Australian competition watchdog warns Google, Facebook laws are just the start

By Jane Wardell

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FILE PHOTO: A sign is pictured outs a Google offcie near the company’s headquarters in Mountain View, California

SYDNEY (Reuters) – Australia’s competition regulator has warned that planned laws to make the country the first in the world to force Google and Facebook to pay for news content were likely just the start of more regulation for digital platforms.

The Australian government announced legislation last month after an investigation it said showed the tech giants held too much market power in the media industry, a situation it said posed a potential threat to a well-functioning democracy.

Under the code, Google and Facebook will be subject to mandatory price arbitration if a commercial agreement on payment for Australian media cannot be reached.

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FILE PHOTO: Attendees walk past a Facebook logo during Facebook Inc’s F8 developers conference in San Jose

“This bargaining code is a journey, if we see market power elsewhere, we can add them to the code,” Australian Competition and Consumer Commission Chairman (ACCC) Rod Sims said in an interview for Reuters Next.

Digital platforms face fines of up to A$10 million ($7.7 million) if they do not comply with the decision.

At the heart of the planned Australian regulation is a “two-way value exchange” to be used by an arbitrator to make a binding decision. That requires Facebook and Google to consider the value they receive from using Australian media content. It also requires local media companies to consider the value they receive from Facebook and Google users viewing their content.

Some Australian media organizations are unhappy with the two-way aspect of the code, and critics have noted that other players like Facebook’s Instagram and Google’s Youtube are not part of the legislation.

Google, meanwhile, has declared the code unworkable, citing in particular a requirement to provide publishers with two weeks’ notice of certain changes to algorithms and internal practice.

Sims said the regulatory code was the best approach to ensure a level playing field, noting that competition laws around the world had failed to stop Facebook and Google gaining significant market power.

“Let’s see how it goes; no point trying to optimise now,” Sims said in an interview on Dec. 21 that was broadcast at the event on Tuesday.

The Australian law, which has broad political support and is expected to be voted on in parliament early this year, was formulated after an ACCC inquiry that found for every A$100 of online advertising spend, $53 goes to Google, $28 to Facebook and A$19 to other media companies.

The ACCC has focused more and more on the rapidly growing market power of Google and Facebook. It has two inquiries open into advertising technology and mobile app stores, with reports due in January and in March, respectively.

Sims, who expressed concern about excessive pricing and self-preferencing by the app stores, said the reports would show the state of play and added that the regulator would continue to focus on data concerns in 2021.

“I’m hopeful that not just Australia, but companies overseas will benefit from what we find,” Sims said.

For more coverage from the Reuters Next conference please click here or http://www.reuters.com/business/reuters-next

($1 = 1.2870 Australian dollars)

(Reporting by Jane Wardell. Editing by Gerry Doyle)