Financial Review - Why Washington is watching Australia's Facebook, Google crackdown

AFR correspondent Jacob Greber cites Open Markets Institute when reporting in Financial Review about the US monitoring Australia's decision to make Big Tech share advertising revenue with local media companies.

Australia's decision to make Facebook and Google share advertising revenue with local media companies is being closely monitored in the US, where there's a growing desire to impose a similar deal on the digital giants.

US publishers, media groups and Congress are monitoring the Australian situation as well as similar moves in France and elsewhere for clues to how the digital distribution duopoly will respond.

"We are very pleased to hear about the Australian government's actions," David Chavern, chief executive of the News Media Alliance that represents more than 2000 US news organisations, told The Australian Financial Review.

"There's a lot more scepticism about the platforms than there used to be. For a time they got a lot of favoured treatment because they were sort of home-grown champions, but there's now a lot of concern about their impact.

"And that concern is across the political spectrum," Mr Chavern said.

Tech giants are coming under massive political pressure in the US from anti-trust advocates. There's also a building wave of bi-partisan concern over their impact on America's crumbling local news outlets as well as their role in spreading fake information and distorting election outcomes.

Jason Kint, chief executive of Washington-based Digital Content Next - a trade association whose members include National Geographic, The Guardian, The Financial Times, The New York Times, and Fox - described the Australian move as "significant".

"The material part of this announcement is that the decision to accelerate into a mandated code is the recognition of the significance of the problem and the harm that's happening real time," Mr Kint said in an interview.

Australia's push comes amid a broad drive across the US, Europe and elsewhere to address the imbalances caused by the fact that most of the incremental growth in media advertising in the last five years has flowed to the two tech giants.

"The fruits of the work coming out of Brussels, out of the EU, out of Australia, the UK's Competition Market Authority - all of these reports are coming to the same conclusion: that they have used their dominance and access to data across their products to leverage and take a dominant share of the business," Mr Kint said.

If Australian Treasurer Josh Frydenberg and Australian Competition and Consumer Commission chairman Rod Sims succeed in breaking open the Facebook-Google fortress it may well be because they are no longer working in a global vacuum.

In the past, the tech giants have been able to use their size and global reach to effectively ignore smaller markets. Spain sought in 2014 to force Google to pay for news going through its aggregator product, but was ultimately rebuffed and the company pulled out of the market.

"If they were to do to Australia - or any nation - what they've done to Spain, there would be much larger outrage," said Jody Brannon, a director for journalism and liberty at the Washington-based Open Markets Institute, which seeks to protect America's economy and democracy from corporate monopolies.

"This is a particularly sensitive time for journalism as well as the pipelines that carry the news, which are the two big boys.

"The power of the duopoly needs to be reined in, at least in the US, with enforcement of existing anti-trust laws, and with recognition that Facebook and Google have become a pipeline that is reminiscent of railroad domination.

"In a new era it's important that legislators look at new ways to understand how these distribution platforms impact the way society is informed," she told the Financial Review.

Read the full story on Financial Review here.