What does the news media bargaining code mean for your business?

Since the Australian Government first announced its planned News Media Bargaining Code, it has been met with significant resistance. First, Google announced that the changes would force the withdrawal of the company’s services in Australia. Then, Facebook made a bold, sudden move, removing Australian news from its platform in a matter of hours. Since then, they have been in discussions with the Australian Government to return our news to our feeds, but so far, no agreement has been reached.

These events have led many to wonder what a life without Google would look like. As a key connector between customers and the services they require, Google search is a crucial support for many Australian businesses. Their exit could fundamentally change howx many companies do business and leave a significant hole in their marketing plans.

That being said, it’s hard to see a complete withdrawal happening. While Facebook has only removed a small part of their offering and is now in negotiations with the Government, Google has been intentionally vague about their changes. As such, we believe that, if Google do take any action, most businesses will be unaffected.

How did we get here?

Mid-last year, the Australian Government announced plans to change how news content is shared online. Under the News Media Bargaining Code, tech giants would have to pay traditional media outlets to link to their content. This would be a significant change to existing arrangements, which allow sites like Facebook and Google to share news content without needing to pay for it.

While proposed to apply to a range of sites, the Government specifically named Google and Facebook as its initial targets. Claiming it will help protect the future of Australian news media, the Government says the code is simply designed to help level the playing field.

As the code will not specify payment arrangements, major platforms (like Google) would need to negotiate a deal with each media outlet. If they cannot come to an agreement, an independent arbitrator would determine the most suitable arrangement. As to be expected, there would also be tough penalties for companies who do not comply with the code.

How has Google responded so far?

Unsurprisingly, Google has several issues with this new code. In fact, Google Australia’s Managing Director, Mel Silva, has described the proposed scheme as “heavy handed intervention”.

In January, Google escalated the issue by announcing they would remove their search function from Australia if the code was put into place. Believing the proposed arrangement would fundamentally break their search function, they have said the code would make operating in Australia “untenable”.

Google has since launched its News Showcase platform in an attempt to show that the new code is unnecessary. Featuring paid-for content from seven leading regional and independent Australian news outlets, the platform provides access to feature stories curated by the publisher. With plans to expand the offering over the coming months, Google says this is a clear alternative to the Government’s proposed process.

What would Google “exiting” look like?

Understandably, the prospect of losing Google’s widely used search function has many people worried. It has become such an intrinsic part of modern life that it’s hard to picture what we would do without it. From looking up what to make for dinner, to planning our next holiday, and – yes – even checking the day’s news, Google supports almost every area of our lives.

However, it’s important to remember that Google is much more than a simple search engine. And, as even the company itself has acknowledged, providing news material is an extremely small part of their service. Even their B2B and B2C offerings are far more diverse than just paid search advertising.

With this in mind, a complete withdrawal would make no sense. It would also be extremely difficult to do, given the sheer volume of hardware they have sitting in Australian homes. As such, if they do take any action, it will most likely be targeted and temporary, much like Facebook.

So… what happens next?

In our opinion, it’s extremely unlikely that Google will follow through on their threats. While Australia may not be its largest market, we still contribute significantly to the company’s coffers, with Google Australia bringing in $4.8 billion in revenue in 2019. This is not something they will walk away from easily.

Even Google has said that exiting Australia is their worst-case scenario. They surely understand that reducing their reach in such a way would hurt the company, both operationally and financially. Their global coverage is one of their biggest selling points and this would be seriously compromised by omitting Australia.

It’s also worth noting that Australia is not the first country to have these kinds of discussions with Google. In fact, there have already been several international court cases regarding Google’s use of news content. None of these have resulted in a blanket change to how Google works.

So, put simply, Google withdrawing from Australia would be such a lose-lose situation, it’s almost unfathomable. To us, it’s far more likely that the News Media Bargaining code will be adjusted to suit how Google wants to operate.

What does it mean for your business?  

No matter what happens next, we strongly believe that news and media outlets are the only businesses that will be impacted by any changes to how Google and Facebook operate in Australia. As the initial take down of news related pages was such a sudden, sweeping action, some businesses were temporarily wiped from Facebook by accident, however, this was swiftly remedied.

Want to discuss this further?

While we’re not worried about the future of digital marketing, we understand you may be. If you have any questions about this situation or are concerned about what it could mean for your business, get in touch with us today. As a client of Distl, you can reach out to your Account Manager at any time to have a chat about what’s on your mind.