The Australian Government intends to instruct the national competition authority (ACCC) to force Google and Facebook to pay-up for news content through a new specific piece of legislation named News Media Bargaining Code. The legislative process is still ongoing and it looks relevant for European members States which are currently dealing with a similar matter, that is to say the national implementation of the Copyright Directive, namely with its art. 15 concerning the well-known publisher’s right (so called also Ancillary copyright).

So far only France has adopted the national implementing legislation for art. 15 of the Copyright Directive. Nevertheless, Google refused to pay any fee by stating that publishers, by accepting indexation, have granted to Mountain View a kind of free license. French publishers did not agree with Google and brought him in front of the French competition authority, which then ruled by asking Google to negotiate a fees with publishers, without however stating very much with respect to the economic level of the fee.

The French case showed the difficulties in concretely applying the publishers’ right, even when involving a competition authority (which was not foreseen by the French law and in fact happened by initiative of the publishers). There are issues about the definition of  the snippet, the treatment of hyperlinks, the negotiation modalities and the parameters to calculate the fee (you can find here a recent analysis from mine, unfortunately in Italian). Therefore, it is not strange that someone may try to solve these issues by delegating a regulatory or competition authority to decide.

This option may be, however, a disgraceful solution because a regulatory or competition authority would normally decide the amount of publisher’s fee on the basis of a sound economic analysis, while disregarding political slogans.  This is why even the French authority has politely refused to decide the case between Google and the French publishers.

This said, the Australian case brings a potential interesting precedent for this discussion and it will be interesting to see whether and how the draft will be finally adopted.  So far, we can read from an article of Guardian Facebook’s reactions about the Australian initiative: ” Facebook does need news stories for its business and won’t pay to share them in Australia”. According to the Guardian, Facebook notes in its response to the draft version of this code that: “If there were no news content available on Facebook in Australia, we are confident the impact on Facebook’s community metrics and revenues in Australia would not be significant.”

Facebook further observed that: “that news content is highly substitutable with other content for our users and that news does not drive significant long-term value for our business” and also warns that: “It is not healthy nor sustainable to expect that two private companies, Facebook and Google, are solely responsible for supporting a public good and solving the challenges faced by the Australian media industry.” Facebook finallybelieves that this approach forces them to “subsidise a competitor”, whilst distorting the advertising market, “potentially leading to higher prices”.

It is a very rare for me to agree with Facebook on something, but I have to a admit that in such a case, I have to do it.

Please note that Google also opposed some of the claims made in the Australian debate. The Chairman of Nine Entertainment and former Federal Treasurer, Peter Costello, argued that Google and Facebook should pay 10% of the revenue they earn from Australia for using news content, which would equate, according to Costello, to around $600m a year. No idea where this figure is from.

As stated above, the monetization of the publishers’ right is a very delicate and weak aspect of the publishers’ claim. No independent study ever provided relevant information about the concrete value that online platforms should pay back to publishers for indexation of their news. The risk is that amount could be very low, because in principle it should reflect a portion of the adverting revenue collected by platforms for such content. The online advertising revenue is based on “impressions”, that is to say “clicks” by Internet users. That amount may be very scarce since visibility  in the Internet does not depends on the intrinsic value of a specific content, like in the case of journalists’ works, rather on the emotions that it can provoke upon users. In other words, fake news, kitten pictures or video a kids singing may be much more profitable than publishers’ works. Sad but true.

For the above reasons, delegating a competition or regulatory authority to assess the publishers’ right might be very risky, if these activity is made on the basis of a normal and sound economic analysis.