The power battle between tech giants and media companies

Out of every AU$100 spent in online advertising, over 70% goes to tech giants Google and Facebook, according to a report by the Australian Competition and Consumer Commission (ACCC). Given that neither party invests in creating the content that generates this ad revenue, it’s about time the playing field was levelled. This ensures that media companies are paid for the 24/7 stream of high-quality journalism that appears in our social feeds and search results.

By July this year, the ACCC will finalise its mandatory code of conduct. It aims to fairly distribute advertising revenue between tech companies and media outlets. However, even when the mandate is complete, the battle to restore the balance of power will just be starting. The critical question is: how can such a code be enforced when the tech juggernauts in question don’t want to play ball?

Addressing the real issue

Like several countries before, Australia has thrown its support behind its media industry.

The motivation for the mandatory code is the abrupt drought of advertising revenue, which has been accelerated by COVID-19. At least 51 media outlets and newsrooms have closed since the beginning of the crisis in Australia. We’re talking big bucks and widespread unemployment, resulting in the government providing a AU$91 million rescue package for the sector.

The reality, however, is that the Australian media industry has been in decline for years. I would go so far as to say it had been in crisis long before COVID-19. Consolidation and closures have been an ongoing theme for publishers across Australia. Some of the biggest mergers in journalism have taken place over the last few years. All, I might add, with approval from the ACCC. What’s needed here goes beyond bailouts. It requires a renewed focus on policy, power and regulation to protect Australian content and public interest.

United we stand, divided we fall

Since Australia made its very public announcement that it would be ‘forcing’ the tech giants to pay up, the world has been watching. However, the scorecard in the game of governments versus tech giants so far leaves a lot to be desired. If past initiatives are anything to go by, it’s going to be a tough and lengthy battle.

Take Spain for example. When payments for content were made mandatory, Google simply withdrew its Google News service. When France announced similar initiatives, both Facebook and Google refused to make payments for user click-through. The power, right now, is very much in the hands of the tech giants but the reality is that they need content from trusted news sources—for relevance, for authority and for advertising sway.

Facebook has already publicly shared its “disappointment” at the ACCC’s announcement. Hopes are now pinned on the Australian government finding a way to push this initiative forward but at the moment, I see history repeating itself. As a single country we are relatively powerless. So, shouldn’t we be tackling this issue as a global news industry? Wouldn’t strength in numbers between nations and businesses stand a better chance of compelling tech giants to do the right thing?

Where do we go from here?

This trend raises serious questions of power and ethics. I truly believe unbiased and independent journalism sits at the roots of democracy. I know I’m not alone.

How then have we allowed tech companies to simply take content from highly trained journalists, writers and reporters for their own gain? Every month, millions of users tune into social media sites and search engines for their news fix. The danger is that we’re already past the point of no return.

Unsurprisingly, Google and Facebook don’t want to play ball. If Australia retaliates by removing its news content from Google and Facebook, it won’t make any difference. However, if multiple countries follow suit, we could see them make the shift into content production. Given the number of scandals they have been at the centre of to date the biggest challenge for tech giants will be generating trust. Something our media outlets have been earning for decades.

On the other hand, if we continue down the current path our industry will look significantly smaller this time next year. Ultimately, Google and Facebook will have sabotaged the very sources it relies on.

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Maggie Gaston is client director at Milk & Honey PR