Trade Concerns Down Under: Australia’s Proposed News Media Bargaining Code and U.S. Reactions

February 20, 2021

On December 9, 2020, the Treasury Laws Amendment (News Media and Digital Platforms Mandatory Bargaining Code) Bill 2020 was introduced to the Australian Parliament. The bill seeks to compensate Australian media companies for the use of their news content on major digital platforms, like Google and Facebook. Additionally, it intends to redress alleged bargaining power imbalances between major digital platforms and media businesses. This legislation has long been a work in progress for the Australian Competition and Consumer Commission (ACCC). In 2017, the ACCC recommended that the major digital platforms and media businesses engage in a voluntary code to remedy some of the imbalances. In April 2020, the ACCC determined that it was unlikely that the companies would reach a satisfactory agreement pertaining to a voluntary code, so the Australian Government advised the ACCC to draft a mandatory code resulting in the introduction of the News Media and Digital Platforms Mandatory Bargaining Code bill.

Although Australian domestic policy may seem to affect American interests, the bill’s introduction has garnered the United States Government’s attention because some believe it may violate the Australia-US Free Trade Agreement and the World Trade Organization’s General Agreement on Trade in Services.

The bill consists of six main components. (1) First, the bill requires that if a digital platform and media business have agreed to bargain, they must do so in good faith. (2) Next, if parties cannot come to an agreement about compensation relating to journalism provided by media companies, then “an arbitral panel will select between two final offers made by the bargaining parties.” (3) The bill also requires that digital platforms provide media businesses “with advance notification of planned changes to an algorithm or internal practice that will have a significant effect on covered news content.” (4) Next, the bill requires that digital platforms “not differentiate between the news businesses participating in the Code, or between participants and non-participants, because of matters that arise in relation to their participation or non-participation in the Code.” (5) The bill also provides a mechanism that would allow digital platforms and media companies to opt-out of compliance with certain provisions of the bill if they reach a bargain outside of the Code concerning compensation. (6) Finally, digital platforms may opt-out of compliance with bargaining and compulsory arbitration requirements if they “make standard offers to news businesses, which are intended to reduce the time and cost associated with negotiations, particularly for smaller news businesses.”

Major digital platforms were quick to respond. The Managing Director of Google Australia, Mel Silva, penned an open letter claiming that passage of the bill would “break the way Google works.” Silva further asserted that the proposed law would create “an unreasonable and unmanageable financial and operational risk” to Google, forcing the company to discontinue the Google Search platform’s availability in Australia. Before the formal introduction of the bill, FaceBook released a response outlining why they do not support the legislation and asserting that if the bill became law, then FaceBook would “stop allowing publishers and people in Australia from sharing local and international news on Facebook and Instagram.” Both Google and FaceBook emphasized that the legislation does not account for the value publishers receive from the free traffic provided by appearing in search results, the platforms already invest in the news media and that a mandatory bargaining code would be too much intervention into the commercial market. Google and FaceBook’s threats to cease offering their news sharing services if the legislation is passed is concerning to many Australians who rely on these services daily.

Although Australian domestic policy may seem to affect American interests, the bill’s introduction has garnered the United States Government’s attention because some believe it may violate the Australia-US Free Trade Agreement and the World Trade Organization’s General Agreement on Trade in Services. The Chamber of Commerce of the United States voiced concerns that, by singling out two American firms, the proposed legislation is discriminatory and is a violation of Australia’s national treatment obligations. The Office of the U.S. Trade Representative also expressed concerns of “harmful outcomes” and that “[t]here may also be long-lasting negative consequences for U.S. and Australian firms, as well as Australian consumers.” The Trade Representative’s concerns center on the targeting of two American companies, an imbalance in factors for arbiter consideration, and the enforcement of a broad non-discrimination rule within the legislation that would not allow digital platforms to provide international news if they choose to no longer provide Australian news. The United States hopes that Australia will delay hasty passage of the legislation and further research what other solutions are available.

The News Media and Digital Platforms Mandatory Bargaining Code is the first legislation of its kind throughout the world. No other country has tried to mandate payment for news and journalism by major digital platforms. This is also one of the earliest trade issues that the Biden administration has faced. This development will continue to inform the debate regarding reigning in big tech and may illuminate what trade policies the Biden Administration plans to pursue.

Gabby Supak