Last month when the Australian government indicated that they would pass new legislation that forces the big tech companies to pay for the local news creators for using their content, Google threatened to shut down its search engine in Australia. However, it took Google less than a month to retreat on that threat and take a 180-degree turn to strike first of its many deals with several Australian news outlets.
Why does the Government think Google and Facebook should pay the News Outlets?
It is no surprise that big-tech companies have found themselves in hot water with the regulators over the past few years. The governments around the world want to avoid the possibility of allowing these companies to accumulate too much power and to protect the interests of small and mid-size businesses who don’t have the means to protect themselves against monopolistic practices that a lot of big tech firms apply.
While the big tech firms thrived during the pandemic, many local newspaper struggled to survive. In this particular case, the proposed Australian legislation, known as the News Media Bargaining code, is the first of its kind and is clearly seen as a test case of the power government has over regulating the big tech firms.
The Australian government argues that a strong news media is vital to democracy and companies like Google and Facebook should pay their fair share of the money they generate through the content generated by these news outlets.
The argument from the Big Tech Companies
Tim-Berners-Lee, the founder of the world wide web, said that the proposed law risks breaching the fundamental principle of the web. The ability to link freely and without any limitations and monetary fees is the fundamental to how the web operates.
Google stated that the news they already present from these local newspaper drive a lot of traffic to the local newspapers’ portals and therefore help them generate more income than they would otherwise. This makes a lot of sense, especially because of the sheer amount of people relying on Google and Facebook for their daily news. However, I doubt that the proposed legislation would require Google and Facebook to pay per click but rather come up with a fair agreement that pays the media outlets upfront from the share of the money that Google and Facebook make of the content created by these media outlets.
The Microsoft Effect
I think Microsoft played a big role in helping the Australian government strong-arm Google by offering Bing as a substitute for Google search.
Microsoft is probably one of the most trustworthy organization when it comes to the big tech firms — which is amazing given that Microsoft landed itself in hot waters with the anti-trust lawsuit for monopolistic practices in 1998 and took a big hit to its reputation.
Under the new executive leadership, Microsoft, over the past several years, has taken its mission of empowering every person and organization in the world to heart. Microsoft has realized that we are living in a consumption economy and squeezing as much money as possible from your customers is not good for business in the long-term. In fact, Microsoft’s cloud business is all based on increasing consumption and the volume of micro-transactions and therefore it has struck several partnerships with companies like Sony, Google, Salesforce, etc. that are its rivals in one business or another. The JEDI contract by the pentagon was awarded to Microsoft in 2019 and later disputed by Amazon is a good indicator of how organizations are more comfortable getting in business with Microsoft.
How Microsoft impacts this increase in regulation by the government is by posing credible options for them. As soon as Google threatened to get rid of its search engine in Australia, Microsoft stated that it agrees with the new proposed legislation and news outlets should be being paid fairly for the content they create. Microsoft even offered to replace Google search with Bing. If you have not used Bing before, you will be surprised to learn that it is not too far behind Google’s search engine.
Sign of Things to Come
Just last week, Google was reported to strike a deal with Seven West Media worth over $23 million per year. Google is also expected to strike similar deals with several other local news outlets in Australia. At the same time, however, Facebook blocked all its media content in Australia in a dramatic escalation with the government’s proposal overpaying for media outlets’ content. It seems like Facebook doesn’t really care about optics anymore and of course, like everything else in the past, I am sure Facebook would ultimately come to an agreement with the government after some “constructive talks”.
Following in the footsteps of Australia, Canada intends to be the second country to pass a law that requires the big tech companies pay the news outlet for using their content and I am sure governments in other countries will pass similar laws in the near future.
Governments around the world and the big tech companies battling over new regulations and legislations is definitely something that is not new and something you will see a lot of in the near future. Past examples like the San Bernardino shootings when Apple and the US Government butted head over privacy, the Cambridge Analytica fiasco, New York City suing Amazon last week, and the Senate hearing with Zuckerberg, Dorsey, and Pichai over misinformation on the web last year are great indicators of how the governments would continue to strong-arm big technology companies to make sure that they are regulated and don’t exploit the extreme power and control of the market.
I believe that over the last 2–3 years, there has been a tremendous focus on how powerful and big some of the big tech corporations have become. The pandemic impacted a lot of small and medium businesses while the big technology corporations witnessed some of the most profitable years in their history. Instances like a recent report suggesting that Amazon deployed secret strategies to dodge regulators in India clearly show that the battle between the governments and the big tech firms will continue in the near future.
Strategies like what Facebook did by blacking out the media content in Australia or Google threatening to get rid of its search engine in Australia will not work as no government would allow it to be perceived as being a hostage to technology organizations with deep pockets, especially when companies like Microsoft are eager to capitalize on the opportunity by offering viable substitute products.