The War Between Google and the ACCC: What Does it Mean for Users?

A high profile online campaign has drawn the battle lines between Google and the Australian consumer watchdog (the ACCC), over proposed new laws which would require Google to share its advertising revenue with news outlets.

Earlier this week Google began targeting users with an online campaign in the form of an open letter from its Australian Managing Director, Mel Silva, which told Australians that the way they use the search engine everyday was at risk from new regulation begging proposed by the ACCC. 

Google makes bold claims

“We need to let you know about new government regulation that will hurt how Australians use Google Search and YouTube,” the letter states. “A proposed law, the News Media Bargaining Code, would force us to provide you with a dramatically worse Google Search and YouTube, could lead to your data being handed over to big news businesses, and would put the free services you use at risk in Australia.”

Certainly, users pricked up their ears – this is a service that we’ve come to rely on and use with increasing frequency, every day. We love its simplicity and reliability, so to suggest that it might ‘get worse’ made a lot of people concerned.

But the dramatic and emotive wording in the letter does make several bold claims, some of which misconstrue the facts behind the new proposed laws, which have been in draft for months, and were released at the end of July for consultation with industry players.

Should Google pay for content?

The new laws – as their name suggests – are a bargaining code. They were proposed as a result of the landmark digital platforms inquiry in December 2019, and are aimed at addressing a number of issues that arose from the inquiry, including user privacy and greater transparency around how information collected is used.

A key concern of the inquiry was the finding that in Australia, Google and Facebook are profiting from content generated by Australian media organizations. In April this year, Treasurer Josh Frydenberg went into bat for media companies which had been unsuccessful in their own negotiations with these tech giants by fast-tracking the new code, and despite originally intending for it to have ‘voluntary’ buy-in from industry participants, made it clear the code will now be mandatory.

In the past several years as digital platforms have disrupted traditional newspaper and magazine news services changing the way we all receive our news and entertainment. As a result,  media outlets have been suffering a decline in revenue, although the media sector has remained relatively healthy.

However, since the Covid-19 pandemic, financial woes have been compounded, particularly for smaller media outlets, and since March more than a hundred regional and rural newspapers across the nation have either shut down or stopped printing, and hundreds of journalists have been made redundant as advertising revenue plummets.

The proposed new Code of Conduct

Under the proposed new code, news companies are able to more effectively address what they say is a ‘power imbalance’ giving them the opportunity to negotiate as a collective for content which appears in their news feeds and search results.

The draft code will outline requirements for these big companies to negotiate in good faith how to pay news media for use of their content, advise news media in advance of algorithm changes that would affect content rankings, as well as prioritise original source news content in search page results, and share data with media companies.

The code will also include penalties and binding dispute resolution mechanisms for negotiations between the digital platforms and news businesses. It will also define news content that would be covered by the code, and will encompass services beyond Google search and Facebook’s main platform, such as Instagram and Twitter.

It does not require Google to charge users for search and YouTube streaming, unless it makes its own decision to do so, and it does not require Google to share any additional user data with Australian news businesses unless it chooses to do so.

Hitting back at the open letter from Google, Communications Minister Paul Fletcher outlined the reality of the revenue numbers. Google has a market capitalisation of $US 1,200 billion while the market capitalisation of News Corp – the biggest of the Australian news businesses – is $US9 billion. Nine Entertainment Ltd is $US2 billion.

According to the ACCC, tech giants such as Google and Facebook made roughly $6bn from the online advertising market in Australia in 2018.

What happens next?

Both Google and Facebook greeted the original news of the code with disdain, and both vowed to fight the proposed regulations. But neither in the past, been known to be overly co-operative with the Australian government. Both have fought hard against the Australian Tax Office over tax obligations, having only just settled disputes that are years old, in the past several months.

Facebook also came under fire from the Australian Electoral Commission in 2019 and was forced to remove some ‘fake news’ content relating to the election.

What happens next remains unclear, but Google has also withdrawn services entirely in certain countries due to new regulations. Back in 2014, it shut down its Google News service in Spain after it was asked to pay for the news snippets it displayed.