Google is so pissed with the Australian Government’s proposed new media code it’s on the home page!

Mel Silva, Managing Director, on behalf of Google Australia has issued an open letter to Australia. In the letter, Google has responded to the Government’s proposed regulation known as the ‘News Media Bargaining Code‘.

This code proposes that Google (along with others) are responsible for compensating traditional media organisations.

In case you needed a reminder of how the web works, here it is:

• People and businesses build websites.
• Sites can register their sites to be indexed by a search engine (i.e. Google) to appear in search results which drives traffic to their website at no cost to the site creator.
• Some websites rely entirely on organic growth, while others choose to pay for advertising, so their links are seen more often by a defined audience (achieved by users opting-in to provide details about themselves).
• Websites often run advertisements or use a paywall to generate an income from content.
• Any public website can also be shared by fans on social media, which generally helps drive traffic and is encouraged, also free to the site creator.
• Brands create pages on these social platforms (like Facebook) to have their fans follow their content, driving more free visits to their site.
• Social media providers run ads next to, or between content which pays for their expenses and generates an income for that business.

Over the past couple of decades, search engines and social media providers have dominated advertising space, as it offers the ability for businesses to directly convert their ad spend, directly to outcomes (tracked by click-through and ultimately purchases). This is something not possible with paper, radio, cinema or TV advertising. Basically the internet is a better advertising platform because ads can be precisely targeted to the audience (more effective).

So despite that very open opportunity for all to play in, it seems the Australian Government have the insane idea that sites like Google and Facebook should pay legacy media companies for an out of date business model.

This makes zero sense and after failing to collect a significant amount of tax from these multinationals, the Government is now seeking to extract money from them in a different way.

The draft legislation aims to amend the Competition and Consumer Act of 2010, in relation to digital platforms. This is exhibit A of the legal system trying to play catch up with technology.

The code itself is fairly in-depth and most people will never read it, however, the basic premise is best explained on this website.

Ultimately the proposed code boils down to these points:

The code seeks to address the fundamental bargaining power imbalance between Australian news media businesses and major digital platforms. This imbalance has resulted in news media businesses accepting less favourable terms for the inclusion of news on digital platform services than they would otherwise agree to.

The ACCC released an exposure draft of this legislation on 31 July 2020, with consultation on the draft due to conclude on 28 August 2020. Final legislation is expected to be introduced to Parliament shortly after conclusion of this consultation process.

The Government has announced that the code would initially apply only to Facebook and Google.

News media businesses wishing to participate in the code would apply to the ACMA. News media businesses would nominate which of their ‘news sources’ they would like included in the code. These can include news websites, newspapers and other print publications, television programs, radio programs, and other audio or video content made available online.

In addition to the criteria above, an eligible news media business’s annual revenue must exceed $150,000, in either the most recent financial year or in three out of the five most recent financial years.

That list line is the kicker, this doesn’t nothing for the small to medium sites that make modest revenues, instead this seeks to take income from 2 of the largest companies on the planet and redistribute it among legacy media.

After being available for 2 weeks, today, things got very weird when Google released this Open Letter to Australia, from Mel Silva, Managing Director, on behalf of Google Australia.

Gautam Anand, Head of YouTube APAC also posted on the YouTube blog, saying:

I’m writing today to make you aware of a proposed new law, known as the News Media Bargaining Code, that could have a significant, negative impact on the creator ecosystem in Australia.

This was followed by a global message to more than 6.3 Million followers. While I think Google overreached a little here, it does demonstrate just how pissed off they are with Australia’s Government right now, over this new proposed legislation. This is a clear attempt to rile up creators and push back on the Government, to provide feedback on the draft ahead of the looming deadline in just 2 weeks from now.

YouTube may be obligated to give large news publishers confidential information about our systems that they could use to try to appear higher in rankings on YouTube, disadvantaging all other creators. This would mean you could receive fewer views and earn less.

A few hours later, the Australian Competition and Consumer Commissioner (ACCC) posted a response to Google’s open letter. The response denies many of the points raised by Google.

Google suggests that given the burden placed on them by the legislation, they would be forced to potentially reduce revenue to creators and even charge for Search. While there’s probably a few technical workarounds to ensure they never have to pay a dime, I think it’s important to understand the Government a playing with fire here.

People’s love for Google in Australia is strong. They make the best search engine on the planet, they make YouTube, used by millions of Australians everyday for entertainment, education and for business applications. They also make Google Maps which is integrated into many vehicles, as well as the big one, Android which makes up around half the mobile phones in the country.

If this legislation is painful enough for a company like Google, its not beyond possibility that we seen them withdraw services from Australia. We are a tiny fish on the global market, with 25 million people, the equivalent of just 1 city in the US.

To put this simply, we need Google, a lot more than they need us. Don’t fuck this up Government, or the next election won’t be pretty.

On 31 July 2020, the ACCC released a draft version of the news media bargaining code. The ACCC invites all interested parties to provide their views on the draft code.

Written submissions are due by 5 pm on 28 August 2020 and can be sent to bargainingcode@accc.gov.au.

I strongly encourage techAU readers to take the time to give your feedback on the issue before the deadline.