Australian code’s unreasonable payment rules

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Two weeks ago, we detailed our concerns with the arbitration system proposed in Australia’s draft News Media Bargaining Code. We also announced a US$1 billion global investment to license content for a new product, News Showcase, which is rolling out first in Germany and Brazil. We signed several agreements with Australian publishers for this product in June, and were hoping to launch it here soon. We have had to put these plans on pause for now as we don’t know yet if a product like News Showcase would be viable under the code. 

The agreements we have signed in Australia and around the world show that not only are we willing to pay to license news content for a new product, but that we are able to strike deals with publishers without the draft code’s onerous and prescriptive bargaining framework and one-sided arbitration model.

We don’t oppose a code, and a system for resolving disputes between parties. But the arbitration system outlined in the draft is unworkable. In addition to the issues we raised on September 27, we have concerns about its unfair payment conditions and unclear definitions and obligations.

We believe these conditions could be amended to make it a fair and workable code: a code that can work together with commercial deals and programs like News Showcase.

An unreasonable ‘must include, must pay’ system

The draft code proposes, in effect, a ‘must include, must pay’ system, something that’s extreme and unprecedented. It essentially forces Google to provide a benefit to Australian news businesses and to pay them to receive that benefit. 

A ‘must include’ regime is rare. And when this type of system is used, parties have a right to be included, but not a right to be included for free — let alone be able to demand payment to be included.   

Under the draft code, if we ‘make available’ news content (by providing links to news websites when you search online, we assume, though this isn’t defined in the code) we have to negotiate payments to that company—even though analysis shows they benefit more from the links than we do. In 2018, the value we provided publishers was estimated to be more than $200 million a year (while news on Google generated just $10 million in revenue—not profit). As we have said, none of the value we bring to the negotiating table would be considered by the arbitrator.

What’s particularly concerning is that it’s not just one unequal negotiation. We would be forced into these one-sided negotiations with all registered news businesses in Australia that earn more than $150,000 per year.

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