Google’s deals with news publishers may avoid what it sees as a worst-case scenario

February 17, 2021, 9:29 AM UTC

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Google has inked licensing deals with at least two major Australian media companies to provide content for a Google news platform, ahead of the enactment of a law that would make Google and Facebook pay Australian publishers to display their stories.

Australian digital news outlet Junkee Media entered into a partnership with Google Australia to curate content for Google’s News Showcase product, Junkee said on Wednesday. Google also struck a licensing deal with Australian news outlet Seven West Media on Monday, and the U.S. tech giant is reportedly finalizing a similar deal with Nine Entertainment Co., another major Australian media company, in which Google would pay Nine Entertainment around $23 million per year for five years, according to a Wednesday Sydney Morning Herald article.

Preemptively brokering agreements with news outlets before the law goes into effect could help Google steer clear of an arbitration process that the law would mandate and avoid having to pay for news stories appearing in Google search engine results.

“Google is paying for news now in the hope that the government will not use the news media bargaining code to force them to pay for news appearing through search results,” says James Meese, a senior lecturer at RMIT University in Melbourne who researches media law and policy.

The spate of deals comes as the Australian government’s news media bargaining code, which has gained multiparty support in the country’s Parliament, is expected to pass before the current Parliament session ends on Feb. 25.

The law would give Australian media outlets the power to bargain with Google and Facebook to receive payments from the tech firms for their use of the outlets’ content on their sites. Google is opposed to the code and worries that if it becomes law, it could set a precedent for stricter regulation on the tech giant around the globe, Meese said.

Australia’s antitrust regulator, the Australian Competition and Consumer Commission (ACCC), which drafted the legislation, says the law will address the “fundamental bargaining power imbalance between Australian news media businesses and Google and Facebook.” Supporters of the code in Australia argue that it would aid news outlets struggling to generate digital advertising revenue in a market dominated by the tech behemoths.

Google called the code “unworkable” and in late January threatened to shut down its search engine in Australia if the code becomes law. Facebook said last year it will prevent Australia-based users from sharing news articles on its website if the bill passes.

The deals between Google and the news outlets could stave off what Google may see as the worst-case scenario.

“Google is desperate to not pay for news delivered through their search engine,” Meese says. “It looks like they are paying over and above market value to secure deals that specifically exclude Google Search.”

Meese says the news outlets could benefit from the agreements, with some companies reportedly earning more money from the Google deals than they were expected to receive through the bargaining code process.

“The government does not want Google Search to exit Australia and so both parties may come to a tacit agreement,” Meese says.

A regulatory precedent

Under the new licensing deals, Google will pay news outlets to “create and curate” content for its News Showcase platform, a $1 billion global initiative that went live in Australia this month. The U.S. company has signed News Showcase deals with news outlets in France, the U.K., and other countries since it announced the project in October, two months after the ACCC released the code draft legislation.

“As we saw with the $1 billion [News Showcase initiative], Google likes to support news but likes to do it in its own way, whereas [the proposed government code] is a very regulated negotiation process,” Meese says.

Besides requiring Google and Facebook to pay news outlets, the code would require them to inform outlets 14 days in advance about changes to their algorithms and other practices that might affect referral traffic to news websites, and any big changes to the way the platforms display news.

Google says that requirement will delay updates for users, increase operating costs, and “mandate special treatment to news publishers in a way that would disadvantage everyone else.”

“As we’ve said since the draft was released in July last year, we remain committed to a workable code,” Lucinda Longcroft, Google’s director of government affairs and public policy for Australia and New Zealand, said in a statement.

“We’ve proposed reasonable amendments, including fair arbitration and that the code apply to News Showcase, which is already paying publishers and supporting journalism in Australia, the U.K., and around the world,” Longcroft said.

According to Meese, Google is concerned that the Australian code will set a precedent and potentially lead to stricter regulations on its operations in markets around the world.

A group of EU lawmakers is already working on draft legislation, similar to the ACCC code, that would tighten licensing agreement and information sharing requirements on the tech giants. Lawmakers in Canada are also considering similar legislation.

“They’re really trying to push back against what could become an international standard,” Meese says. “Definitely the [ACCC] is expecting it to be a kind of global standard that could be rolled out, and I suspect that’s why Facebook and Google are so worried.”