Go Inside News

Aussie news code gains global attention for all the wrong reasons

Big international names in technology have condemned Australia’s unorthodox foray into digital platform regulation on the eve of a Senate…

Vince Cerf, co-creator of the internet (image Joi Ito, Flikr, Creative Commons)

Big international names in technology have condemned Australia’s unorthodox foray into digital platform regulation on the eve of a Senate review of laws that mandate payments from Facebook and Google to news companies.

Tim Berners-Lee and Vint Cerf, both key figures in the development of the internet, have made submissions to the Senate Committee that tomorrow begins its review of the News Media and Digital Platforms Bargaining Code.

While the intervention of these big guns is telling, a less high-profile submission is perhaps deadlier in its criticism of the new laws: David Brennan, a visiting fellow at UTS Law, spells out exactly what is wrong with the code from a legal point of view. Judging from Dr Brennan’s analysis and previous investigations by Go Inside News, the legal status of the code is both unprecedented and highly precarious.

Net pioneers don’t like it

As the inventor of the World Wide Web, Tim Berners-Lee has an interest in keeping it viable. His submission asserts that Facebook and Google having to pay to link to news is a violation of a basic Web principle.

“To my knowledge, there is no current example of legally requiring payments for links to other content,” he writes. If the requirement to pay for linking were to spread, the entire web would be “unworkable”.

Vint Cerf, who co-designed the TCP/IP protocol that forms the basis of data transmission on the internet, makes a similar point in his submission, describing free links as “fundamental” to the internet. He is more pointed in his criticism than Sir Tim, perhaps because he is employed by Google:

“Internet companies do not owe news publishers compensation for the emergence of an internet-based economy,” he writes.

He also makes reference to one of Google’s favourite criticisms of the code, the fact that big news business have substantial holdings in digital listings sites directly responsible for loss of news classifieds revenue. Google’s point here is to highlight hypocrisy and ask what businesses such as (majority owned by News Corp) are contributing in terms of news.

A legal morass

There hasn’t been a lot of media attention to the legal foundation of the code, but in this area it’s harder for the government to dismiss criticisms as mere opinion or self-interested idealism.

Dr Brennan’s submission seems impartial, and it appears he has no desire to destroy the legislation but is rather seeking clarity on what could be crucial issues. The legal questions go to the heart of the matter: what exactly is being paid for when platforms give money to news businesses under the code, and what is the legal basis of the payment?

Dr Brennan runs through the possibilities for the latter:

    • Copyright payment (no, the ACCC has said it’s not)
    • Tax (definitely not being treated as a tax by the code)
    • Compulsory acquisition (the government can do this according to the Australian Constitution, but only if it’s on ‘just terms’, and Dr Brennan doesn’t think it is)
    • Fee for service (Dr Brenan says this could conceivably work in terms of righting a competitively unfair situation, but that there is no legal precedent in Australia)
    • Police power (a punitive payment designed to mitigate an unfair competitive situation)

The ACCC and Treasury have cleverly crafted this “bargaining code” to output what looks like a commercial deal between parties. What Dr Brennan is implying is that this won’t stand up to legal scrutiny. In reality, these mandated and constrained contracts drawn up between news organisations and digital platforms are not commercial agreements. So what kind of legal creature are they? The law may not give two hoots about the ideals of Tim Berners-Lee and Vince Cerf but it does demand a rational and precedented explanation for a situation which sees the forced transfer of wealth from one party to another.

Dr Brennan says the challenge will come either through constitutional law or international law. Internationally the code may contravene the Australia-US Free Trade Agreement because in practice it targets two US companies. There may also be a fairly tricky problem with international news companies publishing news to Australians, because according to WTO rules any protections from unfair competition should also be extended to them.

Dr Brennan’s conclusion is that the code needs to be completely reworked using copyright as its basis. He also notes in an understated but devastating final point that the code as it stands creates a “patronage relationship” between the federal government and registered news businesses.

The platform positions

The Senate submissions of Facebook and Google underline differences in approach to a law both despise. While the Nine and News Corp have seen fit to mostly recycle past submissions and arguments in favour of the code, the platforms have changed and refined their arguments iteratively. Neither are using legal reasoning, no doubt saving up for their day in court.

I will summarise their arguments shortly, but first it’s important to point out that both companies are still adamantly opposed. If anything, their opposition has hardened despite some concessions appearing in the final version of the code. If the code goes ahead in its current form there is every indication Facebook will ban news links, and Google will significantly degrade or pull out of search in the Australian market. That is the big-picture message of both submissions.

Google’s objections focus on three points:

    • Search links should not be subject to payment (it proposes News Showcase links instead)
    • Final-offer arbitration should not be used (standard arbitration proposed instead)
    • Notice of algorithm changes should be required for a smaller subset of changes

Facebook begins its submission with a broader look at the current code before naming areas it really doesn’t like:

    • The necessity to strike deals with every qualifying news organisation and potentially every news masthead
    • The “overly broad” definition of who is a news publisher
    • Unfair constraints on factors that arbitrators can consider when settling disputes (for example, they cannot consider the costs of maintaining search and social networks)
    • Final offer arbitration (“highly unusual”, “uncapped, unknown and unknowable” costs for platforms).
    • The “non-differentiation” clause in the code which means platforms are unable to treat any news organisation differently. (“If one publisher is out, all Australian publishers need to be out.”)

If there is one line in the Facebook submission that underscores the seriousness of its intent in regards to the code, it is this:

“It is clearly commercially unacceptable for a business to operate in an environment where costs are unknowable and uncontrollable.”

Other voices

The Senate submissions contain some other remarkable entrants to the fray, for example, the Bundaberg Regional Council. Mayor Jack Dempsey takes a wonderfully clear line on the code:

“The Bill now seeks to subsidise failed business models (large traditional media companies) by requiring successful businesses (digital platforms) to pay for access to content they don’t necessarily need.”

There is also Junkee Media’s submission, which supports a small revenue diversion and algorithm change notifications, but warns that youth and small news publishers will be devastated by a Facebook and Google pullout from the Australian market.

So here we are

With its shaky legal foundation, the potential for a negative effect on innovative, small and regional news publishers, and the formalisation of government patronage of a concentrated media sector, the code looks as unattractive as ever. The reasons for my arguments against it – I have been covering the issue for 12 months now – stem from a belief in the open web and distaste for shoddy and self-interested reasoning. Digital platform regulation is one of the most pressing issues of the moment, and while the code may appear admirable and defiant on first glance, it’s hard to see good arising from it in its current form.