Australia’s News Media Bargaining Code: What happens next?

An Australian ‘world-first’ – the genesis of the Code

In 2017, as part of a political deal to secure Senate cross-bench support to relax media cross-ownership laws, Australia’s Turnbull Government agreed to conduct an inquiry into the impact of large global digital platforms on the local Australian media industry. In December 2017, Australia’s Commonwealth Treasurer directed the Australian Competition and Consumer Commission (ACCC) to conduct an inquiry into digital platforms.

Among other matters, the terms of reference directed the ACCC to give particular attention to the impact of digital platforms on news and journalistic content. The ACCC’s subsequent inquiry over 2018 and 2019 was world-leading in its breadth and scope, resulting in a comprehensive final report in July 2019.

As the ACCC’s report explained, the reduction in advertising revenue flowing to media businesses was undermining their ability to invest in journalism, particularly at the local level. Part of the decline was attributed to global digital platforms’ success in attracting advertising expenditure. The ACCC suggested there was not yet any business model that could effectively replace advertiser funding to finance quality journalistic content.

Relevantly, the ACCC identified a power imbalance between global digital platforms and Australian news businesses. Australian news businesses were unable to successfully negotiate a share of the advertising revenue generated by digital platforms from the display of Australian news content. The ACCC favoured regulatory intervention to preserve wider public benefits arising from news production and distribution, including the importance of a strong independent media in a well-functioning democracy.

The ACCC proposed that designated digital platforms should voluntarily prepare codes of conduct to govern their commercial relationships with Australian news businesses. Following consultation, Australia’s Morrison Government tasked the ACCC in December 2019 to facilitate development of voluntary codes. If agreement was not forthcoming, the Government would consider mandating an industry code. The ACCC subsequently indicated limited progress and considered that agreement was unlikely on the key issue of remuneration for news content.

In April 2020, in the context of concerns regarding COVID-19’s economic impact on the media sector, the Morrison Government committed to developing a mandatory code to address bargaining power imbalances. Australia’s Parliament enacted a new Part IVBA into Australia’s Competition and Consumer Act 2010 (Cth) that commenced from March 2021 to create the News Media and Digital Platforms Mandatory Bargaining Code (Code).

The Code was a ‘world first’ and has attracted much international attention. The ‘Code’ is best described as a self-contained ‘negotiate-arbitrate’ sectoral access regime enshrined within Australia’s competition laws. This negotiate-arbitrate solution is common for Australian competition policy and has much Australian precedent.

How was the Code intended to work?

The Code aims to address bargaining power imbalances to ensure that Australian news businesses receive fair remuneration from digital platforms for the value generated from news content. The Code seeks to ensure that digital platforms remunerate news businesses if and when the platform generates more value from news content than the business creating this content obtains from its own distribution via the platform.

For a news media business to participate in the Code, it must be registered by the Australian Communications and Media Authority (ACMA). The ACMA must register a news business if certain revenue and content criteria are met, including that the news sources are subject to relevant professional journalistic standards and operate predominantly in Australia for the dominant purpose of serving Australian audiences. As at 4 March 2024, there are 41 registered news media corporations (RNMCs).

Importantly, the Code only creates statutory obligations for digital platform corporations and services that have been designated by the Minister. As at 4 March 2024, no Ministerial designations have yet been made, although the clear intent is that Meta and/or Google could potentially become designated digital platform corporations (DDPCs). To date, potential designation has been used as a ‘threat’ by government to coerce the development of voluntary agreements.

Bearing these threshold issues in mind, the objective of the Code is to incentivise RNMCs (individually or collectively) and DDPCs to conclude agreements for remuneration for news content on digital platform services. The Code includes:

• general requirements, including recognition of original news content, open communication requirements, and a minimum standard that DDPCs provide advance notice of planned changes to algorithms or internal practices that would have a significant likely effect on referral traffic to covered news content;
• non-differentiation requirements, that DDPCs must not discriminate against RNMCs because of the latter's participation or otherwise in the Code; and
• bargaining obligations, including a requirement to negotiate in good faith and conduct a mediation if agreement is not reached on certain core issues within 3 months.

If the parties are unable to reach negotiated or mediated agreement about the remuneration for news content on digital platforms, then the relevant RNMC may give notice to the ACCC that arbitration is required. A panel of 1 or 3 arbitrators is appointed, either by agreement between the parties or, if the parties cannot agree on the appointment of 1 or more arbitrators, by ACMA.  The parties can agree to appoint any person as an arbitrator, however ACMA can only appoint someone from its pre-existing register of arbitrators.  Each party bears half the costs of the arbitral panel. 

The arbitration process involves the two sides submitting final remuneration ‘offers’ to the arbitral panel.  So-called ‘final offer’ or ‘last-best offer’ arbitration is designed to encourage good faith bargaining, whereby parties are motivated to compromise so that they can put forward an ‘offer’ to the panel that is seen as more reasonable than the other side’s ‘offer’.

The arbitral panel can either select one side’s ‘final offer’, or determine an intermediate amount in the public interest by adjusting the more reasonable offer, but taking into account various statutory criteria.  The ACCC is permitted to make its own submission to the arbitral panel.  The Minister is not permitted to directly intervene.  The arbitration is mandatory and the arbitral panel’s determination is binding.

The Code is intended to encourage commercial agreements, allowing the parties to ‘contract out’ of the Code by reaching commercial agreement.  DDPCs are also permitted to make standard offers that avoid any need for negotiation/arbitration if accepted by any RNMC. 

How has the Code worked in practice?

When enacting the Code, the Government considered that between 100 and 200 news businesses could benefit.  Of these, 20 were assumed to have the resources for individual negotiations/arbitrations, while the remainder were assumed to either form collectives or benefit from standard offers.  The Government assumed that 75% of individual negotiations would proceed to arbitration.

In practice, none of this has arisen.  Neither Meta nor Google has yet been designated as a DDPC.  Rather, all negotiations have occurred entirely outside the Code with the designation of DDPCs used more as a threat by government to coerce commercial negotiations and outcomes.  

During 2022, Treasury conducted a review of the operation of the Code to assess whether it was meeting its objectives. By that date, some 30 commercial agreements had been struck.   Treasury considered the Code had encouraged digital platforms to reach a substantial number of agreements with news businesses that would not have been made without the Code.  Treasury therefore considered it reasonable to conclude as at December 2022 that the Code had been a success. 

That being said, Treasury was not able to assess the benefits arising from commercial arrangements, given confidentiality provisions had prevented the agreements being shared with Treasury.  A number of RNMCs made submissions to Treasury that were critical of the absence of any DDPC designations.  Some media speculation has occurred that agreements favoured the DDPCs.  Treasury also commented that the Code has created resource disparities between news businesses, particularly those with and without deals, which had left the latter at a competitive disadvantage.

Treasury considered that small news businesses may be better assisted by other types of government support, including grants.  Australia’s Albanese Government has subsequently sought to provide various forms of financial assistance.  The review also made 5 recommendations to improve the operation of the Code that were all endorsed in the Government’s response a year later in December 2023. 

What happens next?

Meta’s announcement of 29 February 2024 has the following potential implications:

• As of 4 March 2024, no DDPCs are yet designated under the Code, so the Code remains practically inoperative. As such, there is no immediate recourse under the Code for any RNMCs that seek an arrangement with Meta.
• One likely consequence of the announcement is that the Government will consider whether Meta meets the criteria for designation irrespective of Meta’s decision to deprecate Facebook News. If so, we can anticipate that designation of Meta could follow. Meta could seek to challenge any such designation.
• Meta has historically indicated its agreements had terms of 3 years. Meta has publicly stated it will honour the terms of existing agreements. If those agreements were concluded during or after 2021, the relevant RNMCs may still have time before payments from Meta cease.
• Payments under the Code assume that the platform generates more value from news content than the business creating this content obtains from its distribution via the platform. An issue arises whether deprecation of Facebook News will reduce the value imbalance. That being said, there would still presumably be benefits to Meta from other forms of news content sharing.
• The United States does not have an equivalent to Australia’s Code. The proposed similar Journalism Competition and Preservation Bill of 2022 (JCPA) had insufficient bipartisan support to pass through the US Senate. Some have commented that the lack of Senate support reflected Meta’s announcement that it would consider removing news from its platform were the JCPA to pass. Meta’s announcement may well lead to these issues being revisited in the United States.

Irrespective of Meta’s announcement, the fundamental policy issue remains as important today as it was at the genesis of Australia’s regulatory process some 8 years ago, namely ensuring sufficient income to preserve quality local journalism in the public interest. This issue is not unique to Australia, but is global. In 2024, the importance of a strong independent media in a well-functioning democracy remains as important as ever.