Australia’s stand-off with Big Tech is only the beginning of a wider war

Digital Politics is a column about the global intersection of technology and the world of politics.

In a Big Tech game of chicken, Facebook blinked first. Or maybe it was Australia.

Both sides claimed victory Tuesday after the Australian government made changes to an upcoming law that would force Facebook and Google to pay local publishers when their content appears online. The rules could now be passed as soon as Wednesday.

For Canberra, the tweaks — including provisions allowing the tech giants to pay publishing groups different amounts and to fork out that cash only when content is intentionally uploaded (so not when average users share a news link) — mark the culmination of months of political wrangling. The battle had become emblematic for government efforts worldwide to hobble Big Tech’s influence.

For Facebook, which only last week shut down all news content from appearing in its Australian users’ feeds, the agreement allows that content to return in the coming days. It represents a face-saving move after its decision to remove news from Australian users’ feeds garnered widespread criticism from politicians and (some) users from Europe to the United States. The company said its decision was necessary to avoid paying whenever any publishers’ content bubbled to the surface on its global platform.

Google kept mostly out of the fray. It penned a series of deals with publishers, including a global pact with Rupert Murdoch’s News Corp, that will see the search giant hand over roughly $100 million Australian dollars over the next three years.

But this is not the end of the story. The battle over who should get paid for the reams of content that people are served up each day is only just beginning.

From European Union countries adopting the bloc’s new copyright rules into national law to Canada’s early-stage proposals to follow Australia’s lead in mandating platforms pay for content, the fault lines remain stark and are increasingly embittered. They also are a major lobbying target for both Silicon Valley and countries’ domestic publishing interests that have spent years battling it out for dominance over a quick-changing digital economy that has swelled tech companies’ coffers as newspaper groups struggle to keep afloat financially.

It comes down to a very different view of how the internet should work.

For publishers, many of which have seen much of their revenue slip away (to Big Tech firms) as readers’ habits shift online, they have seen their bargaining power eroded as Google and Facebook now dominate the digital advertising market. In consecutive reports by British and Australian competition watchdogs, these tech giants are said to have almost complete power over how publishers can make money online, skewing the market and potentially harmfully reducing the choice for consumers.

The tech companies deny those claims.

Publishers worldwide eagerly saw provisions in Australia’s so-called News Media Bargaining Code — especially legally-binding negotiations that would force Big Tech to cough up cash for content — and wanted a piece of that action.

Only Monday, European newspaper groups (including Axel Springer, a co-owner of POLITICO’s European edition) joined forces with Microsoft to call for similar negotiating powers under the EU’s new copyright regime. Those laws, which still need to be incorporated into domestic legislation across the 27-country bloc, require the likes of Google and Facebook to negotiate licensing agreements with record companies, publishers and others to publish their content.

While the European law doesn’t include the same binding arbitration clauses as offered in Australia, tech companies, in practice, are finding they have little choice but to negotiate.

After Google initially refused to reach a deal with French publishers to pay for their material, the country’s competition agency intervened, forced Google back to the table and, in January, the search giant (reluctantly) said it would pay France’s newspaper groups a reported $76 million over the next three years.

Similar tussles are now expected all over Europe and beyond.

Facebook has faced the brunt of recent attention after cutting off news content in Australia. But it’s Google that has been the focus of most scrutiny, both from publishers and regulators globally. In part, that’s down to ongoing beef between the search giant and newspaper groups, including — until its deal last week — with Murdoch’s News Corp, over how revenue is divvied up from digital content.

The U.S. tech giants realize it’s not good business to anger publishing groups, many of which have close ties to national governments who have the power to make things very uncomfortable for them. Despite the global pushback against Silicon Valley’s fight with publishers worldwide, the one government that has mostly sided with Google and Facebook is Washington, which, in the waning days of the Trump administration, backed the tech companies in their recent stand-off with Canberra.

It’s no surprise, then, that Google unveiled a $1 billion project at the end of last year to help newspapers worldwide make money online. That comes on top of early investment via its so-called Digital News Initiative — tactics that critics have labelled either as a way for Google to keep publishers from leaving the company’s online sphere or blood money to quell newspapers from rebelling against the search giant. Google says it’s committed to helping publishers adapt to the changing winds of the online economy.

Facebook, too, is already opening its wallet. Even before Australia could officially approve the country’s new content rules, the search giant on Tuesday announced a commercial agreement with Seven West Media, a local publishing group. That follows similar deals with some of the country’s smaller media groups, though not the big hitters like News Corp.

In Europe, Facebook confirmed Monday it had earmarked “tens of millions of pounds” for British publishers over the next three years in a separate media partnership deal. That follows a similar agreement with U.S. media outlets (including with News Corp’s Wall Street Journal), and negotiations between Facebook and publishing groups are now underway in France and Germany.

Expect more of the same in the coming years.

Now that Google and Facebook have opened the door to paying for news, publishers worldwide are likely to want their own slice of that (digital advertising-funded) pie. For those who see Big Tech as a danger to the Fourth Estate and democracy, that’s a much-needed change. For those who see an entrenched industry fighting to stay afloat in a digital world, that bodes bad news for the internet as we know it.

Either way, buckle up. It’s going to be a bumpy ride.

Mark Scott is chief technology correspondent at POLITICO.

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