Aggregators and the
news media
4.1
While the previous two chapters have respectively discussed the
challenges and opportunities faced by the contemporary news media in Australia
as a consequence of a number of economic, social, technological and structural
factors, this chapter examines the particular relationship between digital
aggregators and the news media. It discusses the importance of a flourishing
news media to aggregators, and the ways in which aggregators are working with
content creators to combat fake news. Finally, this chapter discusses the growing
political appetite to ensure that aggregators pay their fair share of tax in
Australia, and floats the idea of a levy on aggregators.
4.2
It is clear that the media landscape has been changed irreversibly by
the global success of digital aggregators, particularly:
-
Google, which
has its roots in a search engine but now provides a range of web-based
services, and
-
Facebook, a
social media platform, through which people build connections with one another
and share personal content, which now incorporates the sharing of news and
third-party media.
4.3
Given their centrality to the new media environment, the committee
sought to engage with these two largest aggregators, both globally and in
Australia, Google and Facebook.
The importance of news
to aggregators
4.4
Both Google and Facebook told the committee that they recognised the
value of a healthy media sector in which public interest journalism thrived.
Google's submission acknowledged that it had a mutual interest in ensuring that
good journalism flourishes with the broader media sector:
...not
just because a free and independent media is a matter of vital public interest,
but because ensuring credible news sources can thrive online helps us do a
better job providing our users reliable information.[1]
4.5
Google pointed to a number of its products that give users access to
free news content, including Google News, which links to around 80,000
publishers worldwide, Google Alerts, which alerts readers to new content of
interest to them, and its YouTube platform, which includes content generated by
news media organisations, including larger organisations streaming content,
such as the ABC, and smaller players like Buzzfeed and Vice News.[2]
4.6
In its submission, Facebook highlighted the words of its founder,
Mr Mark Zuckerberg, regarding the value of the news media:
A strong news industry is also critical to building an
informed community. Giving people a voice is not enough without having people
dedicated to uncovering new information and analysing it. There is more we must
do to support the news industry to make sure this vital social function is
sustainable – from growing local news, to developing formats best suited to
mobile devices, to improving the range of business models news organisations
rely on.[3]
4.7
Some witnesses and submitters raised serious areas of concern
with the committee about Google and Facebook.
Criticisms of Google
and Facebook
4.8
These will only be discussed briefly in this report for two reasons.
Firstly, the committee did not receive sufficient volume of evidence in these
areas to reach any definitive conclusions. Secondly, over the course of this
inquiry, the government directed the ACCC to undertake an inquiry into
aggregators and social media platforms, including Google and Facebook, and
potential negative or unfair effects on consumers, media content
creators-including journalists, and advertisers. The ACCC inquiry has broader
terms of reference than this committee, as well as the resources, expertise and
time to consider these matters in full, before it presents its final findings
to government in mid-2019.
4.9
Nonetheless, the committee was concerned about suggestions that
Google and Facebook have abused their market power, including in their approach
to the media sector.[4]
For example, the committee is aware that Mr Michael Miller of News Corp, wrote
in the Australian Financial Review on 31 May 2017:
Google is no friend and has done more than anything to
destroy the journalism model.
Google is only ever one's 'friend' if you obey the rules it
dictates for your business in a digital world.
It has world's most powerful market monopoly: a 95 per cent
market share of search in Australia and similar positions in other major
markets...
[Google] has argued news publishers know they are free to
withdraw from Google Search and Google News at any time.
The reality, however, is Google's dominance of search means
local publishers have little choice other than to be on Google: it is the
digital distribution method and journalism needs to be discoverable.[5]
4.10
In this, Mr Miller suggested that Google consciously impeded the
traditional media's transition to subscription models by:
Making
quality subscription news publishers suffer in search rankings unless they give
Google and its search users content for free;
Displaying
snippets of publishers' content in Google News listings to attract eyeballs
which fund its advertising revenue and to discourage users seeking out content
elsewhere;
Manipulating
search results to promote its own news vertical.[6]
4.11
It was also
put to Google that there had been allegations that it had demanded that media
companies adopt its 'first-click free' policy, and if they did not, their
content would be placed lower in search results, and therefore reach fewer
users.[7]
4.12
Google were
given the opportunity to respond to these allegations in a public hearing in
August 2017, and told the committee that 'whether or not content is behind a
paywall is not a demotion signal for the ranking in search' and that, at that
time, Google was working increasingly with publishers on subscriptions and paywalls.
Moreover, Google disagreed that it had abused its market power regarding its
'first click free policy', and contended that publishers retained the right to
use a number of options to distribute their content.[8]
4.13
Some evidence
questioned the reliability of the metrics used by aggregators to evaluate the
reach of advertising they carried, thereby potentially overstating its value
and impact for advertisers. Mr Darren Woolley, the Chief Executive Officer and
Founder of TrinityP3, told the committee:
...there
are questions being asked about some of the metrics that both Google and
Facebook provide. For instance, if I buy a 30-second television ad on any of
the networks, it will run for 30 seconds. On Google and Facebook, if it runs
for five seconds, it's deemed to be seen, and so now there are questions around
the value that these represent with the metrics that are actually developed by
the digital industry itself...There are two issues. The first is that the metrics
themselves have been corrected several times over the past few years by
Facebook and Google themselves because they found out that their 'algorithm'
has been incorrect and perhaps overstating performance. The second is that
getting a consistent and meaningful measure across the industry has also been
difficult to achieve. While Google and Facebook, because of their size and
market dominance, have actually put forward metrics, it's still the advertisers
who are coming to terms with what that means as far as the value that that
represents as part of their advertising investment.[9]
4.14
While
acknowledging that it was a complex problem stemming from the nature of the
internet itself, Dr Nico Neumann, an academic researching the use of technology
in marketing and advertising, observed that companies that relied on
advertising, including aggregators, were torn between ensuring their metrics
were correct, and maintaining the value of the advertising they carry by
maximising the estimated market reach:
As
I said, this is a problem the industry is trying to tackle right now with
different initiatives which have been more or less successful, in terms of
whether you want to help important stakeholders pick it up. For example, to
make this really clear, you have to understand that even a company like Google
or anyone else—I'll just pick one name—makes money with a fraudulent
impression. It's similar to a marketplace like eBay. If you get a commission
with the volume on everything that's paid, you get your cents. So there's a
conflict of interest. On one hand you want to reduce [ad fraud] because of PR
reasons mainly, while, on the other hand, everyone has pressures to hit their
targets.[10]
Engaging in
partnerships to improve news
4.15
The committee
also received evidence on the work of Google and Facebook to build the capacity
and skills of journalists, and spread awareness of the opportunities afforded
by the digital age. For example, Google submitted that:
Another
way we support news publishing is via the Google News Lab, a dedicated program
within Google that works directly with newsrooms to provide trainings that help
boost digital skills, support data journalism, and develop better tools for
data analysis and visualisation. After running a series of successful workshops
with local publishers since 2016, training more than 100 journalists in the use
of Maps and Search to tell stories, we are expanding our engagement with
newsrooms on an ongoing basis.
We
also support emerging journalistic talent through the Google News Lab
Fellowship by offering students and professionals interested in journalism and
technology the opportunity to work with some of the most prestigious media
organisations in the world.[11]
4.16
Facebook
outlined a number of ways it works with the media sector:
To
this end, we work with our partners in the news industry to find ways for
journalism and news to flourish on our platform–whether it is by providing
advice and training on best practice on our services through our Facebook for
Journalism project; developing new tools to assist publishers to monetise and
distribute their content more effectively, such as through video monetisation
and Instant Articles; or through initiatives to build a more informed community
such as the News Integrity Initiative and First Draft Coalition, among others.
Facebook is a distribution platform for publishers–a way for people anywhere to
read or watch the work of journalists and media organisations, and we are
working to establish stronger ties between Facebook and the news industry to
ensure that we are a collaborative and transparent partner to journalists.[12]
4.17
Mr
Pellegrino, the Managing Director of Google Australia, also noted that his
organisation was responding to a significant appetite from publishers to
develop subscription models and paywall enforcement:
Today
we are being asked to focus more on subscriptions, especially given the growing
trend towards digital subscriptions from the news industry and the increasingly
important role it plays as a revenue stream for many publishers. As you may
have seen in recent days, we are in active discussions with publishers around
the world, including here in Australia, with a view to taking what we do to
support subscriptions to another level. For instance, we are focused on how we
can support subscriptions and paywalls across our services to make subscription
based content more visible in search, and we want to make sure that publishers
are part of this effort. We know that success for everyone is coming together
and partnering in this work. We understand many publishers will be keen to see
the outcome, and we hope to have more to share in coming months.[13]
4.18
Ms Áine Kerr, the Manager of Journalism Partnerships for Facebook, also
noted that the media industry had highlighted skills development as a priority,
to which Facebook had responded in a number of ways:
...a
request we've gotten from the industry is to help with the upskilling of their
journalists so that they can use the products and tools and services to find
content on the platform, to engage with audiences, to build loyal followings. As
part of that here in Australia, for example, we bought a company called
CrowdTangle last December. We've made it free and available. We're already at
12 newsrooms, 30 brands here in Australia, but there is more to do. We're
running e-learning courses, webinars, workshops. We're going to be bringing our
Facebook Journalism Project news days here to Sydney in the coming months.
These are already full. We're holding workshop days, where we bring our product
teams in, our partner engineers, and we show what's on our roadmap, we show how
our products work, we provide skills and training to journalists.[14]
4.19
Additionally, the committee understands that Fairfax and Google recently
announced that they would partner to develop digital media products and
streamline programmatic advertising bookings across Fairfax titles. Mr Greg Hywood,
Chief Executive and Managing Director of Fairfax Media, is reported as saying
this was an innovative approach, and 'We expect [the] upside performance from
this partnership will allow us to make new investment in our journalism'.[15]
4.20
Ms Jacqui
Park, the Chief Executive Officer of the Walkley Foundation, told the committee
about other positive signs of engagement between aggregators and the
traditional media sector. In particular, she highlighted the contribution that
Google made in partnering on the Walkley Foundation's Incubator and Innovation
Fund:
...
We shopped around a lot and Google, to their credit, were the only ones who
came on board. They've been giving us between $70,000 and $120,000 a year for
the past four years. But that's really a very small amount of money to be doing
this kind of work with. We've managed to fund five projects this year up to
$35,000—anything from $5,000 to $35,000.[16]
4.21
Google noted
other ways that they partner with the Walkley Foundation:
In
addition, we partner with The Walkley Foundation to provide funding for its
innovation fund and the Global Editors Network Editors Lab hackdays; both
initiatives support creative and exciting new ways of delivering news and media
content to engage and better inform Australians.[17]
Combating the spread of
fake news
4.22
Both Google
and Facebook noted the work they were undertaking to combat the availability
and spread of 'fake news', or misleading content, on their platforms. Facebook
submitted to the committee that the bulk of 'fake'–or 'false'–news was
financially motivated, and so reducing the profitability of generating fake
news would stem its production. It submitted:
In
terms of disrupting the economic incentives, we believe one of the most
effective approaches is removing the economic incentives for traffickers of
misinformation. We have found that a lot of fake news is financially motivated.
Spammers make money by masquerading as legitimate news publishers, and posting
hoaxes that get people to visit to their sites, which are often mostly ads.
Some
of the steps we're taking include:
-
Applying
machine learning to assist our response teams in detecting fraud and enforcing
our policies against inauthentic spam accounts,
-
Updating
our detection of fake accounts on Facebook, which makes spamming at scale much
harder.[18]
4.23
Facebook also
pointed out a number of its other initiatives designed to make reporting fake
or misleading content easier, including encouraging users to flag contested
articles, ensuring an alternative source was brought to a user's attention, and
piloting partnerships with third-party fact checkers overseas.[19] On point, Dr Peter Fray
noted that:
Facebook,
to its credit, has taken on board a lot of the criticisms that flowed from the
US election and has formed several alliances with fact-checking and
verification services. That is actively happening.[20]
4.24
Likewise, Ms
Megan Brownlow, a Partner with PwC with long experience in the media sector,
told the committee that:
It is
important to acknowledge though that there is a natural check and balance
because Facebook and Google also need the news content. What that means is they
have been encouraged because of that need to create some news supportive
changes. Google, for example, changed its algorithm to surface quality
journalism above fake news and other types of rubbish journalism. That is one
thing it has done. Facebook is putting out 'subscribe now' buttons now for news
stories to encourage users to then subscribe to the news organisations. These
things are recognitions that they need news content creators, and that is a
positive natural check and balance.[21]
4.25
Google also
emphasised that providing relevant, useful and reliable information was at the
core of its service to users. Mr Pellegrino highlighted Google's development of
a range of strategies to deal with misleading content, including algorithms
that could identify sites containing potentially spurious information, ways
that users could flag suspicious sites, and partnerships with external fact
checking organisations. Additionally, Google highlighted the following
initiatives:
-
Google, via
our News Lab, is a founding member of the First Draft Coalition, an
organisation dedicated to addressing challenges relating to trust and truth in
the digital age for newsrooms, human rights organisations and many others
enabling users to highlight fact-checked content in Google Search and News;
-
adjusting
algorithms to help identify reliable sources and demote inaccurate or 'fake
news' content for users, as well as to identify misleading advertising content;
and
-
providing
free protection from cyberattacks seeking to deny user service (DDoS) through
'Project Shield' for news, journalists, human rights, and elections monitoring
sites.[22]
A levy or tax on
aggregators
4.26
Some evidence
received by the committee suggested that the Commonwealth should impose a levy
on aggregators–particularly Google and Facebook, or an additional tax on their
advertising profits. It was suggested that this could offset the cost to
government of any direct subsidies or indirect supports that flowed to
producers of public interest journalism. In making the case for this proposal,
some witnesses and submitters suggested that aggregators had some
responsibility for the demise in of traditional business models, and any
subsequent effects on employment and standards in journalism. It was also
noted, that aggregators continue to make immense profits from leveraging
content made by others, including journalism produced by traditional and new
media, as well as individuals, and alleged that they have done so while
minimising their general tax liabilities in Australia.
4.27
Other
perspectives argued the imposition of a levy would simply be punishing
aggregators for developing successful business models and providing a good
service for consumers.
The tax
liabilities of international aggregators in Australia
4.28
An earlier
chapter of this report noted that Morgan Stanley estimated that the market in
digital advertising in Australia is worth around $6 billion annually, and that
Google and Facebook account for between $4 to 5 billion of this revenue.
4.29
However,
there is a discrepancy between these claims and information provided to the
committee by Google and Facebook.
Mr Pellegrino informed
the committee that:
In
Australia, our overall [gross] revenue that we reported last year was $1.14
billion. We don't break that down by revenue stream. That's a policy that we
have globally....On that $1.14 billion, we generated a profit of $121 million.
We paid $33 million in tax, which is, broadly, an effective tax rate of 27 per
cent.[23]
4.30
Facebook
informed the committee that their annual Australian revenue for 2016 had been
$326 million. In another Senate committee hearing looking at corporate tax
avoidance, Facebook confirmed that of its total $326 million turnover, it
declared a profit before income tax of $6 million for Australia, and that its
total global revenue in this period was $27.6 billion in revenue, with $15.2
billion in expenses.[24]
4.31
Many witnesses
and submitters to this select committee argued that Facebook and Google were
not only stripping revenue from Australian media companies, but they had an
unfair competitive advantage as a consequence of their tax minimisation
strategies.[25]
4.32
There have
been some recent indications that Facebook is adjusting its selling practices
to start to address this issue:
...advertising
revenue supported by our local teams will no longer be recorded by our
international headquarters in Dublin, but will instead be recorded by our local
company in that country....[to] provide more transparency to governments and
policy makers around the world who have called for greater visibility over the
revenue associated with locally supported sales in their countries.[26]
4.33
It is not yet
clear how this will affect Facebook's Australian operations or tax
liabilities–or whether this will contribute positively to the health of public
interest journalism. However, the committee sees it as a positive sign that
Facebook is willing to be more transparent about its local advertising
framework and revenues.
4.34
The committee
also notes the ACCC inquiry into the power of digital aggregators and its
effect on Australia's media industry, discussed later in this report.
Holding
aggregators responsible through taxation
4.35
The committee
heard some evidence that suggested aggregators should be held responsible for
the profoundly negative effects they had caused in the media industry.[27]
4.36
For example,
Associate Professor Andrew Dodd, the Chair of the Public Interest Journalism
Foundation, stated that:
I
believe they do have a responsibility by virtue of the fact that they are
beneficiaries of the content. There's no doubt whatsoever that those platforms
benefit enormously. It's true that a lot of content providers have made a deal,
in a sense a deal with the devil, because what they're asking for are eyeballs
watching content and viewing what they do, but they've had to trade off a lot
of control about the revenue streams attached to it by virtue of the nature of
these new platforms that have broken down their business models. So you simply
ask whether or not these platforms are benefiting from all that journalism that
is being done, and in almost all instances they are.[28]
4.37
The Media,
Entertainment & Arts Alliance (MEAA) described the damage that aggregators
had caused to the sector:
These
non-paying entities strip advertising and other revenue from regulated media
entities that provide important public interest editorial and entertainment
Australian content for Australian audiences. To date, they have made little
effort to acknowledge the funding problem and even less to contribute to
funding the content from which they benefit enormously...Companies that
financially benefit by reproducing but not creating news content should
contribute funding towards maintaining and developing journalistic content and
endeavours. That is a basic principle that we think would be important to
apply. Regulators at national and international levels should act with urgency
to establish payment mechanisms, whether by a levy or other means, from
intermediaries of scale, such as Google and Facebook, which justly compensate authors
and publishers for their creative works.[29]
4.38
Schwartz
Media submitted that a proposed levy might also be countervailed by tax
incentives for aggregators supporting local journalism:
One
of the key proposals being canvassed is a levy or 'turnover tax' on Facebook
and Google, with revenue used to support public interest journalism. This is a
reasonable action by government, taking into account the very low rate of tax
paid by these companies in Australia (considering the revenue they collect
here) as well as the necessity of mitigating the worst effects of their market
dominance. It might also be worth considering offering incentives to Facebook
and Google, tax or otherwise, for supporting local public interest journalism.[30]
4.39
Mr Chris Graham,
the Publisher and Editor of the New Matilda, expressed some scepticism about
whether he supported a targeted levy on aggregators, but suggested that it
could be an option considered by government:
Part
of me doesn't support special taxes for that, for organisations like Facebook,
but a bigger part of me thinks they've got it coming, given the way they
conduct themselves. I certainly wouldn't oppose it, and I wouldn't criticise
it. I think those organisations have a right to operate their businesses the way
they see fit, but there is undoubtedly a broader societal interest in how they
operate their businesses. I think that, if you asked Facebook and Google and
others, they would probably acknowledge that. I don't know if they're
interested in sharing revenue [as it's not their business model]...At one level,
[a levy] makes me a little anxious, but, at another level, have at it.[31]
4.40
Professors
Fray and Wilding argued against Facebook and Google having liability for the
state of the media sector. They observed that that Australians have a very
positive view on aggregators and their products–noting a stark contrast to the
banking sector, where levies have been used by government and garnered popular
support. However, they did note:
Alternatively,
if we think [Google and Facebook] are not causing a harm as such, but are
failing to contribute in the way that others do, there may be a case for some
form of levy. This is broadly the view that would inform a policy decision to
require Netflix to contribute to the production (or at least the funding) of
Australian 'television' drama. It requires a prior decision that the new
entrant is essentially in the same game as the legacy operator–or at least that
they are all now in the same game together.[32]
Proposals for
the mechanism and quantum of an aggregator levy
4.41
While many
submissions supported a levy on aggregators in principle, most did not provide
details on how this should be applied or a mechanism for distribution. However,
the committee did receive some more detailed evidence on the matter.
4.42
The MEAA
suggested that 1 per cent of aggregator advertising revenues could compensate
the sector for the content reproduced on aggregators' news feeds, outlining a
number of potential models:
There
are a number of approaches that are being looked at around the world. You can
approach it in the context of antitrust, breaking down the enormous and
unreasonable market power of these organisations. I know that there is some
work underway on that front in the EU. We think that you have to look at a
means of taxation or levying that enormous revenue and directing it back to a
proper public purpose.[33]
4.43
Mr Matthew Chesher, Director, Legal and Policy for the MEAA,
pointed out that only governments
had the power to address these concerns, given the scale and power of
aggregators.[34]
Mr Chesher suggested that government regulation could stipulate such a levy as
a condition of access to a particular market for aggregation platforms:
As
some starting points, we have identified the following. Companies that
financially benefit by reproducing but not creating news content should
contribute funding towards maintaining and developing journalistic content and
endeavours. That is a basic principle that we think would be important to
apply. Regulators at national and international levels should act with urgency
to establish payment mechanisms, whether by a levy or other means, from
intermediaries of scale, such as Google and Facebook, which justly compensate
authors and publishers for their creative works. Such funds should ensure that
a minimum of one per cent of advertising revenues of organisations of scale are
devoted to fund journalistic and related content, as a condition of a company's
access to each market.[35]
4.44
This idea was also canvassed by Professor Matthew Ricketson, Professor
of Communications at Deakin University. He drew the committee's attention to
the analysis of a senior policy officer of the US Federal Communications
Commission, who proposed that if the leaders of Google, Facebook, Verizon and
Apple:
4.45
...put the equivalent of just 1 per cent of their profits, for five years,
to the [journalistic] cause, local American journalism would be transformed for
the next century. That would be $4.4 billion–enough to establish a permanent
endowment to fund local journalism. That would produce about $200 million in
income a year. More than 15 times the current philanthropic spending on
investigative journalism–and enough for about 50 new investigative reporters in
each state.[36]
Opposition
to a levy
4.46
The committee
also received evidence that argued against the potential introduction of a levy
on aggregators on a number of grounds.
4.47
Some
submitters saw the proposal as an unnecessary impost for businesses that had
developed a successful model, which delivered value to consumers and society
more broadly. For example, Dr Christopher Berg, a Senior Fellow at the
Institute of Public Affairs, argued:
I
would be very firmly opposed to taxing particular firms that a lot of people in
the media industry are angry about because they haven't been able to keep up
with that sort of innovation. I think that would be a very, very bad way to go.
We see successful firms operating in the media space that are adding a great
deal of value to consumers. To then be targeting them with firm-specific
taxation in order to fund what we consider to be our pet projects, I think
would be a very, very bad way to go.[37]
4.48
Mr Campbell
Reid, the Director of Corporate Affairs and Editorial Management for News Corp
Australia, suggested it was more important for governments to ensure a level
playing field in the market place and encouraging behavioural change by
aggregators:
So
[News Corp is] more attracted to a fair, competitive market place rather than
imposing a levy which kind of says that Google and Facebook don't have to
change any of their current behaviours. We think that they do need to change
their current behaviours, because they are making an unprecedented level of
money off other people's creative ideas, and the people who create that,
whether it's a song or a piece of journalism, have a right to earn their share.[38]
4.49
Google
suggested that the real issue was shifting consumer behaviour.
Mr Pellegrino told the committee:
The
challenge is shifting consumer behaviour from old models into new models and
new platforms and mobile devices. The imposition of those regulations and those
levies doesn't help publishers deal with that transition...The success of media
publishers in adapting to a new world will be based upon their ability to
innovate and adapt....[39]
4.50
Additionally,
Mr Pellegrino highlighted the experience in Spain that had led to worse
outcomes for consumers and publishers. As Google News is not monetised, he
suggested, it was not economically viable to maintain the service:
...in
Spain the levy was introduced and we had to then pull down our Google News
product because it doesn't make money, the content distribution. What actually
happened was a dramatic reduction in the number of clicks to publishers.
Specifically, smaller publishers got hurt a lot more than larger publishers. In
a re-review of that, you're hearing a lot from small publishers who want
reintroduction of the Google News platform to help them continue to access
audiences... To ask us to pay for the content and then send that traffic directly
to the websites is not commercially feasible for us, and we decided to shut
that down. [40]
4.51
The Digital
Industry Group Inc. pointed to research that found levies imposed in Spain had:
-
no
theoretical or empirical justification for its existence since aggregators bring
to online publishers a benefit rather than a harm;
-
negatively
impacted the revenue earned from advertisers by online publishers, especially
small ones (which it estimated in the short term at around € 9-18 million
annually), in addition to the creation of barriers to entry and expansion, with
the consequent negative impact on market concentration and competition;
-
a negative
impact for consumers, due to the reduction in the consumption of news and the
increase in search time;
-
a negative
impact for advertisers, due to greater concentration in the advertising market,
for example, through the loss of specialised channels; and
-
a negative
impact on innovation in all the sectors involved (news aggregation, online
press, advertising, etc.).[41]
4.52
The Walkley
Foundation suggested that working with the aggregators to establish an
independent fund supporting journalism might be the best way to proceed:
MEAA
has proposed a levy on platform revenues to fund independent journalism. The
Walkleys are talking directly with the platforms to encourage their
contribution to such a fund.
Both
Google and Facebook are attempting to respond and are open to discussions. In
Australia, the Walkleys has been at the centre of those talks and has active
partnership with both organisations. The government and parliament could help
by recognising the Walkleys as a key media partner in these discussions.[42]
4.53
Mr Chesher saw the only alternative to a
government levy being proactive steps to address the imbalance created by the
scale and success of their business model:
The
alternative is that Google and social media organisations make an important
concession that they are effectively a news outlet that attracts a mass of
advertising, and that they take active steps to deal with it. A levy is
attractive in a superficial way. Its workability is difficult to determine.
Nonetheless, we have got this issue where, frankly, only national governments
are of suitable scale to address a problem of this magnitude. It was recently
reported that Google's US$590 billion market value is about half of Australia's
annual gross domestic product.[43]
Committee view
4.54
The preceding
chapters outlined the very serious challenges faced by the media sector, as
well as some ways in which it is adapting to the modern digital age. It is
clear to the committee that the aggregators–in particular Google and
Facebook–have played a key role in breaking the established business model of
mainstream press media, in particular the way publishers of news can no longer
expect the substantial revenue from commercial and classified advertising that
they once could.
4.55
Aggregators
have also facilitated–even if only as a product of their business models–the
distribution and spread of fake news and misleading content, which is of enough
concern to governments around the world for inquiries to be undertaken, and
laws introduced in an attempt to make aggregators more responsible.
4.56
The
Australian Competition and Consumer Commission (ACCC) launched an inquiry in
December 2017 into aggregators and social media platforms, including Google and
Facebook, and potential negative or unfair effects on consumers, media content
creators–including journalists, and advertisers. A preliminary report is due in
late-2018, and a final report in mid-2019.
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Many of these
issues will be considered by the ACCC in its inquiry. This inquiry will have
far greater resources, expertise and time than this select committee to fully
consider any potential negative or unfair effects on consumers, media content
creators–including journalists, and advertisers from aggregators.
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While much
remains to be done by the aggregators, the committee was encouraged by some
positive indications that they are increasingly willing to deepen their
engagement with the sector, and to invest their time, expertise and money in
new partnerships to support the industry. There are also other positive signs,
including indications they are taking more ownership of the problem of fake or
misleading news, misinformation and hate-speech, and looking for ways to crack
down on the spread of damaging material through their platforms.
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Moreover,
whereas some evidence spoke to the profound difficulties that the news media
faces from aggregators, other evidence spoke of the exciting opportunities
offered by new global markets, ever-growing audiences, and the enhanced
connectedness that the digital age brings with it. How best, then, to harness
the advantages while managing the structural change in a way that preserves the
essential integrity and function of the news media, on which we all–including
the aggregators–rely so heavily?
A
levy on aggregators
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The proposal
to impose a levy on aggregators, in particular on Google and Facebook, was a
regular feature in evidence and garnered a good deal of support. Many witnesses
and submitters saw the policy as a means of ensuring that aggregators would
make a reasonable financial contribution to the generation of Australian-made
content, including quality journalism, and for the Commonwealth to offset any
direct subsidies or indirect rebates or concessions implemented to assist the
media industry.
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Many
suggested this would contribute to bolstering the sector against declining
levels of trust, fewer journalists, and the general depletion of its capacity
to investigate stories that contribute to the general public good. Others
argued it would also ensure aggregators had more reliable and quality content
for their users to engage with and share.
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Nonetheless,
there was also some scepticism about the proposal in evidence. Some suggested
that an impost on aggregators would merely punish companies for their success
and hard work. Moreover, there was a perception that the proposal did not give
due credit for the unprecedented audiences Google and Facebook offered
established media, the innovation and creativity they fostered in the sector,
and the power they give consumers to access cheap and easy information.
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In
considering the idea of a levy, the committee has become aware that both Google
and Facebook have made adjustments to their accountancy practices, so that
advertising booked by Australians will be accounted for in Australia. Moreover,
the committee is also aware that the potential use of transfer pricing by these
and other businesses, to reduce the amount of tax payable in Australia, is the
subject of other Senate inquiries, as well being the subject of examination by
the ACCC.
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Given this,
the committee is not in a position to make recommendations in relation to a
levy at this time, but would make the comment that a levy may be a useful
policy mechanism in the future, depending on the outcome of the other inquiries
mentioned above, and on the continued efforts of large aggregators to cooperate
with and assist news media and other content generators to remain viable.
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The committee
now turns to a discussion of how various international jurisdictions have
attempted to support public interest journalism and the sector more broadly
through policy and legislation.
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