SYDNEY (Reuters) - Australia will force Facebook Inc (O:FB) and Alphabet Inc's (O:GOOGL) Google to share advertising revenue with local media firms, the country's treasurer said on Monday, becoming one of the first countries to require digital platforms to pay for content they use.
Treasurer Josh Frydenberg said the move comes after talks with Facebook and Alphabet failed to yield a voluntary code to address complaints by domestic media players that the tech giants have too tight a 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 in Canberra. "These are big companies that we are dealing with but there is also so much at stake, so we're prepared for this fight."
The government has now 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.
Frydenberg said the mandatory code will include sharing of data, ranking and display of news content and the sharing of revenue generated from news, adding that it would also establish penalty and binding dispute resolution mechanisms.
Australia's online advertising market is worth about almost A$9 billion ($5.72 billion) a year and has grown more than eight-fold since 2005.
For every A$100 spent on online advertising in Australia, excluding classifieds, 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 expressed dismay at the government move on Monday.
"We're disappointed by the government's announcement, especially as we've worked hard to meet their agreed deadline," Facebook said.
"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 an emailed 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.
Monday's move also comes as the new coronavirus pandemic hits Australia's media business hard, with several regional outlets reporting steep declines in advertising revenue.
Pending the new code, the federal government last week unveiled a support package for the local media businesses including a 12-month waiver of spectrum tax for commercial television and radio broadcasters, and a A$50 million public interest news gathering program.
