Wed Oct 23

Should a big tech tax fund news? A new report reopens debate on platforms and media

Written by: Rod Sims, Professor in the practice of public policy and antitrust, Crawford School of Public Policy, Australian National University

Meta’s announcement nearly eight months ago that it would no longer do commercial deals ^[1] under the News Media Bargaining Code has led to much speculation as to how the government would respond.

The code became law in 2021. Facing the threat of designation under it – which would involve further legal obligations platforms may wish to avoid – both Google and Facebook (now Meta) did deals with news media businesses worth up to A$250 million per year ^[2].

Google did deals with essentially all qualifying news media business, large and small – the criteria largely being that their journalists provide news. Facebook did deals with news businesses likely employing up to 85% of Australian journalists

With little response from the government so far, a new report ^[3] from a federal parliamentary committee investigating the impact of social media on Australian society provides welcome focus on this issue.

Key recommendations

The committee makes 11 recommendations, three of which in particular are worth focusing on.

Recommendation two says the Australian government should explore alternative revenue mechanisms to supplement the code, such as a digital platform levy. But it also says “exploration should include consideration for preserving current and future commercial deals”, presumably under the code.

Recommendation three says the Australian government should develop an appropriate mechanism to guide the fair and transparent distribution of revenue arising from any new revenue mechanisms. In particular, this would support the:

sustainability of small, independent and digital only publishers, as well as those operating in underserved communities and rural, regional and remote areas.

Recommendation six says the Australian government “should investigate the viability and effectiveness of ‘must carry’ requirements for digital platforms in relation to Australian news content”.

Coalition members provided a different perspective on some of the committee’s recommendations. They expressed concern about the lack of action from the government in response to Meta’s decision to not do more deals under the code. Further, they read the report as saying that the code is “no longer fit for purpose” – a view they strongly disagree with.

Meta has also heavily criticised ^[4] the committee, saying it has ignored:

the realities of how our platforms work, the preferences of the people who use them, and the value we provide news publishers who choose to post their content on our platforms.

Meta, parent company of Instagram and Facebook, is strongly opposed to paying a levy to fund news media. QubixStudio/Shutterstock ^[5]

Not so simple

The committee’s recommendations raise many questions.

First, how would the levy sit with wanting to maintain existing and future deals under the code? In any solution to dealing with Meta it would seem silly to damage the current arrangements with Google, which has committed to continue supporting ^[6] news organisations under the code, and who are paying the majority of the up to $250 million per year?

Second, biasing any revenue to smaller and/or rural and regional publishers may mean that, despite most news stories coming from the larger media companies, they would not benefit in accordance with their content being used. The code did see benefit to large, medium and small media businesses. But, of course, the larger companies gained most money as they provided most content.

Some smaller media businesses did miss out on funding. But it was often judged that they do not provide news journalism, which was what the code is seeking to promote.

In 2018, the Australian Competition and Consumer Commission (of which I was then chair) made a number of recommendations to the government ^[7]. These included the code. They also included government funding for journalism in underserved areas and support for other objectives, such as boosting smaller news media companies. A different objective requiring a different policy instrument.

Third, the problem that arose with Meta’s decision to not do further deals under the code saw many calls for Meta to be designated ^[8] under the code. This would have meant they would be forced to do deals and potentially face arbitration if the news media businesses were not happy with the outcome.

As the parliamentary committee would be aware, when Canada largely copied ^[9] the code, it automatically designated Meta. In response, Meta took all news and links to news off its platform. This allows Meta to escape the Canadian version of the code as it only applies to platforms that carry news.

One solution to this is to insist the tech platforms “must carry” news, as suggested in recommendation six. Then they would be back under the code and could be successfully designated and forced to negotiate. It is unclear in the report whether the “must carry” idea, which would make the code relevant to all platforms, is an alternative to the levy.

Google has committed to continue supporting news organisations under the Code. Framalicious/Shutterstock ^[10]

A way through

Overall, the report provides welcome renewed focus on this topic. By recommending the government “explore” a levy or “investigate” must carry obligations, the committee appears to recognise the potential difficulties with these options.

Would there be international trade implications from a levy? How would money from a levy be distributed? It is one thing to have a fund to help small players in underserved markets; quite another for the government to be distributing money to large media players.

And how would the “must carry” provision be enforced given that carrying content may not be the same as users discovering it?

But there may be a way through these problems. Allow Google to continue as they are under the code, look at what other platforms need to be covered by the code, and threaten that if Meta or another platform were to take news off their site, then a levy or a must carry provision would be introduced. In the case of Meta, such threats, which must be real, could see them revert to doing deals under the code.

To help new and emerging news journalism, particularly in underserved areas, this would seem to require government funding, as the Australian Competition and Consumer Commission recommended ^[11] all the way back in 2018.