Facebook, Google told they must pay Australian media for news

Australia’s government has ordered Facebook and Google to share revenue generated from news articles in what it says is a world-first move opening up another front in the regulatory and political pushback against the digital giants.

According to Treasurer Josh Frydenberg in Friday, the two companies will have to negotiate with traditional media on income in good faith.

He also said that If no treaty is reached there will be a crucial arbitration process and penalties for breaching the code will be up to A$10 million ($7 million).

The move is about confirming a “level playing field” for Australian media companies, Frydenberg added. The draft code, which is open to consultation until Aug. 28 before being legislated later this year, will initially only apply to Google and Facebook but could be extended to other digital companies in the future.

Traditional media firms have long complained their content is being exploited by digital platforms without due compensation. As newspapers and broadcasters hemorrhage jobs, their complaints have garnered more political support.

Regulators in other jurisdictions, as well as investors, are staring closely to see how the code works in practice. Should watchdogs in other markets follow Australia, it would chip away at two of the most wildly successful business models of the 21st century, built largely on content free-for-alls.

Rod Sims, the chairman of the Australian Competition and Consumer Commission which drafted the code said, "There is a fundamental bargaining power imbalance between news media businesses and the major digital platforms."

“We wanted a model that would address this bargaining power imbalance and result in fair payment for content, which avoided unproductive and drawn-out negotiations, and wouldn’t reduce the availability of Australian news on Google and Facebook.”