Facebook and Google will now have to pay local media firms a cut of the advertising revenue they rake in when using their content, the Australian government said Monday.
Australian treasurer Josh Frydenberg said that the decision came after Facebook and Google parent company Alphabet failed to adequately address complaints by Australian media companies that the tech giants have an iron grip on advertising, their main source of income.
“We understand the challenge that we face, this is a big mountain to climb,” Frydenberg told reporters. “These are big companies that we are dealing with but there is also so much at stake, so we’re prepared for this fight.”
For every dollar spent on online advertising down under, nearly a third goes to Google and Facebook, an ACCC report on digital platforms published in June last year showed.
Last December, Australia said Google and Facebook would have to agree to new rules to ensure they do not abuse their market power and damage competition, or the government would impose new controls.
Facebook on Monday said it was “disappointed” by the Australian government’s decision, saying it has “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,” Facebook Australia and New Zealand Managing Director Will Easton said in a statement.
Google said it would continue to cooperate with plans for the media code of conduct.
“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,” a Google spokesperson said.
The new code will include sharing of data, ranking and display of news content, and will include mandatory sharing of revenue generated from news.
Australia’s online advertising market is worth about $5.7 billion a year and has grown more than eight-fold since 2005.
The government has asked the country’s competition watchdog, the Australian Competition and Consumer Commission (ACCC) to frame a mandatory code of conduct between media outlets and digital platforms after talks stalled on content payment rules.
The government scrapped its initial plan to come up with a voluntary code by November and has asked ACCC to submit its draft mandatory code by July, to be passed into legislation shortly thereafter, the treasurer said.
With Post wires