After a long “who-will-blink-first” game, Australia has passed a new law that makes it compulsory for Google and Facebook to pay media companies for news and content. The Australian parliament on Thursday passed a new News Media Bargaining Code (NMBC) Thursday which makes Australia the world’s first country where a government arbitrator will negotiate and set rates for tech giants to pay should the company’s negotiations with media companies fail.  

According to Australian Treasurer Josh Frydenberg and Australian Communications Minister Paul Fletcher, “The code will ensure that news media businesses are fairly remunerated for the content they generate, helping to sustain public-interest journalism in Australia.” The Australian Parliament passed the code after Josh Frydenberg and Facebook co-founder and CEO Mark Zuckerberg agreed on the code.  

According to the Australian Competition and Consumer Commission chair, the code’s purpose is to curb the market power that Alphabet-owned Google and Facebook have. Since Google and Facebook need media but aren’t reliant on any media companies, media companies couldn’t strike commercial deals.  

The news comes after Facebook restored the sharing of news links by Facebook users and news publishers when it struck a deal with the Australian government. Before the deal was struck, the social-media giant had banned all the news publishers on their platform to share links. This ban had an overarching impact on the pages of the Australian hospitals, government organizations, and charities. 

The Australian government had to meet Facebook in the middle and announced that it added 4 amendments to the proposed legislation. This was the first step-down from the Australian government as it had earlier said that it would not make any changes to the amendment.  

As of now, Facebook agreed to “retain the ability to decide if news appears” on its platform and ensuring that Facebook won’t be subjected to a forced negotiation. It was also agreed upon that Facebook will resist efforts of media companies to advance regulatory frameworks “that do not take account of the true value exchange between publishers and platforms like Facebook.” The 4 amendments made to the code include a 2-month meditation period that gives both sides time to “negotiate deals” before an arbitration comes to place. 

What does the new News Media Bargaining Code (NMBC) act do? 

The new News Media Bargaining Code (NMBC) aims to curb the immense bargaining power of Facebook and Google have in their negotiations with the Australian media companies that provide news. Now the tech giants will not be able to abuse their power by operating their platforms on a take-it-or-leave-it basis for journalism. 

The new law will incentivise Google and Facebook and the news organizations to strike a balanced deal between themselves. In a situation where such talks fail, the tech giants could see themselves being dragged into arbitrations.  

According to market regulator ACCC (Australian Competition and Consumer Commission), in the past publishers had little to no negotiating power since they were heavily reliant on tech monopolies like Facebook and Google.  

However, it’s interesting to note that the newly amended code requires the Australian government to consider the platform’s existing contributions to the field of journalism. This includes the commercial deals struck with publishers before the code is applied. This could in theory lead to the fact that Facebook and Google can both escape the process of arbitration completely. 

Australia’s face-off with tech giants can be looked like something more than just revenue sharing. In the backdrop of the Australian Prime Minister’s recent tussle with Chinese on trade, one can conclude that Australia wants to have control over its national sovereignty.