Australia’s bold move to make Google and Facebook pay for news content they share turned into a high-stakes drama when the tech giants threatened to pull out of the country. But instead of leaving Google and Facebook cut deals worth $166 million annually with local news outlets, avoiding the full force of the new laws. This struggle between tech behemoths and news organizations is now influencing similar legislation in California, where lawmakers are grappling with how to balance the needs of struggling media with the power of Silicon Valley. As global debates about tech regulation heat up, Australia’s experience offers a dramatic preview of what might come next.

Google threatened to leave Australia three years ago when lawmakers there took on the titans of Big Tech, drafting laws to make Google and Facebook pay for news stories they posted on their websites.

Google Australia Managing Director Mel Silva stated in a Senate hearing that the business would have “no real choice” except to cease offering Google Search in Australia if the News Media Bargaining Code became law.

More was done by Facebook’s parent company. Following the bill’s passage in the lower chamber of parliament, Meta forbade Australian news organizations from sharing content on Facebook and for six days barred Australian users from linking to news websites.

However, Google and Facebook refrained from executing their threats in Australia.

By the time the measure was signed into law, the government had given in on a major point: if digital platforms agreed to enter into private agreements with media businesses, they might avoid regulation. As a result, in order to avoid legal restrictions, Google and Facebook hurried to arrange deals with the majority of significant news organizations.

In the end, according to Australian officials, Facebook and Google gave Australian newsrooms a total of $166 million annually. This amount is a small portion of Alphabet and Meta’s combined valuation of more than $3 trillion, but it is a significant contribution for numerous struggling media companies.

Legislators in Sacramento are currently drafting the California Journalism Preservation Act, a plan that would compel tech corporations to pay media companies for accessing their news material, using the Australian law as a model.

The proposal from California, which would be the first of its kind in the US, is being introduced as news organizations of all sizes are seeing a sharp fall and are being forced to lay off employees as digital platforms take up more and more of their advertising revenue. Although the bill’s future is yet unknown, Australia’s innovative approach to holding Google and Facebook responsible, as well as a comparable law that was approved in Canada last year, provide some early indicators of how things might pan out in the Golden State.

The Australian law’s impact was described as “extremely, unambiguously positive” by economist Rod Sims, a former chair of the Australian Competition and Consumer Commission who was instrumental in its creation.

However, after a few years of Australia’s experience, it is unclear how the government will regulate Big Tech going forward and whether news journalism can continue to be a profitable business.

The agreements Australian media outlets have made with Google and Facebook are only good for three to five years, and many in the industry are wary given last year’s confrontation between IT companies and Canada: Facebook removed news from its website after lawmakers enacted the Online News Act, a bill that was modeled after an Australian statute.

“We’re at a very uncertain point in the history of legislating digital platforms and finding a way to support public interest journalism in the context of a media ecosystem that’s infected with misinformation,” said Misha Ketchell, editor of The Conversation Australia and New Zealand.

“It’s a problem we’re going to be facing for at least the next 15 to 20 years and I don’t think any solution will be total,” he added. “This is the start of a cycle of legislation all over the world.”

News organizations and Big Tech platforms have been at odds for almost ten years.

Fundamentally, the disagreement is both economical and philosophical. The platforms maintain that regulation is incompatible with the principles of the open Internet, a stance supported by Tim Berners-Lee, the man who created the World Wide Web.

“The code risks breaching a fundamental principle of the web by requiring payment for linking between certain content online,” the computer scientist wrote to the Australian Senate.

According to Google, internet regulation would support “a narrow range of sources for the diffusion of knowledge, thereby undermining media diversity and democratic discourse.”

Big Tech critics respond that the internet isn’t open since Google uses algorithms to choose what consumers see. They contend that Google makes money by placing advertisements next to news articles written by third parties, undermining the public interest’s need for journalism and resulting in news deserts as print media close.

“This isn’t like Kodak being put out of business by the digital camera,” Sims said. “Facebook is not doing news. It is taking it without paying for it.”

Across Europe, regulations were proposed in the early 2010s. In 2012, French publishers lobbied the government to pass laws charging search engines for referring to their websites, which prompted Google to threaten to remove its links to news websites. After some convincing, Google decided to contribute $64 million to a fund that would “support transformative digital publishing initiatives.” Publishers abandoned the legislation.

“Google gave them a chunk of money, and the publishers and the legislation went away,” said Alfred Hermida, a professor of journalism at the University of British Columbia. “Ever since then, that has been Google’s strategy: paying off the news industry to avoid regulation.”

When Sims was given the duty of starting an investigation into the effects of digital platforms on society by the Australian Treasury, the drive to regulate tech in Australia got underway six and a half years ago.

Sims was instrumental in the creation of the News Media Bargaining Code, a bill that called on Google and Meta to split a percentage of their news content income with Australian news outlets, after producing a 623-page report.

Google retaliated, claiming that the proposal would harm internet users, and ignored its current business agreements with Australian news publishers.

However, there was a public outrage when Facebook limited access to news during wildfire season and while the government was distributing COVID-19 vaccines, as well as vital emergency services and state health organizations. Scott Morrison, the prime minister of Australia, criticized Facebook for its decision to “unfriend Australia.”

In the end, a government agreement was reached that permitted platforms to escape regulation or classification under the law provided they engaged in voluntary commercial agreements negotiations with media firms.

News publishers enjoyed success, by some criteria.

A year following the enactment of the act, Guardian Australia had established a new office in Brisbane and employed over forty journalists. The Australian Broadcasting Co. added ten new locations to its regional coverage area and hired sixty journalists. Victoria’s Colac Herald, a local newspaper, updated its camera gear. The Conversation, a university-funded nonprofit website, has added a new section devoted to books and ideas and increased its coverage of environmental issues.

However, not everybody receives money from Facebook. Meta declined to sign a contract with Special Broadcasting Service, a multicultural government broadcaster, or The Conversation.

Several media specialists have expressed disapproval of the lack of openness in the business agreements that platforms and outlets are making. They point out that publishers are not compelled to prove they have used the funds.

Sims called that “dopey.” He contended that making commercial transactions public would give platforms with greater negotiation strength the upper hand.

Australia served as an inspiration to Canadian lawmakers. However, they decided to act differently after the Online News Act was passed in June 2023. Google and Facebook insisted on forced regulation rather than offering to negotiate their way out of it. In response, Meta blocked all Canadian news articles on Facebook.

Meta’s withdrawal from Canada was disastrous for several small news organizations and digital start-ups that rely on Facebook to drive traffic and build an audience.

In the five months following the Facebook ban, Eagle Feather News, a small Indigenous newspaper in Saskatchewan, had a sharp decline in unique visits, from roughly 20,000 to 12,000 per month. The monthly earnings from ad sales decreased from $19,000 to $11,000 in the same time frame.

“It’s been devastating,” said Kerry Benjoe, Eagle Feather News’ managing editor.

Benjoe added that she and other small publishers had become overly dependent on Facebook, while other major Canadian publishers attribute their problems to the internet giants. “We weren’t pushing people to our news site,” she said.

The Canadian government hurried to ensure that Google stayed put after Meta withdrew.

They secretly bargained with Google at the last minute to modify the law from Australia’s model of the negotiating code to a fixed sum that would be disbursed to outlets based on the number of employees.

Google consented to contribute $73 million per year, inflation-adjusted for all time, to a fund supporting the journalism sector.

Although the funds have not yet been distributed, analysts predict that qualifying outlets will receive roughly $14,600 per year for each journalist.

“The Canadian government placed a very big bet that this was all a bluff from the tech companies and they could not live without Canadian news and they would huff and puff but would ultimately cave,” said Michael Geist, the Canada research chair in Internet and e-commerce law at the University of Ottawa. “I think they failed to read the market.”

Some contend that the law benefited the industry as a whole.

“The vast majority of publishers will see real dollars flowing to their news business,” said Paul Deegan, president and chief executive of News Media Canada, a national group representing more than 550 regional news outlets. He mentioned that before the regulation, Google had agreements with roughly a dozen Canadian publishers.

However, a few significant advocates of the bill ultimately felt let down by the administration.

The wording of the bill was influenced by Ryan Adam, vice president of government and public relations at the Toronto Star, the biggest daily print newspaper in Canada. However, he expressed doubt that the legislation would eventually benefit his publication monetarily.

The Star had already signed content license arrangements with Google and Meta before the law’s enactment. He claimed that when the government moved to a fund model, his company was no longer able to negotiate directly with the major IT companies.

“The government materially changed the legislation at the last minute and folded to Google,” Adam said. “The Online News Act has been largely a disappointment for us.”

Some media analysts claim that Australia and Canada demonstrate the boundaries of digital firms’ ability to pay news publishers, while California considers legislation.

“If you try to play chicken with these companies, they are not going to blink, because this is more than a story about California, or Canada,” Hermida said. “This is a global story.”

Hermida stated that if Google were to acknowledge that it was legally obligated to compensate news organizations in Canada or California, that would establish a precedent and that “it can’t afford to do that; it will change the nature of its global business.”

No government has been able to create a long-lasting framework to control Big Tech thus far.

“Nothing in the Australian legislation forces Google or Meta to bargain; the only reason they came to the bargaining table was the threat that they would be designated,” said Diana Bossio, professor of media and communications at Swinburne University. “Canada went one step further and they designated, they forced Google and Meta to bargain, and as a result, Canadians didn’t have access to news.”

Researchers from the University of Toronto and McGill Universities released a report in April stating that six months following Facebook’s prohibition, local news outlets in Canada had lost a whopping 85% of their Facebook engagement, while national news outlets had lost 64%. Nonetheless, Facebook users who were politically active stayed on the site.

In Australia, Meta is also changing course. Meta declared in March that it would not be renewing as a number of the agreements it made with Australian news businesses three years prior were about to expire.

Though Sims is no longer the head of the Australian Competition and Consumer Commission, he expressed doubts about Meta’s ability to avoid regulation in the long run by censoring news. According to him, Facebook might be forced by the government to display news from reliable media sources.

“Do we want prominent social media platforms where a lot of people get their news — Facebook or Instagram — not having any trusted news sources?” he said.

Google has already shown its strength while the California law is still pending in Sacramento.

Google eliminated connections to news websites in California in April as part of a “short-term test” to see how prospective state laws might affect users. It issued a warning that the proposed law from California would jeopardize the “support of the news ecosystem.”

Google contends that the new legislation would disadvantage smaller, regional publications in favor of large media corporations and hedge investors. Additionally, it contends that for Alphabet, which recorded $307.4 billion in revenue last year, it would result in “uncapped financial exposure” and “a level of business uncertainty that no company could accept.”

In June, California lawmakers updated their plan to more closely resemble the Canadian model: The present plan calls for platforms to contribute money into a fund that would then be distributed to news organizations in proportion to the number of journalists they employ. Another bill aimed at supporting journalism is being debated by lawmakers. It would create a new tax on giant tech platforms and provide news organizations with a tax credit for hiring full-time journalists.

Sims stated that he is “99.9% confident” that Google will close agreements regardless of what happens with Facebook, given the competition it faces from Microsoft’s Bing, which is powered by ChatGPT.

“It’s not all gloom and doom,” Sims said. “I imagine Bing would be licking their lips if Google left California.”

Sims pleaded with Sacramento lawmakers who are promoting regulation to be steadfast.

“Google needs news,” he said. “You’ve got to be absolutely resolute: This is going to happen. But if there’s something they want, which is no skin off your nose, compromise.”

Previously, GreatGameInternational reported that after an attempt by Redbird IMI, owned by Emirati Vice President Sheikh Mansour, to acquire The Telegraph newspaper and The Spectator magazine, the UK has decided to ban foreign entities from owning newspapers and magazines.