Facebook CEO Mark Zuckerberg arrives to testify before a joint hearing of Congress.Credit:AP
The Australian government’s media bargaining code,which is at the centre of the dispute,has been endlessly debated over the past year. Media companies say they should be paid for producing journalism that benefits the platforms,but they lack the bargaining power to extract any value for it. Tech giants claim they do not really benefit from the existence of news,that news represents a small part of the overall activity on their platforms,and since they actually send these news organisations free traffic they shouldn’t be paying them anything.
There are merits to both sides of the argument.
Yet there is little doubt stronger regulation of Google and Facebook is urgently needed. The two companies have scarily dominant positions in their respective markets of search and social media,and also an entrenched duopoly in digital advertising. Meanwhile,their ascent has coincided with a host of societal problems ranging from rising misinformation and fake news,to a troubling surge in online conspiracy theories and growing internet addiction.
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The media bargaining code attempts to revolve the digital duopoly’s market dominance by using the threat of arbitration to force Google and Facebook to strike commercial deals with media companies. Could there have been a more straightforward solution? A digital platform tax or levy may have been cleaner and simpler and has existing parallels elsewhere in the economy.
There are already taxes on addictive and harmful products (think cigarette excise),and levies on disruptive new market entrants that are used to compensate legacy incumbents also exist (for example,the levies on Uber rides that are distributed to taxi licence holders).
Regardless,the debate about the merits of the media bargaining code in Australia has now become moot. The bill to bring the code into law has sailed through the lower house of Parliament and is all but certain to be passed by the Senate. Facebook is effectively saying that the overwhelming majority of elected officials in a sovereign parliament are wrong.