Should Facebook and Google - two of the largest and most profitable businesses in the world - have to pay Australian news media businesses for use of their content?
If you Google "COVID in Australia" and it takes you to a story in The Canberra Times, or if a video clip from WIN News comes up in your Facebook feed, you are looking at content from an Australian news media business. Australians trust the content from these and many other well-known news media businesses, which have built reputations over many decades.
They employ journalists and other workers with skill and experience; and they apply quality standards and editorial processes before a story goes to air or goes to print.
All of this costs money - so if that content is used by another business, it is fair that other business should pay for it.
But all too often when it comes to negotiating fair payment, Facebook and Google have played hardball.
As the Australian Competition and Consumer Commission has found, there is an imbalance of bargaining power between Facebook and Google, and Australian news media businesses.
The risk is that more and more Australian news media businesses may cease operating - while Facebook and Google become ever more dominant.
That's a competition policy problem. It is also a big problem for our democracy.
A healthy and diverse media sector which reports on issues of the day is crucial to a well-functioning democracy.
Our government has been worried about this problem for quite a while. In 2017, then Treasurer Scott Morrison asked the ACCC to look into how Google and Facebook were affecting the supply of news and journalistic content - and what this meant for content creators, advertisers and consumers.
In any market we need to watch out for powerful players building a dominant position, leading to weaker competition and poorer consumer outcomes.
The ACCC put out the final report of its Digital Platforms Inquiry last year. It found that the arrival of digital platforms has totally changed the way media content is produced, distributed and consumed.
Facebook and Google have grown quickly to become the dominant players in online markets in Australia. They are unavoidable business partners for news media businesses - both to reach an audience for their content and to earn advertising revenue.
In December last year, the government accepted most of the ACCC's recommendations - including the need for a code covering commercial dealings between Google and Facebook and Australian news media businesses.
We asked the ACCC to start work on a voluntary code - but even then, we said that if agreement was not reached, we would look at other options including a mandatory code. By April this year, it became clear that agreement was looking very unlikely. At the same time Australian news media businesses were under even more pressure, as COVID-19 caused advertising revenues to plummet. So we asked the ACCC to step up the pace - and prepare a mandatory code.
Our government has worked through these issues steadily and carefully over several years, giving all affected parties including Google and Facebook ample opportunity to comment.
Even now, what has been issued is only a draft. Google and Facebook - and other affected parties - have had the chance to lodge comments. Some submissions are hundreds of pages long. All will be carefully considered by the ACCC.
Later this year, the ACCC will give the government its final advice - and based upon that we will prepare legislation to go into the Parliament. Again, as this is debated, interested parties will be able to put their views to parliamentarians on all sides. This is how democracy works.
Facebook and Google are innovative platforms that are widely used by consumers. But in any market we need to watch out for powerful players building a dominant position, leading to weaker competition and poorer consumer outcomes.
Just as US competition regulators took on Microsoft 20 years ago because of its dominance, the power of Google and Facebook today raises competition policy questions. And in a democracy, news media businesses have a special and important place - contributing to a diversity of information and opinion. If the growing power of the digital platforms destroys the diversity and sustainability of the Australian media sector, that is bad for our nation and our democracy.
That is why we have asked the ACCC to develop a mandatory code, and we now look forward to receiving their final advice on what that code should contain.
Paul Fletcher is the federal Minister for Communications, Cyber Safety and the Arts.
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