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Treasurer John Frydenberg made the announcement in July 31 in Melbourne. Photo: Daniel Pockett/AAP

Australia plans to force Facebook and Google to pay for news

The step comes just days after both Google and Facebook were dragged before US Congress for a hearing into tech market abuse.

The Australian Competition and Consumer Commission (ACCC) has released its draft news media bargaining code, announced in 31 July by Treasurer Josh Frydenberg.

The draft code allows commercial news businesses to bargain – individually or collectively – with Google and Facebook, in order to be paid for news the tech giants publish on their services.

According to ACCC chair Rod Sims, the code aims to address the bargaining power imbalance between news publishers and major digital platforms, to bring about fair payment for news.

“We want Google and Facebook to continue to provide these services to the Australian community which are so much loved and used by Australians. But we want it to be on our terms.” Frydenberg said

The ACCC has previously found Google and Facebook’s failure to pay for news content is eating into the advertising revenues which fund journalism.

Is Australia the first country to require Facebook and Google to pay for news content provided by media companies?

Australia is not the first country to take such steps to protect independent journalism, and both Spain and France have attempted similar steps, with little success.

In Spain, for example, Google pulled its Google News service after the country made it mandatory for the platforms to pay publishers. Meanwhile, last year, Google stopped showing news snippets from European publishers on search results for its French users.

In the UK, in early July, the competition watchdog called for the Government to pass new legislation to curb the two companies' dominance in online advertising.

On the latest move by Australia, Mel Silva, managing director of Google Australia and New Zealand, said it "sends a concerning message to businesses and investors that the Australian government will intervene instead of letting the market work".

"It does nothing to solve the fundamental challenges of creating a business model fit for the digital age."

In the past, the company has argued that media outlets benefited more from having their news content in its News section, than it did from having them there. Last year, for example, it said it made only around A$10m in revenue from news-linked advertising and news-related queries accounted for slightly more than 1pc of total queries on Google Search in Australia.

Reactions of two tech giants

Facebook's Australia and New Zealand head, William Easton, said the company was "reviewing the Government's proposal to understand the impact it will have on the industry, our services and our investment in the news ecosystem in Australia".

Google said the regulation ignores “billions of clicks” that it sends to Australian news publishers each year.

“It sends a concerning message to businesses and investors that the Australian government will intervene instead of letting the market work,” Mel Silva, managing director of Google Australia and New Zealand, said in a statement.

“It does nothing to solve the fundamental challenges of creating a business model fit for the digital age.”

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