Google and Facebook will have to share ad revenue with Australian media soon

The Australian government has called for a change in the way advertising revenue is distributed between media outlets and companies like Facebook and Google, according to a new report. The Treasurer of Australia, Josh Frydenberg, explained that a mandatory code of conduct will be developed by the competition watchdog in Australia to compel platforms like Facebook to pay media companies when their content is used.

This comes as multiple industries around the world struggle to deal with the economic effects of the COVID-19, with media companies feeling the pinch of reduced advertising demand. The Australian Competition and Consumer Commission (ACCC) was already working on something similar previously, with a voluntary code of conduct in the works for a late 2020 implementation.

However, the authorities have now ordered for a mandatory code of conduct instead. This means that there will be penalties and other enforcement mechanisms for content negotiations between digital platforms (like Facebook, Google) and media companies in Australia. Additionally, these rules will also extend to subsidiary platforms such as Instagram and Twitter (owned by Facebook).

The code is an apparent response to a report by the ACCC from 2019 which found that companies like Google and Facebook take home a large percentage of revenue from online advertising, despite the fact that a lot of the content being viewed on these platforms were created by media companies.

According to Frydenberg:

“It’s only fair that those that generate content get paid for it.”

How have Facebook and Google responded?

According to a statement to The Verge, Facebook is “disappointed” by the news, arguing that the company’s commitment to publishers and journalists is clear:

“COVID-19 has impacted every business and industry across the country, including publishers, which is why we announced a new, global investment to support news organizations at a time when advertising revenue is declining. We believe that strong innovation and more transparency around the distribution of news content is critical to building a sustainable news ecosystem.”

As for Google, the response is a little more politically correct:

“We have sought to work constructively with industry, the ACCC and government to develop a Code of Conduct, and we will continue to do so in the revised process set out by the government today.”

We should see a final draft of the code by the end of July, and enforcement/implementation of the rules is expected soon after. The move, according to Australia’s communications minister, is one that will fundamentally alter the way content is handled, with a “strong and sustainable” news ecosystem being the aim.

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The full economic effects of the COVID-19 global pandemic—and resulting lockdown measures in severely impacted countries—will continue to be felt by organisations across multiple industries everywhere. It looks like the Australian authorities’ move is a move to support local news organisations in a time when multiple outlets are reportedly struggling, with certain media companies in the country halting printing.

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