BackFacebook now required to pay for news in Australia, other countries may follow suit: 10 points
Big tech firms had fiercely opposed the legislation from the outset, fearing it would threaten their business modelsBoth Facebook and Google have each said they will invest around US$1 billion each in news around the world
PremiumThe Australian parliament on Thursday passed landmark legislation that paves the way for Google and Facebook to invest tens of millions of dollars in local content deals.
The tech giants will now be required to pay for local news content. While Google will pay for news content that appears on its "Showcase" product, Facebook is expected to pay providers who appear on its "News" product starting later this year.
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Big tech firms had fiercely opposed the legislation from the outset, fearing it would threaten their business models. However, after Australia's judgment, regulators in the European Union and the US are expected to pressurise their government to move on the same lines.
Here is how the law came to being and its implications
Fair payment: Australian government had said that its proposal mandates a negotiation safety net through an arbitration panel.
The digital giants would not be able to abuse their dominant negotiating positions by making take-it-or-leave-it payment offers to news businesses for their journalism. If a news business refused to budge, the panel would make a binding decision on a winning offer.
Regulators had accused the companies, who dominate online advertising, of draining cash away from traditional news organisations while using their content for free.
Tech giants' fears: The digital platforms feared that what's happening in Australia will become an expensive precedent that larger countries will follow and threaten their business model.
In particular, the companies objected to rules that made negotiations with media companies mandatory and gave an independent Australian arbiter the right to impose a monetary settlement.
A shutdown followed: Facebook -- which is much less reliant on news content than Google -- had initially said being forced to pay for news was simply not worth it and shut down access to news content for its Australian users.
Facebook said the proposed Australian law “fundamentally misunderstands the relationship between our platform and publishers who use it."
Government's stance: Australia's government condemned the decision of Facebook to block news websites, which also prevented some government communications, including messages about emergency services, as well as some commercial pages.
“Facebook's actions were unnecessary, they were heavy-handed and they will damage its reputation here in Australia," said Treasurer Josh Frydenberg, who added that he was given no warning before Facebook acted.
Negotiations on the table: Following this, a last-gasp deal was made between Facebook and the Australian government. The social media giant said it will restore news pages in Australia after reaching the agreement.
“We are satisfied that the Australian government has agreed to a number of changes and guarantees that address our core concerns," said William Easton, managing director of Facebook Australia.
Law passed finally: On Thursday, the Australian parliament passed the legislation that forces technology companies like Facebook and Alphabet Inc's Google to pay media companies for content.
Facebook and Google now have an additional two months to reach further agreements that would stave off binding arbitration.
Facebook's investment: Both Facebook and Google have each said they will invest around US$1 billion each in news around the world over the next three years.
Facebook said that it has invested $600 million since 2018 in news.
Other countries observe development: Governments in Europe and the US are also sympathetic to the points of views of the news companies that are demanding payment from tech giants.
The Australian legislation could serve as a global benchmark for how to force tech titans to the negotiating table and pay the traditional media for their news content.
US legislators are voicing the loudest concerns about Facebook, with Rhode Island Congressman and Antitrust Subcommittee Chairman David Cicilline tweeting that the company “is not compatible with democracy."
Licensing agreements with Canadian media: Facebook is exploring potential licensing agreements in the coming year with Canadian media outlets and expanding its investment in local journalism initiatives, according to reports.
The move comes as the Canadian government is preparing to introduce legislation in the coming months along the lines of the Australian model.
Last week, Canadian Heritage Minister Steven Guilbeault, in charge of crafting legislation, condemned Facebook's decision to shut down all news sites in Australia for several days, and said it would not deter Ottawa from introducing new rules.
Sheer numbers: Thousands of journalism jobs and scores of news outlets have been lost in Australia alone over the past decade as the sector watched advertising revenue flow to the digital players.
For every $100 spent by Australian advertisers today, $49 goes to Google and $24 to Facebook, according to the country's competition watchdog.
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