The Commonwealth Government is proposing to introduce a controversial new mandatory code that intends to regulate digital platforms and their distribution of news content.

The Government is seeking to address the alleged bargaining power imbalances between Australia news media entities and digital platforms, such as Google and YouTube. However, it has received significant backlash from both Google and Facebook for a start.

Mel Silva, Managing Director of Google Australia, has penned an Open Letter indicating that the code will result in a “dramatically worse” service, and Facebook has threatened to block Australian users from sharing news on its site in response to the proposed code.

The proposed code arose in response to findings from the Digital Platforms Inquiry conducted by the Australian Competition and Consumer Commission, which cited a number of concerns drawing from the alleged inability of Australian news businesses to negotiate more favourable terms with digital platforms such as Google and Facebook.

The draft Mandatory Bargaining Code, released on 31 July 2020, will require Google and Facebook to give news outlets a cut of their digital advertising revenue, essentially paying for news at a price set by news publishers.

Google has also indicated that the Code has the potential for further adverse effects against digital platforms. For Google specifically, these include:

• Implementation of “minimum standards”. This will require the advance notification of algorithm changes and of “non-discrimination requirements”. Preventing the disadvantaging of the news content of Australian news businesses may in fact actually result in giving an unfair advantage to any other business that has a website, by enabling them to “inflate” their priority over non news-media businesses, which is likely to change Google search results.  
• The “bargaining rules” facilitated by the code may result in big media companies receiving “special treatment” and facilitate “enormous and unreasonable demands” that, as a result of payments Google will be required to make to media companies, may then result in the free services that Google provides to its users becoming uneconomical.

We are keen to see if the Government will address these potential adverse effects in addition to the concerns from the big digital players.