Hang on a snippet. News media calls win over tech giants too soon

Why are Australian media publishers so intent on going after Google and Facebook? Same reason robbers target banks: that’s where the money is. That’s why they’ve leant on the Federal Government to impose a mandatory code of conduct on the big digital platforms, including paying for news content.

Australia’s papers this morning were as one in bannering the story: “Giants told to pay up” said The Australian. “Tech giants face forced payments for news” said The Sydney Morning Herald. “Tech Titan Takedown” screamed The Daily Telegraph.

Not so fast: the government announcement is a win for the publishers, and particularly for News Corp who have been leading the campaign against the platforms on behalf of old media. But there’s a long way to go before we can expect the Silicon Valley giants to start cutting cheques to the Murdochs.

The main target is Google and a share of the $4.2 billion in (mainly) advertising revenue that it collects in Australia. By comparison, that’s more than the ad revenue taken by the three major television networks combined.

The mandatory code to be developed by the Australian Competition and Consumer Commission (ACCC) is designed to go beyond payment to include how the tech companies rank and display news stories and require prior notice of any changes to their algorithms which affect news.

This morning’s media rewarded the Morrison government with “world first” pats on the back, but Australia is sliding into the slipstream of the European Union and its member states.

In 2019, the EU determined that headlines and opening words of an article (known as “snippets” in Google speak) were covered by copyright, requiring Google to do a deal with the publishers to reproduce them in search results.

As France moved to require payments for this copyright, Google removed the snippet text from its search results in France, leaving only the headline and the url. France’s competition authority has declared this action is likely to constitute an abuse of the search engine’s dominant market position. This month, it’s given Google three months to negotiate a deal with the publishers.

Google has form in playing hardball. When Spain legislated payments for news search in 2014, Google blocked its news tab in that country — and readership dropped as a result..

The debate may seem arcane, but Google search remains the dominant channel for accessing news stories. Snippets catch publishers both ways: they can provide enough information to satisfy the casual reader. Strip them out and there’s not enough taste to lure other readers to click through.

Facebook, meanwhile, has been attempting to fob off the publishers — particularly News Corp — with its news tab.

Last November, Facebook CEO Mark Zuckerberg joined News Corp CEO Robert Thomson to announce that payments would be made for stories in a newly-launched news tab. Despite claims at the time that this would be rolled out across the world, six months later it’s still in trial in the United States.  

The News Corp claim against Google in Australia seems to go beyond snippets. News stories, it argues, are central to the Google business model. They provide the body of up-to-date content that brings searchers in, even while Google doesn’t directly monetise those news searches through ads.

This is likely to mean that the Australian publishers will be looking for a formula that ties the proportion of news searches to overall search revenues. (These sort of formulas are not unheard of in copyright licencing: universities and schools, for example, have long paid a fee for photocopying based on student numbers.)

Despite the excitement that ran around newsrooms overnight (“designed to save the mainstream media” says The Australian’s editor-at-large Paul Kelly), it’s unlikely to significantly rescue the publishers from their financial mess. According to the ACCC’s digital platforms report, Australians only spend 2.3% of their time online on Australian news sites. 

Google says it already pays significant copyright fees in Australia — mainly for music used on YouTube. (Digital streaming on, for example, YouTube and Spotify are now the major source of fees for music use.) However, this is based on clear and long-established copyright principles. The claim for a payment for news which the publishers, themselves have long provided for free is harder to determine. 

As in Spain and in France, Google (and Facebook) will be approaching this with a global frame, conscious that any concession made here will generate matching claims in all other jurisdictions. Expect more hardball.