google to share ad revenue

The Australian government has become the latest to crack down on Facebook and Google, announcing they will be required to share ad revenue with news providers.

In an unprecedented move, the government has directed the country's competition regulator, the Australian Competition and Consumer Commission (ACCC), to create a mandatory code between the digital giants and news media in the next three months.

The code will cover the sharing of data, the ranking of news content and the monetization and sharing of revenue generated from news.

In contrast to recent decisions in Spain and France, which are based on copyright law, Australian authorities are treating this as a competition issue.

The decision to make the code enforceable follows months of fruitless negotiations in the wake of the ACCC's report into digital platforms last June.

The regulator found that both Google and Facebook had substantial market power in their respective segments. Because they were unavoidable trading partners for Australian news media, they also enjoyed "substantial bargaining power" with them.

ACCC Chair Rod Sims said he advised the government last week that agreement on a voluntary code was "unlikely."

Treasurer Josh Frydenberg said the issue had been accelerated because of the collapse in the ad market due to the coronavirus outbreak. News Corp., the largest local media firm, has just shuttered 60 community newspapers.

He acknowledged that when France and Spain attempted to make tech firms pay for content they refused, and that the companies might threaten to roll back their Australian operations.

"But we believe this is a battle worth fighting. We believe it is critical for future viability of our media sector. It's all about competition and creating a level playing field."

Facebook said it was "disappointed" with the decision and noted that it had spent millions on training and other support for Australian publishers.

Though unlikely to directly affect the telecom sector, the decision is significant for a number of reasons.

For one, telcos themselves are emerging content players. All see digital content as essential for their 5G business.

It also begins to address a complaint they've frequently made against Google: The search giant has entered into virtually every telecom market from voice and messaging to long-haul data and yet unlike operators is almost completely unregulated.

The move forms part of a growing wave of regulation aimed at reining in the platform firms and rewriting the rules of digital business.

The Australian move might be limited to just two of the big players. But all are under scrutiny in multiple jurisdictions for their market dominance, abuse of market power and their largely unregulated accumulation and utilization of personal data.

Politicians and regulators will be watching how this plays out.

Robert Clark, contributing editor, special to Light Reading

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