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The Dangers of Australia’s Discriminatory Media Code

· February 19, 2021

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*Edited 2/24/2021 to reflect new information*

The debate is intensifying as Australian policymakers move closer to making the News Media and Digital Platforms Mandatory Bargaining Code (“the Code”) a reality in the country. This week Parliament held a third reading of the bill – the Senate will debate the bill on Monday, and the only step remaining for adoption after that would be executive approval. While there is a lot of interest in how individual companies are responding, the Code remains fundamentally flawed and flies in the face of Australia’s international trade commitments.

The proposal has undergone heightened criticism in recent weeks, as it appears likely to result in restricting Australians’ access to digital services. DisCo has covered in its series on the Code how the new framework would harm the functioning of the Internet, and further entrench the position of a few powerful incumbents in the Australian news sector, including News Corp. 

Internet pioneers have warned that the Code would undermine the open nature of the Internet. Tim Berners-Lee, in comments submitted to Australian regulators, argued that the proposal would “undermine the fundamental principle of the ability to link freely on the web and is inconsistent with how the web has been able to operate over the past three decades.” He further warned: “If this precedent were followed elsewhere, it could make the web unworkable around the world.” Vint Cerf, in his own submission, noted that the Code “represents a fundamental challenge to the free and open Internet, to the functioning of the country’s digital economy, and to Australia’s economic future.” Professor of Media Studies, Amanda Lotz at Queensland University of Technology flags that “the Code is unlikely to do much to fix the crisis faced by journalism in the internet age. It isn’t even a band-aid on the problem.” 

Trading partners including the United States have raised concerns about the targeted nature of the Code and its compliance with Australia’s trade commitments. As previously covered on DisCo, the code conflicts with Australia’s trade commitments under the U.S.-Australia Free Trade Agreement (AUSFTA) and the WTO by disadvantaging U.S. technology companies to prop up domestic constituencies. 

Throughout the regulatory process, the Australian Competition and Consumer Commission and Treasurer have clearly stated that they are only focused on two U.S. companies here: Google and Facebook. The Treasurer has discretion to designate the parties that the Code applies to — and he has threatened designation only as to these two, without even examining whether Australian, Chinese, or other companies should be in scope. This decision is based only on a discretionary finding of a “bargaining imbalance,” and does not apply similar requirements to other suppliers of news referrals, including domestic digital and non-digital media companies. As such, the Code would not only violate AUSFTA commitments on national treatment (AUSFTA Arts. 10.2 and 11.3) and most favored nation requirements (AUSFTA Arts. 10.3 and 11.4), but also analogous provisions in the WTO General Agreement on Trade in Services (GATS), including Articles XVII and II.

Further, the Code’s requirement that the companies effectively must carry certain domestic news content conflicts with Australia’s commitment to not impose “performance requirements” on U.S. investors. For example, under AUSFTA, Australia may not require a U.S. investor to “purchase, use, or accord a preference to goods produced in its territory” (Art. 11.9.1(c)) or “achieve a given level or percentage of domestic content” (Art. 11.9.1(b)). The Code imposes a non-differentiation obligation on covered services to carry specific Australian news content which is inconsistent with this prohibition.

Despite these trade inconsistencies, Australian policymakers continue to move quickly and their misguided approach is already hurting the online environment and market in Australia. 

The two companies have been preparing to deal with the possibility that they could be designated. Google has worked on commercial deals with publishers outside the framework of the Code as part of their broader initiative to support journalism, and is seeking to find a path forward that does not break Google Search. In other markets, Facebook has launched initiatives to support journalism such as “Facebook News” which is available in the U.S. and UK. Following recent clarifications from policymakers and amendments to the draft legislation introducing the Code, Facebook has since announced it will no longer restrict the sharing or viewing of Australian and international news content in Australia in order to comply (additional details on Facebook’s decision are available here). Other firms have sought to take advantage of the new regulations to better position their own competing products. 

These initiatives and responses do not alter the fundamental dynamic: the Australian government is taking extraordinary, discriminatory and unjustified legislative action to intervene in the market and force payments from American companies to Australian publishers. Policymakers committed to a free and open Internet should continue to push back against such foreign protectionism — in Australia, and against any other governments that pursue a similar path.

Digital Trade

Companies rely on clear, predictable rules that facilitate digital trade to export their products and services around the world. These rules include balancing the competing interests between encouraging investment and enabling information access; promoting the free flow of information online; and maintaining balanced intermediary liability regimes.