Google Australia managing director Mel Silva said the company was “deeply disappointed” with the proposed code.
“The government’s heavy-handed intervention threatens to impede Australia’s digital economy and impacts the services we can deliver to Australians,” Ms Silva said.
“We urge policymakers to ensure that the final code is grounded in commercial reality so that it operates in the interests of Australian consumers, preserves the shared benefits created by the web and does not favour the interests of large publishers at the expense of small publishers.”
Facebook Australia managing director Will Easton said the company was looking closely at the code and its implications.
Australian Competition and Consumer Commission chair Rod Sims said Google and Facebook had responded to the proposed code in the same way organisations with market power always did.
“They want to be left to negotiate unfettered and so they call for what they refer to as commercial negotiation. But of course it never is when one party has a lot of power and the other one doesn’t,” he said.
The arbitration model adopted by the ACCC is based on an approach proposed by Rupert Murdoch’s News Corp.
Under the draft code, companies will have three months to come to an agreement before an arbitrator steps in with a binding decision. The arbitrator will consider the direct and indirect benefits of Australian news content for the digital platforms, the cost of producing the content and the burden on digital platforms.
“What we have sought to do with this mandatory code is not protect Australian news media businesses from competition or from disruption that’s occurring across this sector,” Treasurer Josh Frydenberg said on Friday.
“What we have sought to do is create a level playing field to ensure a fair go for Australian news media businesses and that when they generate original content, they are fairly paid for it.”
The code will prohibit discrimination against Australian news providers in a bid to prevent the platforms removing or demoting their content in favour of rivals not subject to the rules, including international outlets.
The tech giants will also have to provide more detail on the data they collect on users, come up with a proposal for recognising original content and provide 28 days’ notice of changes to algorithms and policies that will affect news and advertising.
Australian news publishers described the draft code as an important step forward.
News Corp executive chairman Michael Miller the draft code was a “watershed moment”.
‘What we have sought to do is create a level playing field to ensure a fair go for Australian news media businesses.’
Treasurer Josh Frydenberg
“It can force the platforms to play by the same rules other companies willingly follow and it ultimately means they will no longer be able to use their power to walk away from negotiations with news creators,” Mr Miller said.
A spokesman for Nine Entertainment Co, owner of this masthead, welcomed the government’s attempts to push against the regulatory and bargaining imbalances.
“We are confident that following this important step in the process we are positioned to achieve an outcome which will ensure significant long-term benefits to our news organisation,” the spokeswoman said.
Free TV chief executive Bridget Fair, who represents the interests of Nine, Seven West Media and Network Ten, said measures such as algorithm transparency and anti-discrimination measures and penalties for breaching the code were important.
To be eligible for bargaining under the code, media businesses will have to be focused on publicly significant news reporting for Australian audiences, be subject to professional editorial standards and ethics, and have annual revenue exceeding $150,000.
While public broadcasters ABC and SBS had expressed an interest in benefiting from revenue-sharing deals with the tech companies, they have been excluded from the key element of the code. The broadcasters will benefit from the other requirements around data and algorithm transparency.
Labor and the Greens said the ABC and SBS should have been included in the revenue-sharing deals.
“It seems it’s okay for tech giants to rip journalism from the ABC and SBS for free, but if it’s Murdoch’s content then they have to pay,” Greens senator Sarah Hanson-Young said.
Mr Sims said the code could be legislated by November and payments could start flowing early-to-mid next year.
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Fergus Hunter is an education and communications reporter for The Sydney Morning Herald and The Age.
Zoe Samios is a media and telecommunications reporter at The Sydney Morning Herald and The Age.