Labor logic: Newspapers screwed up online classifieds so tech giants should pay up

With Australian newspapers losing their traditional revenue model due to a drop in classified advertisements, which has resulted in job losses across the industry, Shadow Assistant Minister for both treasury and charities, Andrew Leigh, believes it makes sense for digital platforms to pick up the slack.

"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."

The "scare campaigns" Leigh was referring to are the notices Google has placed on its services, such as YouTube in Australia, that inform users of the issues it takes with the country's new media bargaining laws.

The News Media Bargaining Code adopts a model based on negotiation, mediation, and arbitration to "best facilitate genuine commercial bargaining between parties, allowing commercially negotiated outcomes suited to different business models used by Australian news media businesses".

The Australian Competition and Consumer Commission (ACCC) believes the code is necessary to address the fundamental bargaining power imbalances between Australian news media businesses and major digital platforms, such as Facebook and Google.

But 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".

One of the search giant's many concerns is that the laws are unfair and that they may put the "way Aussies' search at risk". Google said the laws would force it to provide users with a "dramatically worse Google Search and YouTube", which could lead to data being handed over to "big news businesses, and would put the free services you use at risk in Australia".

"I think it'd be better if Google was working constructively with the regulator, rather than running these sorts of scare campaigns which are in some respects misleading," Leigh said in response. 

"It's important that anyone making claims in the public debate is doing so truthfully."

Leigh said the laws are "simply an ask for a trillion-dollar company to make a small contribution to keeping the news media going". He believes what the ACCC has asked of Google does not seem unreasonable.

See also: Labor floats jail time as penalty for social media giants that breach Aussie law

Asked if the Media Bargaining Code is another way for ensuring the big end of tech town pays its tax contribution in Australia, Leigh said it is important that those companies pay their fair share of tax.

"They've also realised that minimising your tax using all sorts of double-Dutch sandwiches and the like just wasn't a good public relations move -- that got users annoyed as they shifted to tax havens, rubbing shoulders with the drug runners and extortionists that occupy tax havens," Leigh said.

"So the tech giants have been brought to the table on multinational tax avoidance. They could do better, but they're doing better than they were in the past. I hope that on this issue of making some contribution towards the news media, that the tech giants are able to step up."

He also pointed to the previous battles between the likes of eBay and Amazon and the Australian government in making them pay tax on purchases made through their respective platforms.

"Eventually they accepted, once they'd been given enough time for their IT systems to adapt, that they did need to play ball on that. Now GST is paid on small value items which are shipped into the country by Amazon and eBay," he said. "But it was interesting on that one, to see the tech giants fight it tooth and nail at the outset and then ultimately say 'yeah, okay, fair enough -- we can cop this'."

HERE'S MORE

• Google and Facebook to bargain with Aussie news outlets for 'fair' payment terms
• Google says Australian media bargaining laws open up opportunities to 'game' the system
• ACCC and Google come to blows over new media bargaining laws
• Google labels Australia's news media bargaining code as 'unfair'
• ACCC seeks advice on addressing Facebook and Google 'bargaining power imbalances'