Protection Racket: Digital Media Code a farce as Google and Facebook not “designated”

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digital media bargaining code, Rupert Murdoch, News Corp,
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Google and Facebook are yet to be “designated” under the Digital Media Bargaining Code, leaving the Code a farce rather than the touted “world-first reform”. Pressure on the platforms meant a small transfer of money from them to the old media allies of the Government such as News Corp and Nine but the essential challenge of reforms to the “surveillance capitalism” giants remains unaddressed. Kim Wingerei reports.

In June last year, Nine boss Hugh Marks declared that a deal with Google and Facebook would be worth about $600 million for old media. News Corp Australia’s chairman Michael Miller reckoned it was more like $1 billion.

In its disclosure to the stock exchange, Nine somewhat cryptically indicated that the deals, and “ongoing growth in subscription revenue”, would lead to an improvement in their before tax earnings for FY 2022 of between $30 and $40 million. In other words, it is likely that the combined value of the deals is less than that, and a whole lot less than originally  touted.

Google & Facebook laws just a back rub for News and Nine

Back then, the push for media “reform” was all about “investing in quality journalism”, as Nine, News Corp and others made their submissions to the Australian Competition and Consumer Commission’s (ACCC) Digital Platform Enquiry which presaged the bill that was enacted on March 2 this year.

For the bill’s provisions to come into effect, the ACCC has to declare Google, Facebook, or in theory any social media company, “a platform provider”. The ACCC has yet to do that, meaning the bill itself is merely a threat. It contains no provisions that enforce or affect the quality of journalism. In short, it addresses none of the concerns raised by the original inquiry.

Further, the Code is not even operational, which goes to suspicions in the market that the process has been about extorting some money out of the immensely profitable Google and Facebook into the hands of the government’s media allies, chiefly Rupert Murdoch’s News Corp , Peter Costello’s Nine Entertainment and Kerry Stokes’ Seven network.

As one observer of negotiations puts it: “The law is in place but neither Facebook or Google have been “designated” under the Code therefore the bargaining provisions under the Code have not been enlivened, are not operational. 

“Facebook and Google are currently doing deals under threat of designation. They want to do enough media deals to avoid being designated and to avoid being exposed to negotiation and mediation, or Final Offer Arbitration under the Code.”

This comes down to the decision of the Minister for Communications, Paul Fletcher, who is yet to designate, and there is no timeframe set for designation. It remains a threat, and Fletcher knows Google and Facebook are loath to be dragged into any arbitration process and, if he attempts to designate, they may simply walk away from the agreement and leave the government’s “media reforms” in tatters.

Michael West Media estimates that the combined value of the deals done between Goggle and Facebook and the old media companies (News, Nine and Seven West Media), plus The Guardian, Sky News, ABC, Antony Catalano’s ACM and a handful of others, is worth between $75 and $100 million annually. Small change for Google and Facebook, which will also use it to reduce their paltry amounts of tax paid in Australia.

Facebook: What’s the Scam?

In Google’s case, the payments are related to the publishing of articles in the “Google News Showcase”, not in Goggle’s search results. This is what Google always insisted on for fear it would set a global precedent and forcing them to change their business model. Google got its way, the News Showcase is just that, a side hustle that not many people visit.

According to Similarweb, a global web analytics firm, Google News Australia (of which Showcase is a part) had 565,000 visits in April, a mere 0.5% of Google’s total Australian visits of 107 million in the same month.

Where the monetised news feeds will appear on Facebook is a lot less clear, but it is equally unlikely to make a difference to Facebook users, for better or for worse.

In short, Google and Facebook got exactly what they always wanted – freedom from any meaningful regulation of their activities in Australia. And it’s costing them a pittance. The real issue for media reform, containing the domination of Google and Facebook – and the greater threat of “surveillance capitalism” – remain entirely unaddressed.

The singular achievement of the Code has been to transfer a little bit of money from the platforms to the Government’s media allies (and a little bit for second tier players too, to keep them quiet about the farce), to subsidise and prop up old media companies.

The Government will nevertheless continue to claim it as a win, although the code itself is unlikely ever to be invoked or tested in court, Instead the code will wither away as a useless piece of legislation which failed to achieve its lofty purpose.

The Government will, of course, also claim it as a win for the ABC, the only one of the recipients of the “largesse” to have said that it will use the money to strengthen regional media coverage.

A commendable stance, which has the support of Communications Minister Paul Fletcher. In an act of magnanimity he declared the money was for the ABC to keep “without reduction in their Government funding”.

And pigs will fly.

The Digital Media Bargaining Code was always a furphy primarily designed for the purpose of redirecting money from Google and Facebook to Nine Entertainment and News Corp, as well as Seven West Media. It’s done that, but not much else. Real media reform remains as elusive as ever. And meanwhile Google, as per its recently released financial statements, is back to paying zero income tax in Australia.

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