The News Media and Digital Platforms Mandatory Bargaining Code: a Review

 

I INTRODUCTION

 

The Australian government has recently introduced the Treasury Laws Amendment (News Media and Digital Platforms Mandatory Bargaining Code) Bill 2020 (Bill). The Bill establishes a mandatory code of conduct (Code) to counteract the bargaining power imbalance apparent between digital platform corporations and Australian news businesses and corporations.

The Bill is the result of the government’s further steps in response to the Australian Competition & Consumer Commission’s (ACCC) Digital Platform Inquiry in July 2019 (which highlighted power imbalance concerns)[1] and is meant ‘to support the sustainability of the Australian News sector.’[2]

Key parts of the Code

How the Code attempts to create a power balance:[3]

  • bargaining – a requirement that the responsible digital platform corporations and registered news corporations/news businesses that have indicated an intention to bargain do so in “good faith”;[4]

 

  • compulsory arbitration – where the responsible digital platforms corporation and registered news corporations/businesses disagree on the matter of remuneration in relation to making available covered news content, an arbitral panel will select between two final offers made by the bargaining parties;

 

  • general requirements – which, among other things, require responsible digital platform corporations to provide news businesses with advance notification of planned changes to an algorithm or internal practice that will have a significant effect on covered news content;

 

  • non-differentiation requirements – platforms must not differentiate between the news businesses participating in the Code, or between participants and non-participants, because of matters that arise in relation to their participation or non-participation in the Code;

 

  • contracting out – the Bill recognises that a digital platform corporation may reach a commercial bargain with a news business outside the Code about remuneration or other matters. It provides that parties who notify the ACCC of such agreements would not need to comply with the general requirements, bargaining and compulsory arbitration rules (as set out in the agreement); and

 

  • standard offers – digital platform corporations may make standard offers to news businesses, which are intended to reduce the time and cost associated with negotiations, particularly for smaller news businesses. If the parties notify the ACCC of an agreed standard offer, those parties do not need to comply with bargaining and compulsory arbitration (as set out in the agreement).

 

II APPLICABILITY OF THE CODE

 

Which digital platforms are required to participate in the Code?

“Digital platform” is not defined in the Bill however according to the Bill’s Explanatory Memorandum[5] the term is intended to take its ordinary meaning. ‘It is intended that it will capture platforms that deliver a wide variety of services such as social media services, search engines and other digital content aggregators’.[6]

A) Designation by the Minister – section 52E

Section 52E prescribes that a digital platform corporation must participate in the Code if the Minister specifies that:

  1. one or more services in relation to a corporation or its applicable related bodies corporate[7] are “designated digital platform services”; and
  2. the relevant corporation is a “designated digital platform corporation”.

This provision is mostly discretionary and only requires that the ‘Minister must consider whether there is a significant bargaining power imbalance between Australian news businesses and the group comprised of the corporation and all of its related bodies corporate.’[8]

B) Responsible digital platform corporation

Once a digital platform corporation is “designated” by the Minister it is considered to be a “responsible digital platform corporation” under the Code[9] which registered news businesses can bargain with. It is also subject to the other general requirements and non-differentiation obligations of the Code.

The responsible digital platform corporation will be either:

  1. a related body corporate (of the corporation identified in the Ministerial determination) that is incorporated or managed in Australia and operates or controls the designated digital platform service; or
  2. if that subsidiary does not operate or control the digital platform service by itself or with one or more other entities – the designated digital platform corporation.[10]

Which news businesses can participate in the Code?

The main requirement to participate in the Code is that a news business must be registered with the Australian Communications and Media Authority (ACMA).

An “applicant corporation” seeking to register a news business must also apply to be registered by the ACMA as a “registered news business corporation” and demonstrate that they operate or control that news business, either by themselves or together with other corporations.

A) Eligibility tests

If a news business is not already registered with the ACMA, an applicant news business must also meet the following registration eligibility requirements per section 52G(2):

  1. section 52N(1) (the content test);
  2. section 52(O)(1) (the Australian audience test);
  3. section 52P(1) (the professional standards test);
  4. section 52M(1) (the revenue test); and
  5. section 52L (connection between applicant corporation and news business).

There are some other parameters, however section 52G(2) has significantly imposed limitations of:

  1. a minimum requirement of a demonstrated turnover of $150,000 in the preceding tax year (or at least 3 of the preceding 5 tax years); and
  2. remuneration is only available for news content where the primary purpose of nominated news sources is to produce “core news” content.[11]

According to the Explanatory Memorandum content is “core news” content when it is in the “public interest”. For example, the Explanatory Memorandum specifically indicated that lighter “infotainment” content such as “daily morning show[s]” and “opinion [or commentary] on news” may not be considered as “core news.”[12]

The Code also vaguely distinguishes between “core news content” and “covered news content:”

Core news content” means content that reports, investigates or explains:

  1. issues or events that are relevant in engaging Australians in public debate and in informing democratic decision-making; or
  2. current issues or events of public significance for Australians at a local, regional or national level

whereas “covered news content” means content that is any of the following:

  1. core news content;
  2. content that reports, investigates or explains current issues or events of interest to Australians.

Notably, covered news content attracts some requirements under the Code but not necessarily the remuneration which core news content attracts.

 

III. OPERATION OF THE CODE

 

The General Requirements

Once a news business corporation is registered by the ACMA, each designated digital platform service must comply with a number of “general requirements”. This includes general requirements which relate to covered news content of the registered news business.[13]

The general requirements are covered under Division 4, Subdivision B to C and include:

  1. Subdivision B – the Minimum Standards:
    • Section 52R – Giving list and explanation of data provided to registered news businesses;
    • Section 52S – Change to algorithm or practice to bring about identified alteration to distribution of content with significant effect on referral traffic;
    • Section 52T – Change to algorithm or practice to bring about identified alteration to distribution of content with significant effect on referral traffic—paywalled content;
    • 52U – Change to algorithm or practice to bring about identified alteration to distribution of content with significant effect on distribution of advertising;
    • 52V Sections 52S, 52T and 52U — dominant purpose;
    • 52W Sections 52S and 52T — significant effect; and
  2. Subdivision C — Recognition of original covered news content:
    • Section 52X – Recognition of original covered news content.

 

IV ADDITIONAL NOTES

 

Involved/interested parties should additionally take into account the following:

Parties can make alternative contract arrangements

Under section 52ZZL, if certain conditions are met, parties can contract out of general requirements (Division 4), bargaining obligations (Division 6) and the arbitration requirements (Division 7).

Collective bargaining is expressly allowed

The Code makes express allowance for bargaining by a representative of a collective made up of an unlimited number of registered news businesses.[14] It will be interesting to see if and how news businesses decide to act on this section of the Code in due course (if the Bill is passed).

 

V CONCLUSION

 

The strain on traditional media, news, and professional journalism since the ascension and proliferation of online social media platforms is an issue worth the attention of the public interest. However, concerns have been voiced that if the Bill is passed it may create an unattractive precedent that access to online links should be exchanged for money (whereas now users commonly exchange access for data).[15] Further, because access to information is inherently tied to equal opportunity there is the possibility that such a precedent could discriminate against those who are already socio-economically disadvantaged.

The Bill was recently referred to the Senate Economics Legislation Committee where a report is due on 12 February 2021, after which the Bill may be passed (if there are no further amendments or oppositions). The Bill has been strongly supported by the Prime Minister and the Treasurer in public statements whereas the main targets of the Bill, being Facebook and Google, have publicly threatened to withdraw and/or restrict services to Australia if the Bill is passed.[16]

The proposed Bill and Explanatory Memorandum can be accessed here: https://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/Bills_Search_Results/Result?bId=r6652

 

ENDNOTES

 

[1] Australian Competition & Consumer Commission, Digital Platforms Inquiry (Final Report, 26 July 2019).

[2] Explanatory Memorandum, Treasury Laws Amendment (News Media and Digital Platforms Mandatory Bargaining Code) Bill 2020 [1.25] (Explanatory Memorandum’).

[3] Ibid [1.9].

[4] Treasury Laws Amendment (News Media and Digital Platforms Mandatory Bargaining Code) Bill 2020 s 52ZH (‘the Code’).

[5] Explanatory Memorandum (n 2).

[6] Ibid [1.47].

[7] See s 50 of the Corporations Act 2001 (Cth) for the meaning of “related bodies corporate”.

[8] The Code (n 4) s 52E(3).

[9] Ibid s 52A.

[10] Explanatory Memorandum (n 2) [1.2]; also see s 52A of the Code (n 7) for the definition of “responsible digital platform corporation”.

[11] The Code (n 4) s 52N(1).

[12] Explanatory Memorandum (n 2) [1.75].

[13] The Code (n 4) ss 52Q, 52R.

[14] See the Code (n 4) s 52ZZP.

[15] See, eg, David Adams, ‘”Unworkable around the world”: Tim Berners-Lee, creator of the World Wide Web, is the latest internet all-star to slam Australia’s media bargaining code’, Business Insider Australia, (Online Article, 20 January 2021) <https://www.businessinsider.com.au/media-bargaining-code-tim-berners-lee-2021-1>.

[16] See, eg, Misha Ketchell, ‘Is news worth a lot or a little? Google and Facebook want to have it both ways’, The Conversation, (Online Article, 25 January 2021) <https://theconversation.com/is-news-worth-a-lot-or-a-little-google-and-facebook-want-to-have-it-both-ways-153787>.