In a move widely expected to set a global precedent, the Australian government is continuing to push ahead with their upcoming tech legislation which will effectively require digital media giants to pay a tax on any publication of news within the country.
It has been a controversial period since the Australian Competition and Consumer Commission (ACCC) first called out the market dominance of these tech companies, particularly Google and Facebook, in December 2018. Since then, the war of words has escalated, with both Google and Facebook coming out strongly against the regulation, which is designed, in the Australian government’s eyes, to produce a fair and balanced media landscape.
The Digital Fuel Marketing Sydney office take a look into the upcoming Australian Government Tech Legislation, and what it could mean for advertisers.
What is the News Media Bargaining Code and What Does it Say?
The draft News Media Bargaining Code which was released on 31st July 2020 is essentially the first step when it comes to taking legislation changes to parliament before being passed into Australian law. The code outlines a method of arbitration and mediation between all of the relevant parties in order to strike a deal when it comes to payment. It’s anticipated that the ACCC would like to get this legislation passed before the end of the year.
The more controversial side of the draft code – something that has got the tech world talking – is that the digital platforms will have to give news businesses 28 days notice of algorithm changes, and any significant changes to the display of news. Additionally, the draft code is suggesting these same digital platforms are to provide clear information about the data they collect on users, something that Google has strongly voiced concerns over in an open letter to Australian users of their platform. This unprecedented move saw the ACCC retaliate against refuting the idea that the draft code meant forcing Google to provide this type of information.
Why has the News Media Bargaining Code Tech Regulation Been Introduced by the Australian Government?
Effectively, the ACCC and the government are saying that in order to offset the losses that local publications (print, digital, or both) have suffered over the years since the tech giants have been in play in the country (circa 2004), they will need to begin paying those organisations when the content is published. Simply put, the ACCC suggests that because more and more people get their news from Google or Facebook, fewer people are inclined to pick up a newspaper or visit a more local online publication’s site. If you can get all your news from a single aggregator platform, what incentive is there to seek out the original source(s)? The Australian government says it wants to maintain a more sustainable media ecosystem and democracy.
How Much Will Tech Companies Have to Pay if the News Media Bargaining Code is Passed?
The actual system of payment is not clear at this stage. Whether it will be a flat fee, a percentage of revenue or potentially a cost-per-piece setup is yet to be decided. This is all part of the ‘arbitration process’ that the ACCC has outlined in the first draft of the code, which is now inviting negotiations between news businesses and digital platforms. However, the ACCC has said that in order to avoid anyone dragging their feet through the process, there will be potential fines for those not complying with the process.
Which Tech Companies Will be Affected by the News Media Bargaining Code?
At this stage, the ACCC has only targeted Google (including YouTube) and Facebook (which includes Instagram and WhatsApp Messenger). Other large tech companies may also be liable under the proposed legislation moving forward, if the Australian Treasurer deems these platforms to have a significant influence in the future.
What are Google and Facebook Saying About the News Media Bargaining Code?
Along with the open letter from Google Australia’s Managing Director Mel Silva, Google has also released a blog post outlining 13 things that the Australian public should know about the proposed legislation. It is clear that Google is vehemently against this tech legislation and their response shows that they believe the arbitration process is ‘extremely one-sided and unfair’, meaning the way that Australian’s use their services in the future could be at risk. This could mean Google may potentially scale back certain elements of their services down-under, taking away the Google News experience and related services.
On 1st September 2020, Facebook threatened to take news services away from their platform in Australia if the News Media Bargaining Code legislation comes into effect. Facebook believes that news publications would suffer immensely from these proposed changes, however the ACCC hit back at this threat, suggesting it was “ill-timed and misconceived”.
Will the News Media Bargaining Code Impact How Businesses Advertise on Digital Platforms in Australia?
At this point, it is hard to say how this tech legislation may affect individual businesses advertising on Google and Facebook in Australia. If you’re an Australian digital marketing agency with clients advertising their news content, or part of an in-house marketing team within an advertising publication, you may have mixed feelings on the potential effects of the legislation. The prospective payments from Google, Facebook et al may fund much-needed growth in the news media industry and actually lead to an increase in digital spend, or the tech giants may follow through on their threats and take drastic measures. After all, Google has form for this, taking away Google news in Spain following government legislation they didn’t agree with.
Additionally, if you’re a business outside of news, it could be demoralising knowing that certain organisations could receive algorithm changes 28 days in advance of the change as part of this legislation. Getting a head start to algorithm changes will enable engineers or developers to make changes to sites or pages to gain an advantage when it comes to organic rankings.
For paid advertising services, it is unlikely that significant changes will take place regarding average CPC’s. As for the most part, CPC’s are down to an auction-style bidding process, with prices fluctuating according to demand. However, it is possible that these digital platforms could introduce other costs or fees to offset the loss created by the legislation, much like the digital service tax introduced to selected countries in the EU recently.
Expert Advice from Digital Fuel Marketing
The Digital Fuel Marketing Sydney office offers marketing consultancy services alongside management of your digital advertising spend in Australia, supported by a worldwide team with offices also in the UK and a presence in the US. If you’re looking for support with your digital marketing from an expert agency, get in touch with us today.