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Angela Flannery
Holding Redlich, Sydney
angela.flannery@holdingredlich.com

 

The Australian Government has recently consulted on draft legislation, the Treasury Laws Amendment (News Media and Digital Platforms Mandatory Bargaining Code) Bill 2020 ('draft Code'). The draft Code requires designated digital platforms, initially only Google and Facebook, to negotiate with Australian media companies on a range of issues, including the question of payment for using a media company’s news content. If the negotiating is unsuccessful, this question of payment may be sent to compulsory arbitration. The compulsory arbitration provisions of the draft Code, if it becomes law, may provide a model which could be adopted in other jurisdictions.

Why the draft Code is considered necessary

The Australian Competition and Consumer Commission’s (ACCC) completed its Digital Platforms Inquiry in mid-2019. Among other things, the Inquiry concluded that a significant bargaining imbalance existed between Australian media companies and the global digital platforms, Google and Facebook. The imbalance arises because media businesses perceive they need to have their content made available by these platforms to reach Australian consumers, but the platforms themselves do not need the content of any particular media company.

Given the ACCC’s findings, the Australian Government directed that a voluntary code should be developed between the platforms and Australian media companies by November 2020. However, in April 2020, when the ACCC reported to the government that it did not believe agreement on a voluntary code would be reached, the government ordered the ACCC to develop a mandatory code.^[1] The draft Code is proposed to be that mandatory code.

Digital platforms and media companies subject to the new regime

The draft Code would be incorporated in a new Part IVBA in the Competition and Consumer Act 2010 (Cth) (CCA). Under the proposed Part IVBA, the following measures are included:

Platforms and digital services

The Australian Treasurer may designate both digital platforms, and digital platform services, to which the new Part IVBA applies. Only Google and Facebook will initially be designated as digital platforms, but other platforms may be included in future. The Treasurer has stated that the designated services will be, for Google, Google Search, Google News and Google Discover and, for Facebook, Facebook News Feed, Instagram and Facebook News Tab, although it was noted that this last service is not yet available in Australia.

While particular digital services will be designated, many of the provisions of the draft Code, not the mandatory arbitration provisions, will apply to all of the digital services offered by the designated digital platform and its related entities.

Media companies and the news

Media companies have the option of opting in to the proposed regime. They may opt in, in relation to one or more of their ‘news businesses’, via a registration process to be established by the Australian Communications and Media Authority (ACMA), Australia’s communications sector specific regulator. A news business is one, or a combination, of a newspaper, magazine, television or radio programme, website and streaming or similar service, provided it is ‘news content’ and online.

The ACMA will only register a media company and associated news business or businesses where these meet a number of specific criteria, including a content test. To satisfy the content test the news business must publish online content that is predominantly ‘core news content’, that is, content which: is created by a ‘journalist’, as defined in the draft Code; and records, investigates or explains issues that are of public significance to Australians, are relevant to issues of public debate and democratic decision-making or relate to community and local events.

Once the registration of a news business corporation and its associated news business(es) has occurred, the Code provisions, including the mandatory arbitration process, will generally apply to ‘covered news content’ of each such news business. This is a broader concept than ‘core news content’ as it also includes any other journalist created content relevant in recording, investigating or explaining issues of interest to Australians. For example, sports and entertainment news, although not core news content, would be ‘covered news content’.

Mandatory bargaining and arbitration

Although the draft Code includes other provisions that have generated a level of controversy, the most important – and hotly contested – element of the draft Code is the bargaining and arbitration regime.

A registered media company (or a representative company on behalf of a group of such companies), may trigger the negotiation process with a digital platform in relation to the media company’s registered news business or businesses and all of the platform’s digital platform services, not only the designated services. The matters that may be negotiated are not limited by the draft Code and instead the relevant media company may specify those matters, with the only qualification being that they must relate to the registered news business’s covered news content made available on the relevant digital platform service or services.

A dispute about pricing is the only issue that may be sent to compulsory arbitration. Compulsory arbitration may be triggered if the parties do not reach agreement within three months of commencing negotiations. The draft Code currently provides that either bargaining party may require the commencement of the compulsory arbitration process, however it is anticipated that the final version of the Code will only permit media companies to commence arbitration. Australia’s two public broadcasters may not access the arbitration regime.

Under the ‘final offer’ arbitration model which has been adopted in the draft Code, the arbitrator (or panel of three arbitrators) must decide between ‘final offers’, as put forward by the two parties, to determine how much the registered news business should be paid for making its covered news content available to a designated digital platform service for one year. The decision of the arbitrator (or panel) is binding.

In selecting one of the final offers put forward, the arbitrator (or panel) must only consider the following factors:

• the direct and indirect benefits that the designated digital platform service receives from the news business’s covered news content;
• the costs to the news business of producing that covered news content; and
• whether a particular remuneration amount would place an ‘undue burden on the commercial interests’ of the designated digital platform service. It is not clear what would be considered an undue burden in this context, as the term is undefined and the Explanatory Memorandum is silent as to the meaning intended.

Under the terms of the draft Code, an arbitrator or panel may not consider the benefit that a news business receives from its covered news content being made available on the designated digital platform service – both Google and Facebook have long argued that news organisations receive a significant benefit from platforms directing users to their news content and, for this reason, should not be entitled to payments by the platforms.

The arbitrator or panel has only 45 business days to make a decision. The ACCC believes this is an appropriate timeframe for this arbitration model and reflects the underlying intention of the draft Code that disputes relating to remuneration are resolved quickly.

The only circumstances where an alternative remuneration amount to that proposed in one of the final offers may be selected is where each final offer is not in the public interest because it is highly likely to result in ‘serious detriment’ to either the provision of covered news content in Australia or Australian consumers. In such a case, the arbitrator (or panel) will then take one of the final offers and adjust it so that it is in the public interest.

Non-discrimination: a key provision

The draft Code includes a non-discrimination provision, which is intended to ensure that Google and Facebook treat news media businesses equally, irrespective of whether or not they are registered under the new Part IVBA and irrespective of the deal struck with a particular business. This is intended to stop the platforms taking actions such as ceasing to provide access to the content of particular media companies.

Could the Australian model be adopted globally?

Consultation on the draft Code closed on 28 August 2020. As at 22 September 2020, no comment has been made by either the ACCC or the government as to whether any changes will be made to the key provisions of the draft Code or when the draft Code will be considered by the Australian Parliament.

To date, international attempts to ‘level the playing field’ between the digital platform behemoths and media companies by imposing requirements of the platforms to pay for making news content available have been largely unsuccessful. One well known example is the current French proposal, which relies on the European Union’s Directive on Copyright, to require Google to pay for the use of snippets of news articles from French media companies. Google reverted to only showing headlines of articles to avoid paying such fees, resulting in the French competition regulator ordering Google to negotiate with French publishers. The negotiations are currently ongoing although French media companies have complained that they are unlikely to be resolved in the immediate future.

The Australian Government and the ACCC believe that the non-discrimination provisions of the draft Code, as well as the fact that the mandatory arbitration process that is able to be activated quickly, are the key differences that will mean Australia’s approach succeeds. Whether that is the case is an issue that will be watched closely, not only in Australia but elsewhere, once the draft Code becomes law. It may be that the Australian model will provide useful guidance for other jurisdictions.

 

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