Facebook, Google Will Need To Pay Australian Media For News Content, Or Risk Facing Hefty Fines Under New Law

Tech giants like Facebook Inc FB and Alphabet Inc GOOGL GOOG subsidiary Google will have to pay for news content generated by Australian media, Bloomberg reported Friday.

What Happened

Australia has unveiled a draft law, open to consultation until Aug 28, which will apply to only Google and Facebook initially, but could be extended to other companies later on, Bloomberg noted.

The legislation set to pass later in the year will allow smaller media outlets to directly negotiate revenue sharing with tech giants.

Both companies would be required to negotiate with media outlets on revenue sharing in good faith, according to Australia’s Treasurer Josh Frydenberg. A binding arbitration process will ensue if no deal is reached, and penalties up to $7 million or 10% of local revenue may apply. 

Google said it was “deeply disappointed” and called Australian government’s action “heavy-handed.”

Facebook noted it was reviewing the government’s move “to understand the impact it will have on the industry, our services and our investment in the news ecosystem in Australia.”

Why It Matters

The law has other implications as well, including a requirement to give 28 days notice of algorithm changes to media outlets that affect traffic and ranking of news behind paywalls, according to Bloomberg.

The tech giants will also need to inform media companies about the data they collect from readers, including the time spent on a given article.

In April, French antitrust authorities ordered Google to enter into discussions with news publishers on the use of their content for news aggregation purposes, TechCrunch reported.

Germany and Spain, which had previously passed similar laws, were not successful in getting Google to pay their news providers. 

Price Action 

Alphabet Class A shares traded 0.3% higher at $1,543.25 and Class C shares traded 0.6% higher at $1,541.00 in the pre-market session Friday.

Facebook stock was up 6% at $248.61 per share at press time.