Google and Facebook must now share data and advertising revenue with local media companies in order to display their content.
This decision was made after complaints by local media that Google and Facebook have a stronghold on advertising.
Considering advertising revenue is the main source of income for Australian media, this is a particularly contentious issue.
Treasurer Josh Frydenberg tells reporters they’re ready for a fight with the two tech giants due to the nature of what’s at stake.
“We understand the challenge that we face, this is a big mountain to climb.
These are big companies that we are dealing with but there is also so much at stake, so we’re prepared for this fight.”
Australia’s online advertising market is reportedly worth almost $9 billion AUD ($5.72 billion USD) annually and has grown more than eight times since 2005.
For every $100 AUD spent on online advertising in Australia, nearly a third goes to Google and Facebook.
The two companies were first asked to provide a voluntary code of conduct for addressing the complaints by Australian media companies.
After a code of conduct was not provided voluntarily, a mandatory code will put in place by the the Australian Competition and Consumer Commission (ACCC).
ACCC has until July to submit a draft of the mandatory code of conduct, which will then be passed into legislation.
In addition to sharing advertising revenue, the mandatory code will also include rules related to sharing data, and the ranking and display of news content.
Penalties will be established for failure to abide by the code of conduct, and binding dispute resolution mechanisms will be put in place as well.
In a statement to reporters, Facebook Australia Managing Director Will Easton responded to the government’s orders:
“We’re disappointed by the government’s announcement, especially as we’ve worked hard to meet their agreed deadline.
We’ve invested millions of dollars locally to support Australian publishers through content arrangements, partnerships and training for the industry.”
A Google spokesperson addressed the court orders with the following statement:
“We have sought to work constructively with industry, the ACCC and government to develop a code of conduct, and we will continue to do so in the revised process set out by the Government today.”
Australia is now the second country to force Google to pay for content. See: Google Suffers Major Defeat – Must Pay French Publishers
This ruling comes at a time when the coronavirus pandemic has caused a steep decline in ad spend.
For some daily newspapers in Australia, the amount of ad revenue lost means they’ve had to stop printing altogether.
Some of the largest media companies in Australia have even asked staff to take a pay cut or simply resign.
A mandatory code of conduct is unlikely to solve all of these problems, but it will help media companies recoup some of their lost revenue and level the playing field to an extent.