Australian-Rules Regulation

June 8, 2020

How Google and Facebook will at last pay for news content

 

In little Australia (viewed from afar by little Canada), the Competition Commission is bravely bringing to heel the data giants Google and Facebook.

 

Australian news publishers may soon win relief from their one-sided commercial relationships with the digital platforms run by the Silicon Valley monopolists: most notoriously Google’s search engine and Facebook’s news feed, but also a wide array of their supporting platforms like You Tube, Instagram and Google News.

 

For the most part, Google and Facebook just rip off news publishers for their content, either through news content links in Google search engine results or user-uploaded news articles on Facebook.

 

The billion-dollar data giants monetize all this stolen news content: directly through advertising against the very content they are taking, indirectly by drawing more consumers to their digital platforms, and very directly by harvesting precious personal data on news consumers visiting their platforms.

 

When businesses like Google and Facebook become monopolists, government watchdogs like the Competition Commission struggle to find the best response.

 

Since only the US government can break up this Californian monopoly, there remain two options for other countries.

 

Do we regulate big data like public utilities, telling them what they must do in the public interest? Or instead do we try to level the playing field between big data and the news publishers, not unlike how Canada regulates transactions between cable companies and broadcasters?

 

Despite the fact that the Commission shares the consensus view that journalism is a public good, which might suggest the regulated utility approach, it is pushing a mandatory “bargaining code” to redress the imbalance of bargaining power between big data and the news publishers.

 

Although the Commission’s latest document is formally a request for submissions on a long list of pregnant questions, it’s possible to guess what the Commission might fashion in a mandatory bargaining code.

 

Will the code focus on hard news or cast a wider net to capture sports, listings, and entertainment?  What is a legitimate news organization? What degree of professional accreditation will be required of its journalists?

 

Once those parameters are set, next up is how to enshrine bargaining rules. The Commission considers whether a collective bargaining model would work: news publishers banding together to take on big data.

 

But what if the collective solidarity of the publishers falters? This in fact seems likely. The similarities to conventional labour negotiations between unions and employers suggest that Facebook will divide and conquer the various news organizations unless regulatory oversight is very tight.

 

The Commission sees bilateral negotiations between individual news organizations and big data as a possible model. To level the playing field, a bargaining code not unlike a Labour Code might be offered. That would mean policing Google and Facebook’s good faith at the bargaining table, requiring them to share commercial data with publishers, and imposing an end-game solution of independent binding arbitration.

 

Once the regulation model is resolved, next comes the rolling up of sleeves and the nose-biting negotiations. At the bargaining table, it might be straightforward to identify the “direct value” of Facebook’s and Google’s advertising revenue tied directly to the use of publishers’ news content. Finding a fair price might not be too hard.

 

But big data’s big money is also found in the “indirect value” it gets from news content that invites news consumers to their platforms for all sorts of digital visits unrelated to news. That draw generates more traffic, more advertising, and….crucially….more user data. Putting a price on all of that is going to be hard, the Commission reckons.

 

And make no mistake: it’s mostly about data. Given that Google and Facebook constantly accrue data from the publishers’ news consumers, the publishers have a very legitimate interest in negotiating access to Google’s and Facebook’s even richer data on news consumers.

 

Another bargaining item will be the impact of Facebook’s and Google’s frequently tweaked algorithms on news publishers. In the past both companies infamously blind-sided news publishers by changing algorithms without notice, completely reshuffling the kind of news content that platform visitors see. The Commission’s new code might require big data to provide advance notice of some changes in algorithmic curation of news so publishers can adapt.

 

The Australians are moving fast and aim to have a draft code out in July. Compared to the dilatory pace of the Canadian public policy, this is moving at Warp 10. Here in little Canada where the Liberal government twiddles its thumbs, we will be watching with rapt attention.

 

 

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