There was one undisputed winner in the high-stakes showdown this week between the Australia government and tech giants Google and Facebook: Rupert Murdoch.
One of the world’s great news barons likely hasn’t stopped smiling since a détente was reached between the companies and a government that was threatening to bring in legislation that would have fundamentally altered their value proposition.
A full-out war was at least temporarily avoided, and Mr. Murdoch’s company, News Corp., quickly swooped in to sign a lucrative content-sharing agreement with Google reportedly worth tens of millions. His company is expected to ink a similarly attractive package with Facebook.
To the victor go the spoils.
Few citizens in the world wield as much influence as Mr. Murdoch, especially Down Under, where his media power is feared. Over the years, he’s toppled Australian prime ministers as easily as dominoes. What he wants he usually gets, and he wanted to see a government go toe-to-toe with Google and Facebook, to let them know it would no longer be business as usual.
And if Prime Minister Scott Morrison wasn’t up to the task, Mr. Murdoch would find someone who was.
The key was a threat by the government to impose a Major League Baseball-like arbitration system on disputes that arose between news organizations in the country and Google and Facebook over the price paid for the use of their content. Facebook, in particular, did not like the prospect of forfeiting the control it was used to having and threw a hissy fit.
The company eliminated all news content from its platform in Australia, including critical health information related to the pandemic. The tactic backfired spectacularly, and the content was later restored. Soon after, talks between the government and Google and Facebook produced amendments to the legislation that seemed to satiate the tech powers. Meantime, they were given the opportunity to sign deals with Australian publishers, with Mr. Murdoch being first in line.
The hope is the new law never needs to get used. I have my doubts.
There is little to no chance that negotiations between the tech giants and news organizations in Australia over money will always go smoothly. When they don’t, an independent arbitrator can set the price that Google and Facebook pay. All it will take is a few arbitration awards that the tech companies feel are grossly unfair and we could be back to square one.
The brinksmanship was of keen interest around the globe. As one Aussie politician put it, the government was in a proxy battle for the world. The Canadian government, in particular, has been making similarly threatening noises about bringing the hammer down on the two tech behemoths and likely now believes there is a template to be mimicked, at least in spirit.
Without question, Google and Facebook know this can’t be a one-off arrangement. They are going to have to make similar deals in countries strategically important to them, or else they will face the threat of legislation that looks an awful lot like Australia’s. But every situation will be different.
Canada doesn’t have a Rupert Murdoch or a News Corp., which owns high-impact news organizations on three continents. They offer something Google and Facebook desperately want. We’re bit players in the grand scheme of things.
Some of the biggest media players in this country, meantime, are frantic for anything that will staunch the economic bleeding. Things will only get worse for them when pandemic aid initiatives (such as wage subsidies) come to an end. They likely don’t have time to wait until Heritage Minister Steven Guilbeault works out a plan. (It took the Australian government three years.)
Canada also doesn’t have the same regulatory regime as Australia, so it’s not as simple as just importing its model. Would the Canadian Radio-television and Telecommunications Commission become the equivalent of the regulator Australia has to enforce its legislation? How would Canadian newspapers feel about that? Not great, I would imagine, given the CRTC’s erratic history.
Meanwhile, desperate Canadians publishers could sign desperate agreements with the tech companies, which might set an ugly negotiating floor for those not in such dire straits. Or Facebook and Google might say they’re putting a premium on value and quality and only make deals with brands they feel deliver that. Absent legislation, there would be little that those left out could do about it.
Regardless, this story is far from over. It’s virtually guaranteed that tensions will be renewed in Australia at the first sign Big Tech looks like it’s not living up to its end of the bargain. The unprecedented legislation just passed looms over it all. Things could still get ugly fast.
The only person who doesn’t care is Mr. Murdoch. He’s got his money. He’s not worried about anyone else.
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Gary Mason