Facebook and Google have been engaged in a stoush with the Australian Competition and Consumer Commission (ACCC) since August over the News Media Bargaining Code that entered the House of Representatives in late December.
The bargaining code, according to the government, is necessary to address the fundamental bargaining power imbalances between Australian news media businesses and major digital platforms.
But according to Google, the code is "unfair", saying also it puts the "way Aussies' search at risk". Google believes it contains an unfair arbitration process that "ignores the real-world value Google provides to news publishers and opens up to enormous and unreasonable demands" and similarly Facebook takes issue with the code, having threatened to pull news completely from its Australian platform.
Both tech giants have responded to the code in a more official capacity than just a blog, with Google telling [PDF] the Senate Economics Committee that the code, even after amendments, remains unworkable "because it includes a skewed arbitration process which forces Google to pay for links and snippets in Search".
"The designation of Search creates an unprecedented and distortionary outcome in which Google would have to pay for links to news websites in Search results. An obligation to pay for links would break the way search engines and the internet work for everyone," it wrote.
A workable code, Google said, would instead guarantee remuneration of news media businesses by designating News Showcase -- which it has paused from launching in Australia -- and similar offerings featuring licensed news content.
"Payment for deals in News Showcase would operate to ensure payment for commercial value," Google said. "Binding arbitration and the application of minimum obligations to News Showcase agreements under the Code would ensure a framework for good faith negotiations.
It also said the arbitration provisions are untested, one-sided, and at odds with fair commercial agreements and "present unmanageable legal and commercial risk to Google".
"Google has already seen a number of news businesses dramatically increase their demands (in one case threefold) in commercial negotiations since the bill was tabled," it added.
Lastly, Google said the provisions on notice of algorithm changes misconceive how its systems operate, while calling them unworkably broad, and said that it could not operationalise them as written.
"This provision should be amended to require only reasonable notice about significant actionable changes to Google's algorithm," it said.
The search giant also pointed to a report it commissioned, which focused on the idea that the annual economic value it brings down under is AU$53 billion. In doing so, it took the opportunity to again highlight that in 2019, Google Search sent more than 3 billion visits to Australian news businesses' websites, representing an estimated value of more than AU$200 million.
Facebook, meanwhile, in its submission [PDF], said the Bill is not, as its name suggests, a bargaining code.
"It removes the potential for genuine bargaining by forcing Facebook to make payments that are detached from true calculations of commercial value and by incentivising news publishers to make unreasonable ambit claims and bargain in non-commercial ways. It removes any meaningful influence over our own commercial dealings with publishers," it wrote.
Facebook also reminded the committee of its claim that the commercial value derived from news content in Australia is virtually zero.
"Facebook is very willing to pay Australian news publishers for news content made available on Facebook, as long as it is subject to genuine commercial considerations," it said. "The very nature of this extraordinary law means that, as long as this law is on the table, the nature of negotiations between digital platforms and news publishers will not be genuinely commercial."
Similar to Google, Facebook paused the rollout of its news play in Australia, Facebook News, which is a platform exclusively for news, where the company pays publishers for content.
"Australia would have been the first jurisdiction outside the US to receive this product and its launch here would have brought millions of dollars of investment in the Australian news industry," the social media giant said.
"However, the uncertainty and unworkability of the proposed legislation has meant that Facebook News has been reprioritised for other countries, beginning with the United Kingdom in January 2021 and with other countries to be announced imminently."
While Twitter is not yet considered under the code, the blue bird site told the committee [PDF] the current draft code would potentially incentivise the curation of exclusive news content on the designated digital platforms, creating unfair competition and harming smaller platforms through reduced traffic and the loss of potential exclusive or breaking news content.
"We would urge the government to consider the long-term ramifications of codifying the creation of arbitrated content agreements between dominant digital platforms and established news media businesses," it added.
"We would also ask the government to reconsider if this process achieves the stated legislative objective to address bargaining power imbalances or if it serves to further reinforce the position of dominant players on both sides of the bargaining table."
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