Australia Will Require Tech Companies to Pay News Outlets

Evening the Playing Field

Australian lawmakers are passing regulations that will force US tech companies, like Facebook (FB) and Google (GOOGL), to share money generated from news on their sites with the original publishers.

The model of using content for free has helped Facebook and Google achieve unprecedented success. Together, the companies’ market values are about $1.7 trillion. Meanwhile, many news outlets are experiencing severe financial hardships. The Australian regulations will aim to spread revenue a bit more evenly between the two sectors.

Tech Companies Try to Adapt

Recently, tech companies have been facing scrutiny from a number of governments surrounding how they deal with news. Already, Google and Facebook have made some changes to their operations in response to criticism from governments and media companies.

In April, antitrust regulators in France passed laws requiring Google to pay media companies to display clips of articles. Google then preemptively announced a new plan for paying news companies in Germany, Brazil, and Australia. Facebook launched a separate news branch of its company last year and paid about 200 publishers to put articles in the section. Some publishers received between $1 million and $3 million from Facebook. Australian officials say these moves are a step in the right direction but are not enough.

Determining the Value of News

As talks unfold about the new regulations, it is not yet clear how revenue will be shared between tech companies and media outlets.

Australian news organizations received 2.3 billion clicks from Facebook between January and May 2020. Google Search accounted for 3.44 billion visits to Australian news sites. There’s no question that the two industries are intertwined. In some ways they each provide value for one another. However, the exercise of putting a price tag on the value that news creates for tech companies is a difficult task. Investors will be carefully watching to see how discussions in Australia progress, and what this could mean for regulations on tech companies in other countries.

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