Australia is set to force Google and Facebook to pay for news content

• Australia's government has introduced draft legislation which would force Google and Facebook to pay news publishers for hosting their content.
• Australian Treasurer Josh Frydenberg said the aim of the legislation is to give news companies fair remuneraton for original content.
• Google's Australia and New Zealand managing director said the draft legislation was a "heavy-handed intervention" that "threatens to impede Australia's digital economy and impacts the services we can deliver to Australians."

The Australian government said on Friday it plans to give Google and Facebook three months to negotiate with Australian media businesses fair pay for news content.

The government has released a draft mandatory code of conduct that aims to succeed where other countries have failed in making the global digital giants pay for news siphoned from commercial media companies.

Treasurer Josh Frydenberg said Google and Facebook would be the first digital platforms targeted by the proposed legislation but others could follow.

"It's about a fair go for Australian news media businesses, it's about ensuring that we have increased competition, increased consumer protection and a sustainable media landscape," Frydenberg said.

"Nothing less than the future of the Australian media landscape is at stake with these changes," he added.

If the US-based platforms could not agree with the Australian media businesses on pricing after three months, arbitrators would be appointed to make a binding decision, the draft said.

The draft will be open to consultation until August 28, with the legislation to be introduced to Parliament soon after, Frydenberg said.

As well as payment, the code covers issues including access to user data and transparency of algorithms used to rank and present media content.

Breaches of the code could attract penalties of up to 10% of the platform's annual turnover, or a 10 million Australian dollars ($7.2 milllion) fine.

Google Australia and New Zealand managing director Mel Silva said the code discounts the significant value Google provided in free clicks on publishers' content.

"Our hope was that the code would be forward thinking and the process would create incentives for both publishers and digital platforms to negotiate and innovate for a better future, so we are deeply disappointed and concerned the draft code does not achieve this," Silva said in a statement.

"Instead, the government's heavy-handed intervention threatens to impede Australia's digital economy and impacts the services we can deliver to Australians," Silva added.

When Spain passed laws on licensing links to news sites in 2014 Google withdrew its Google News service from the country entirely, and in 2018 when the EU floated the possibility of introducing a similar so-called "link tax" the company's top news executive refused to rule out the possibility of shuttering its business in Europe.

Facebook Australia and New Zealand managing director Will Easton said in a statement his company was reviewing the code to "understand the impact it will have on the industry, our services and our investment in the news ecosystem in Australia."

Frydenberg said the motive was not to protect Australian businesses from competition or disruption but to ensure they are paid fairly for original content.

The conservative government is pushing ahead with the changes after the pandemic created an advertising revenue crisis for many Australian media companies.