Recent Case Notes & Commentary

AUSTRALIA’S NEW PLAN FOR DIGITAL PLATFORMS TO PAY MEDIA COMPANIES FOR NEWS

The Hon Neil Brown QC

The first step has been taken in Australia to make digital platforms pay for news that originates from traditional media companies.


The Australian government has endorsed a mandatory plan that will lead to media companies paying for the news that the digital platforms - initially Google and Facebook - acquire.


The plan is a world’s first. The issue has been a live one in many countries - should the digital platforms pay for news that originates with the medial companies; how can you work out the amount they will pay and should other standards also be imposed on digital platforms to endure a level playing field in the media. But Australia has now laid down how it will do something about it.


The basis of the plan under a draft code just released is that media companies may start the process off by entering into negotiations with the digital platforms to determine an appropriate payment for the digital platforms to make to the media companies for news content. If that process does not result in agreement on how much to pay, it will be followed by binding arbitration to break the deadlock and fix the amount to be paid.


The mandatory code will also set out minimum standards for “non-remuneration matters”.


There will now be 4 weeks of public consultation on the draft code which has just been released. But the thrust of the new plan is already clear.

OBJECTIVE

The government’s objective has been to promote competition, enhance consumer protection and support a sustainable Australian media landscape in the digital age. It has long been contended ( although, of course, differing views have been expressed) that the traditional media companies have been at risk from digital platforms and that the important democratic access to news and opinion is at risk.

The Australian Competition and Consumer Commission (ACCC), which has drawn up the code, has expressed the problem, as it sees it, in a nutshell; there is, it claims,

“… a fundamental bargaining power imbalance between news media businesses and the major digital platforms, partly because news businesses have no option but to deal with the platforms, and have had little ability to negotiate over payment for their content or other issues.”

The ACCC’s code is designed to end this imbalance.

According to the ACCC, the new code will achieve “fair payment for content, (and avoid) unproductive and drawn-out negotiations, and (will not) reduce the availability of Australian news on Google and Facebook.”

APPLICABILITY

The Code will apply on the one hand to media companies, news gatherers and presenters like newspapers, radio and television on one hand, and on the other hand, digital platforms, “initially” Google and Facebook, although there is provision for others to be included.

Perhaps the strongest clue as to what bodies might ultimate be covered is to be found in this statement by the ACCC:

“The ACCC’s 2019 Digital Platforms Inquiry examined the impact digital search engines, social media platforms and other digital content aggregation platforms have on competition in media and advertising services markets.”

FIRST STEP-NEGOTIATION

The process will start with a media company requesting negotiations with a digital platform. This can be the usual commercial negotiation or via mediation.

The negotiation may be about:

· The remuneration to be paid by the digital platforms to the media companies,

· the minimum conditions set by the code; or

· other matters relating to Australian news content on any service provided on the digital platform.

If the negotiations fail, there will be compulsory arbitration. But there will be a qualification.

ARBITRATION

Compulsory arbitration will only be available for disputes about remuneration.

Arbitration will be triggered if agreement is not reached within three months (including participation in mediation), or if both parties agree to move to arbitration before three months expires.

The parties can agree on the appointment of an arbitrator. If they cannot agree, the Australian Communications and Media Authority (ACMA) will appoint a panel of three arbitrators drawn from a register of ten members with experience in legal, economic or industry matters.

THE ARBITRATION PROCESS

The arbitration process will work by each party making a final offer on the remuneration to be paid and the panel will accept one or the other of those offers.

• In determining which offer to accept, the panel will be required to take account of the direct and indirect benefits of Australian news to digital platforms, the costs incurred by the news companies in producing news, and whether an undue burden would be imposed on the digital platform.

• The panel may reject both parties’ offers but only if each offer raises significant public interest concerns. The panel may then adjust one of the offers. Presumably, it can then fix the result as being the adjusted offer.

Needless to say, there is still a lot that will have to be worked out as to how the amount payable will be calculated and how the rules of the arbitration will be determined, but the objectives of the process are clear.

MINIMUM STANDARDS

Apart from the arbitration on remuneration, there is also to be negotiation and mediation, but not arbitration, on minimum standards to be applied by the digital platforms on matters including:

- the data it collects on users’ interactions with Australian news content;

- recognising original Australian news content;

- algorithm changes, the ranking and display of paywalled news content; changes to internal policies and practices that are likely to affect the display of news content significantly; the type of data it collects on users’ interactions with Australian news content; the display of advertising associated with news content; and others.


One of these matters deserves special mention: to give the media companies the ability to ‘opt out’ of having their news content included on any individual digital platform service. That should lead to some interesting negotiations. And the question immediately arises: how is that right to be enforced?

So, what are the provisions for enforcement of the code as a whole.

ENFORCEMENT

The sting in the tail is that there are fines for non-compliance with the code.


The ACCC may decide to take enforcement action for non-compliance with certain aspects of the draft code, including:

· not bargaining in good faith during negotiations, including refusing to participate in negotiation, mediation or arbitration;

· breaching minimum commitments under the code; and · breaching non-discrimination provisions in the code.

The penalties have the potential to be high, namely:

the greater of either:

· $ 10 000 000 (AUD);

· three times the benefit obtained from the conduct (if calculable); or

· 10 per cent of a digital platform’s annual turnover in Australia in the last 12months.

Further information: nabrownqc@vicbar.com.au