Australia passes landmark law to force Facebook and Google to pay for news content

Facebook says it will invest at least $1 billion in the news industry over the next three years

Australia's parliament on Thursday passed landmark legislation that will make it compulsory for tech giants like Facebook and Google to pay local media companies for their news content.

Final amendments to the so-called News Media Bargaining Code were passed by lawmakers in a vote that has made Australia the first country in the world where a government arbitrator can decide the price that digital giants will need to pay to local publishers in case their private talks fail.

The legislation will ensure that "news media businesses are fairly remunerated for the content they generate, helping to sustain public interest journalism," Treasurer Josh Frydenberg and Communications Minister Paul Fletcher said in a joint statement, according to Reuters.

"The code is a significant microeconomic reform, one that has drawn the eyes of the world on the Australian parliament," the statement added.

The new media code will be reviewed within one year of its coming into effect, to "ensure it is delivering outcomes that are consistent with government's policy intent," the ministers said.

Frydenberg added that the government was pleased to see the progress made by Facebook and Google in reaching deals with local news publishers.

On Wednesday, Facebook said that it plans to invest at least $1 billion in the news industry over the next three years. The company disclosed that it was in active negotiations with news publishers in France and Germany for an agreement to pay for news content. The social media giant claimed that it had already invested around $600 million in the industry since 2018.

Facebook's latest commitment to the news industry follows a similar $1 billion investment by Google last year.

Last week, Facebook sparked global outrage by announcing that it was blocking all news websites (domestic and international) on its platform in Australia, and would also restrict Australian users from sharing any news content from Australian publishers.

While implementing the ban, the company inadvertently blocked information and government pages, including health, emergency and welfare services - a move that drew huge criticism from the news publishers, politicians and human rights advocates around the world.

Australia's Prime Minister Scott Morrison described Facebook's decision as "arrogant", saying he would press ahead with proposed laws to force Facebook to compensate news outlets.

Frydenberg and Facebook, however, indicated on Tuesday that both parties have reached a compromise on key aspects of the law.

"Facebook has refriended Australia, and Australian news will be restored to the Facebook platform," Frydenberg said.

As part of the concessional deal, Australia offered several amendments in its law, including a change to the arbitration mechanism. The amendments will also ensure that Facebook and Google now get a longer period to reach deals with local media firms before the government intervenes.

Campbell Brown, Facebook Vice President of Global News Partnerships, also said that Facebook would retain "the ability to decide if news appears on Facebook" so that the company is not automatically subjected to a forced negotiation".

Rod Sims, the competition regulator who drafted the new media code, said he was satisfied with the amended legislation.

"All signs are good," Sims said.

"The purpose of the code is to address the market power that clearly Google and Facebook have. Google and Facebook need media, but they don't need any particular media company, and that meant media companies couldn't do commercial deals," Sims added.

The move by the Australian government is expected to unleash more regulatory action in other countries where regulators have been considering ways to curb the powers of companies like Google and Facebook.

PM Morrison said last week that he had discussed the new law with the leaders of the UK, Canada, India, and France.

Lawmakers in Canada and the UK have also publicly said that they are considering similar steps to rein in the dominant tech platforms in their countries.

After Facebook blocked news in Australia last week, Canadian Heritage Minister Steven Guilbeault, who is drafting legislation to make digital platforms pay for using media content, said that such moves will not deter Canadian lawmakers from moving ahead.