In a joint announcement by the Australian Competition and Consumer Commission (ACCC) and The Hon Paul Fletcher MP Minister for Communications, Cyber Safety and the Arts, the Government announced that it has directed the ACCC to proceed to develop a mandatory code of conduct to govern commercial arrangements between digital platforms and news media businesses. The code is intended to address bargaining power imbalances created by the global power of tech and social media giants. The elements that the code will cover include the sharing of data, the ranking and display of news content and the monetisation and sharing of revenue generated from news. A draft of the mandatory code will be released for consultation by the ACCC before the end of July, with the code to be finalised soon after.

This announcement is an acceleration of timing and toughening of the Government’s position compared with the “voluntary code” proposed in the Government response to the ACCC’s Digital Platforms Inquiry (DPI) in December last year. The catalyst for the fast-tracked implementation of a code has been the coronavirus pandemic, which has led to a significant reduction in the advertising revenue that news outlets rely on. The Government’s media release also suggested that the shift to a mandatory rather than voluntary code has resulted from the fact that discussions on the “voluntary code” between the ACCC and these platforms had not progressed at a suitable rate, and the likelihood of a voluntary agreement between the parties was doubtful. The Government also emphasised the need for reliable public interest journalism, particularly during this time.

DPI and Government response last year

The ACCC’s Final Report on the DPI cited numerous findings demonstrating that a high number of Australians access news through social media and search engines. While the ACCC recognised the significant benefits that these digital platforms had delivered to Australians, the report stressed the special responsibility that these platforms had to ensure that their operations were transparent, fair and accountable. In particular, the ACCC noted that while digital platforms, such as Google and Facebook, were valuable disseminators of news, these platforms appeared to be more necessary to the news media businesses than any particular media business was to a platform, providing these platforms with substantial bargaining power and allowing them to implement policies and formats that could have an adverse impact on the ability of news media companies to adequately monetise their news content. The ACCC also cautioned that this could disincentivise news content creators, particularly where significant effort was required to create original content. The ACCC concluded that there was a need to develop a harmonised media regulatory framework and recommended that designated digital platforms should “each separately be required” to provide a code of conduct to the Australian Communications and Media Authority (ACMA) to “govern their commercial relationships with news media businesses”. While the ACCC’s final report did recommend that such codes should be created by the platforms themselves on a voluntary basis, it suggested that where digital platform were unable to submit an acceptable code to the ACMA within a set time period, ACMA should create a mandatory standard to apply to the platform.

The Government’s initial response last year was generally in favour of the ACCC’s conclusions, accepting that there was a need for broad reform of media content laws in order to create a level playing field between businesses and directing that the ACCC was to develop and implement voluntary codes of conduct governing relationships between digital platforms and media businesses. If no agreement could be made with the platforms, the Government would look to developing alternative options. The codes were to be finalised by Nov 2020 and reviewed over 2021 and were only to be binding on the parties who elected to sign up to them. However, the Government has now concluded that this original timeframe requires acceleration.

The road ahead

The proposed reforms have been welcomed by Australian news businesses, with News Corp Australia executive chairman Michael Miller stating that the mandatory code was a “vital step” in securing the future of Australian news businesses.

Much of the detail of what the code will contain remains uncertain. For instance, what will constitute “news content” and be regulated by the code has not yet been determined. However, the code is expected to incorporate the recommendations made in the DPI and the Government’s subsequent response including the following:

• provisions requiring search and social media giants to pay for content;
• provisions covering the sharing of data and the privacy implications;
• provisions covering the ranking and display of news content on these platforms; and
• stronger enforcement powers given to the ACCC, including penalties and sanctions, and the ability to impose "binding dispute resolution" on the media industry.

There is concern as to what will constitute an effective payment-framework under the code. For instance, often social media platforms don’t actually host the media content, and instead the content is shared and displayed solely through the platforms’ users. In addition, the ACCC must navigate how the differences in the platforms, for instance differences in audience size, will be addressed. Indeed, the Copyright Agency, while welcoming the code and the remuneration to be paid to copyright owners, also cautioned that the effectiveness of the code would depend on the content of its provisions, essentially whether they would be strong enough to ensure that big tech could not avoid proper payment for the “use of valuable news content”.

Similar reforms overseas have foreshadowed the difficulty of enforcing such a code in practice. Last year, France implemented a European Council Directive requiring the authorisation and compensation of content when published online. However, Google responded by refusing to display French news media where it had to pay for the content. This is currently being investigated by French regulators as a potential abuse of market power. The Australian Government in the DPI recognised these challenges, however has maintained that it is only by remunerating the creators and copyright owners of news content, that Australian journalism can flourish in a digital age.

Authors: Nupur Sachdev and Lesley Sutton