• by Laurie Sullivan  @lauriesullivan, September 28, 2020

Google on Sunday called Australia’s media code unfair and unworkable, suggesting the setup won’t allow for fair negotiations.

It is not opposed to the code, which requires Google and similar companies to pay for media, but says it is opposed to critical parts such as forced payments, advance notice of algorithm changes, and a requirement to share information with the media companies.

Last week, Google proposed changes to help resolve the challenges and today went into more details about one of its biggest concerns, "the highly unusual, largely untested, one-sided arbitration system that would determine commercial arrangements between Google and news companies," Mel Silva, vice president of Google Australia & New Zealand, wrote in a blog post published today. 

“We don’t oppose a code governing the relationship between news businesses and digital platforms — but right now the way the law is drafted isn’t fair or workable,” she wrote.

In the Australian Competition and Consumer Commission (ACCC) drafted a code for digital platforms to pay news media companies for their content. The code determines the commercial arrangements.

Not only does Silva call the code unfair, but she explains how it goes against what the ACCC said should occur when it wrote the code: “Negotiations around compensation for the use of news should also take into account the value that Google and Facebook already provide to news media businesses for using their news content.”

The code system is called “binding final-offer arbitration.” In the United States it’s referred to as “baseball arbitration.” Silva explains that it's not used in any of the eight mandatory codes in Australia. And without the two parties’ consent, it ha never been used in Australian law before at all.

Two parties negotiate a price for a product or service after assessing its market value and the value each side provides the other in a standard negotiation. If the parties can’t reach an agreement, they might ask a mediator or arbitrator to decide on what’s fair. In baseball arbitration, if the two sides can’t reach an agreement, each puts forward one final offer and the arbitrator picks one, guided by set criteria. 

Google calls the claims unreasonable. This type of system is only put in place if the value of the product or service cannot agree on a price.

“Some of the amounts being suggested by news businesses about how much we should pay to provide links to their stories defy commercial reality,” Google wrote. “One news business has already claimed digital platforms should pay $1 billion every year, despite the fact that only 1 percent of all searches by Australians last year were seeking news — equating to around $10 million dollars in revenue (not profit).” 

Google also claims it is being singled out. The draft code says the arbitrator should consider news businesses’ production costs — but not Google’s. 

“The only other factor the arbitrator must consider when deciding on a payment is that it must not place ‘an undue burden’ on Google,” Google wrote. “It’s a vague and undefined condition and an insufficient substitute for being able to talk about our actual value and costs.”