Google Reaches a Deal on News Content with French Publishers but Goes to the Brink in Australia

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Finally, after months of negotiations, Google and the main French publishers’ organization (Alliance de la Presse d’Information GeneraleAIPG) have reached agreement on the principles under which Google will pay news publishers in France for use of their content in Google’s online offerings. This agreement, which reportedly covers issues such as daily volume, monthly internet traffic and contribution to political and general information will open the way for licensing deals with individual French publishers. As I wrote back in April of last year (Holding Google to Account: France Takes a Stand), it took months of protracted negotiations backed by a firm stance from the French government to reach a deal.

At that time, the French Competition Authority issued an order requiring Google to negotiate with French press publishers and news providers regarding licensing fees for news content appearing in Google search listings in France. The Authority gave Google three months to negotiate “in good faith” and come up with an agreement resulting in payment to publishers. France was the first EU member state to put in place measures to implement a new “neighbouring right” provided to publishers as part of recent revisions to the EU Copyright Directive. Google appealed the Authority’s ruling–and lost. As a result, Google started negotiating with major French publishers, including Le Monde and Le Figaro, on a revenue sharing deal, but some publishers remained opposed. The framework agreement with AIPG appears to resolve this. The conclusion of a deal in France demonstrates the need for government muscularity in dealing with this behemoth of a global corporation.

Google will fight tooth and nail to avoid any changes to its business model–through the courts, influencing public opinion, direct lobbying of national governments, and by seeking to enlist the support of the US government—as any powerful corporation would do. It takes political courage to stand up to Google, and a firm and consistent line is essential. Australia is another country learning that Google has sharp elbows and plays hardball.

Google pushed back—hard—when Australia announced it was going to introduce a new code (News Media Bargaining Code) regulated by its competition authority, the Australian Competition and Consumer Commission (ACCC), and it continues to do so. The code would require the major internet platforms (Google, Facebook) to enter into negotiations with Australian news content providers to reach revenue-sharing agreements regarding the use of news media content in the platforms’ online offerings. If no agreement is reached, an arbitrator would determine the direct and indirect value of news content to the platforms, the cost of producing it, and evaluate the impact of payment on the platforms. In response, Google launched a scare campaign threatening that Australians could lose free search, then urged Australians to swamp the ACCC with complaints.

The Australian government has not backed down to what it has termed “bullying tactics”, and it proceeded to introduce the legislation in December of last year. Meanwhile, Google was fighting rear-guard actions in other countries and, as part of its strategy, “blinked” to some extent by announcing that it was prepared to enter into licensing negotiations, on its terms, with some media outlets in some countries.  Among these countries was Australia, but no sooner were the agreements announced than Google pulled a bait-and-switch by announcing suspension of its Australian agreements because the Australian government was continuing to develop the news media bargaining code.

When the Australian legislation was finally introduced in December, it contained some concessions to Google and Facebook by explicitly recognizing that there is monetary value in the service that the platforms play by referring readers to news content. This value would have to be taken into account in any negotiations between the platforms and content providers over access to content. But this did not satisfy Google. It has gone nuclear by threatening during testimony with Senators on the legislation to once again block access to Google Search by Australians. First it “experimented” by blocking search results to Australian news sites and is now seriously threatening to close down the Search offering in Australia altogether.

Could it do so? Indeed, it could, as it has done in China, but would it? That remains to be seen. It is hard to believe that Google would abandon a market the size of Australia, where it dominates search to the tune of about 90%, and allow its competitors (Bing, Yahoo, DuckDuckGo and others) a leg up. It is also not clear whether closing down its search function would affect other Google offerings, such as Google Maps, Youtube etc. or if Australians could continue nonetheless to access Google offerings outside Australia, possibly by using Virtual Private Networks (VPNs) to skirt any geo-blocking imposed by Google. It’s all potentially very messy.

Google is also trying to get the US government to intervene, with some success. In a submission dated January 15, just five days before the Trump Administration left office, the US Trade Representative’s Office wrote that, “the U.S. Government is concerned that an attempt, through legislation, to regulate the competitive positions of specific players in a fast-evolving digital market, to the clear detriment of two U.S. firms, may result in harmful outcomes”. Harmful to whom, one wonders? Whether the Biden Administration will be as eager to take up cudgels for Google remains to be seen.

Is this about the money, or the principle? A bit of both, but mostly the latter. Google has demonstrated that it is prepared to throw some money at the problem by rolling out its $1 billion (over three years) news content initiative, announced back in October, but it wants to do it “voluntarily”, and on its terms. Its tussle with Australia is being watched by many countries (not the least of which is Canada, where news publishers have been pushing the government to take action to require the big internet platforms to share revenues generated through access to content that the publishers have produced). In France it took months of negotiations, backed up by pressure from the French government and the courts, to get a deal that satisfied both publishers and Google. The Australian government will not be easily cowed and Google is treading a dangerous path with its threats, but it also will not give way without a fight.

It is hard for me to believe that some compromise will not be found. Australia is too big and too important a market for Google to abandon. It reportedly generates about $4 billion per year in Oz, although only A$134 million of this is booked as profit. It can’t walk away from every market where it is under pressure to come to terms with news content providers. By the same token, Australia does not want to push Google so hard that it becomes the test case, but Australians, especially Australian politicians, don’t like to be threatened. That is not a wise thing to do. However, the legislation is not cast in concrete at this point; indeed the whole point of the Senate review is to assess the impact of what is being proposed and to identify areas where the legislation could be improved. I fully expect that a few tweaks will be made (the Senate Committee’s report with recommendations is due February 12) that in the end will be acceptable to Google—particularly tweaks to the arbitration process that is likely to take place after the news publishers and Google fail to agree on terms voluntarily, as seems almost inevitable. At the same time, the legislation will establish the principle of requiring payment for providing access to news content. The Australian government will settle for nothing less.

Google won’t like it, but its credibility is under threat from many sources, not the least of which are anti-trust suits in the US, and it doesn’t have many friends.  Other countries are watching and waiting to see how things will play out in Australia, after noting the agreement that was reached in France. One thing is clear. Without the threat of force majeure by governments, Google will carry on with business as usual.

France held the line, and a deal was reached. I expect something similar will happen in Australia (although if both sides are obstinate, this could go to the brink). Despite fighting to never give an inch, Google will likely have no choice but to accommodate demands from established news content providers for a reasonable degree of sharing of revenues generated from use of their content.

© Hugh Stephens 2021. All Rights Reserved.

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