Canberra versus tech giants: Winning a losing battle?

TO hear it said, Australia scored a decisive victory over Internet giants Google and Facebook when these companies agreed to work out a deal with local traditional media firms to pay for their content. The reality is far more complex.

Canberra framed its position as an attempt to support journalism, especially of the "public interest" variety. That is debatable. It would be closer to the truth to say that the government of Prime Minister Scott Morrison used legislation as a way to support local media companies whose business models were no longer working. Left to themselves some newspapers, especially within Rupert Murdoch's publishing empire, were facing oblivion despite repeated and savage cost-cutting measures in recent years. However, even in their diminished state, news organisations wield political influence. Canberra was corralled to help them out at the expense of Internet tech giants.

The Australian law is premised on the idea that Google and Facebook owe local publishers for linking to their content. In any rational market, publishers would owe platforms for this free advertising. The headlines and snippets that a Google search displays can be blocked if the publishers don't want to be included. But in this case, the law would force Google and Facebook to negotiate with Australian news publishers to pay for the news content unless they came to their own voluntary agreements. In the event, Google seems to have decided that since it faced competition from Microsoft's Bing search engine and other Web browsers, it was preferable to do a deal. Google decided to pay Mr Murdoch's News Corp and the Nine News conglomerate. It is in talks with other news outlets.