Australia to force Google, Facebook to pay for news content

Facebook and Google could be required to pay news outlets for their content in "world first" legislation set to be introduced to Australia's parliament on Wednesday.

In one of the most aggressive moves to check the power of the US digital giants, Canberra plans to compel the companies to pay media organisations when their platforms host their content or face millions of dollars in fines.

Treasurer Josh Frydenberg said the new rules, first mooted in July, will be introduced to parliament Wednesday and are expected to come into effect next year.

"This is a huge reform. This is a world first. And the world is watching what happens here in Australia," he said.

The new media law will apply to Facebook's "News Feed" and Google searches. 

The firms will be required to compensate Australian media outlets, including public broadcasters ABC and SBS, who were initially excluded from plans.

The government has decided to exempt other popular platforms such as YouTube and Instagram from the rules.

Measures to force transparency around the closely guarded algorithms that tech firms use to rank content were also watered down.

Frydenberg said the tech giants will now be required to notify media companies only when "conscious changes" to algorithms would have a "significant impact" on search rankings, with 14 days' notice rather than the 28 days first suggested.

Australia initially proposed a voluntary code of conduct, but toughened its stance after deciding the "unequal bargaining position" between traditional news media businesses and digital platforms would prevent fair deals being struck.

Frydenberg said the two sides would still be encouraged to reach commercial agreements but if that failed they would be sent to binding arbitration.

The initiative has been closely watched around the globe, as news media worldwide have suffered in an increasingly digital economy where advertising revenue is overwhelmingly captured by big tech firms.

Facebook has warned it could block users and media organisations in Australia from sharing news stories if the law comes into effect.

In a blog post in August, the company's managing director for Australia and New Zealand said the legislation "misunderstands the dynamics of the internet."

Google in turn has warned that "the way Aussies use Google is at risk".

An Australian review that led to the proposed changes found that for every $100 spent on online advertising, Google captures $53 while Facebook takes $28 and the rest is shared out among others.

The crisis has been exacerbated by the economic collapse caused by the coronavirus pandemic, with dozens of Australian newspapers closed and hundreds of journalists sacked in recent months.