Google attacks extreme ways of ACCC news media bargaining code

Search giant unhappy with final offer arbitration process to be used between tech giants and Australian newspapers.

Google has continued its fight against Australia's news media bargaining code, this time attacking the final offer arbitration process, known as baseball arbitration, that will be used.

In such a process, rather than parties agreeing to a deal, an arbitrator is presented with a final offer from each side and must select one of the offers presented. Google is arguing that Australia's old media are asking for sums far in excess of what Google generates from searches related to news, which it says is around AU$10 million in revenue.

"Clearly, both sides have very different ideas of what the prices should be -- and asking the arbitrator to pick a 'final offer' is an extreme way of resolving that," Google ANZ chief Mel Silva said in a blog post.

"The reality is that baseball arbitration often fails and doesn't produce quick outcomes. Independent economists have raised questions about its effectiveness."

Silva also said the arbitrator would not need to consider the approximately AU$200 million the search giant claims news organisation derive in value from Google properties.

"We are happy to negotiate fairly and, if needed, see a standard dispute resolution scheme in place," Silva wrote.

"But given the inherent problems with baseball arbitration, and the unfair rules that underpin it here, the model being proposed isn't workable for Google. It wouldn't be workable for many Australian businesses -- no matter how large or small they are."

In a separate blog post, Silva said the code would set a bad precedent.

"The draft code would also create a mandatory negotiation and arbitration model that only takes into account the costs and value created by one party -- news businesses," she said.

"The code's provisions mean costs are uncapped and unquantifiable, and there is no detail on what formula is used to calculate payment."

Google once again complained that under the code, it will be forced to provide news businesses with advanced warning of changes to its search algorithm, which could punish other local businesses.

"If you ran an independent travel website that provides advice to people on how to plan local holidays, you might lose out to a newspaper travel section because they've had a sneak peek at changes to how Search works," Silva said.

"That's an unfair advantage for news businesses. Businesses of all kinds would face an additional hurdle at a time when it's more important than ever to connect with their customers."

At the start of the month, fellow tech giant in the crosshairs of the code, Facebook, said it would stop allowing news to be shared by Australians on its platforms.

"Assuming this draft code becomes law, we will reluctantly stop allowing publishers and people in Australia from sharing local and international news on Facebook and Instagram," the social media giant said in a blog post.

"This is not our first choice -- it is our last. But it is the only way to protect against an outcome that defies logic and will hurt, not help, the long-term vibrancy of Australia's news and media sector."

Last month, shadow assistant minister Andrew Leigh said the quiet part out loud when he said the changes should happen because Australian newspapers failed to capitalise on the shift to online in decades past.

"I think it's really important to recognise … that news plays such a critical role in our democracy and yet the funding streams that they used to rely on -- the classified ads -- have been separated apart from the newspapers," he said.

"We've seen huge financial pressure being placed on newspapers and their online equivalents at a time in which we really need the scrutiny of those outlets … we need to have this high-quality investigative journalism, and I think what the government's doing here is one way of achieving it. I don't think it's perfect, but I don't support the scare campaigns being run against it."

Google said a couple of weeks later that it was not responsible for the decline of newspaper classifieds.

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