Treasury Laws Amendment (News Media and Digital Platforms Mandatory Bargaining Code) Bill 2021
Thirty-two years ago, on a cold June day, scientists in Melbourne succeeded in realising a project that had been in the making since the mid 1970s. It started out as idle speculation. But interest grew over the years as the possibilities became clear and obstacles were overcome. By the late 1980s the project secured enough support and funding for it to become a reality. So on that June morning in 1989 a computer at the University of Melbourne established a connection to a NASA satellite, which in turn connected to a computer at the University of Hawaii. Australia had joined the internet. In the months that followed the connection was upgraded and more universities were brought in. The Australian Research Council and the CSIRO both contributed funding and before the year was out our first internet service providers were established, allowing businesses and individuals to connect to the internet in their own right. Since then the internet has transformed our society, our economy and the way that we live. But one effect is already clear: the internet can enable much greater competition in some markets but greater concentration in others.
Market concentration is already one of the most difficult and enduring economic policy issues in this country. A small number of large corporations dominate many of our markets: the big four banks, the supermarkets, the airlines, electricity providers, gas companies and fuel companies. Concentration allows each to exercise market power—power they would not possess in a truly competitive market, power they can use to exploit their stakeholders. Suppliers are often squeezed to the point of bankruptcy, as our dairy farmers can attest. Employees are required to work harder without the wage rises they deserve, as many workers will tell you. Customers pay top dollar for often mediocre service and mediocre products, as anyone with an electricity bill will know. And governments are squeezed to provide a favourable regulatory and tax setting. The winners from market power are corporate executives and shareholders.
We are now approaching the 30th anniversary of the National Competition Policy, but we have not made enough progress towards a truly competitive Australian economy. We still have an economy that suffers from too little competition, too little innovation and too little market reform. For all the benefits the internet has brought and will continue to bring to Australia, it can also cause harm through increased concentration. We must act now to intervene, to regulate and to prevent the increasing concentration of market power, before it is too late.
The default structure for tech is a natural monopoly, a winner-takes-all market that Google, for example, enjoys with search and Facebook enjoys with its social network. Unlike past monopolies these businesses don't squeeze consumers into paying top dollars for their services. They use their market power in a different way; they compel users to give up their privacy. The price the public pay for Google and Facebook services is giving up their privacy. Business pays in other ways. The news media has paid most dearly. Their content has been stolen and reused by digital platforms, who earn advertising revenue from the content but pay little, if any, compensation to the news publishers. Publishers have been unable to challenge this practice out of fear that they will be cut off from Google or Facebook, risking their entire business. This was happening while 'the rivers of gold' were drying up with publishers and many of them were struggling to survive. The last decade has been one of consolidation as news publishers merged and closed, and embarked on waves of redundancies.
To give publishers the best chance for survival, the Turnbull government introduced media reforms in 2017. In retrospect, that bill should also have dealt with the unethical practices of some digital platforms. But, at the time, there was a belief that publishers could reach a fair deal with the platforms. Sadly, that wasn't the case. The negotiations on that bill were very intense, with my colleague Nick Xenophon primarily seeking support for civic journalism—particularly to help smaller media entities transition to the digital environment—while I focused on securing what became the ACCC's Digital Platforms Inquiry. We were successful in putting the case to government, and I am glad that that inquiry has led to this bill, the Treasury Laws Amendment (News Media and Digital Platforms Mandatory Bargaining Code) Bill 2021.
Despite all the hyperbole and the grandstanding, this bill is really a routine piece of legislation. It simply provides that a platform and a publisher can enter into arbitration if they can't reach a deal. It's not rocket science; that's all it is. Neither party is forced to participate. If a publisher or platform don't want to do a deal with each other, they are not obligated to do so. The code only applies when both sides want a deal but they cannot come to an agreement. The arbitration process will remedy the problem of platforms delaying negotiations and squeezing suppliers of news content. It does so by creating a pathway for a rapid, fair outcome that considers the benefits each side receives from the deal and the costs they incur.
The legislation is routine—even, I dare say, mundane—but you would never know this if you focused on the extraordinary reactions from the platforms. Google's threat to quit Australia and Facebook's decision to deny service to thousands of Australian news providers and government pages were a massive and very pathetic overreach. These stunts demonstrated that tech companies believe they can intimidate democratic governments to secure favourable outcomes. But they have spectacularly backfired. Google's threat to leave Australia lost them any parliamentary goodwill they may have enjoyed. Facebook's decision to block pages like the Bureau of Meteorology, state health agencies and local community groups lost them any public sympathy.
Going rogue has demonstrated to Australians that there is an urgent need to regulate digital platforms. This is why I'm also moving an amendment that forces designated platforms to disclose their user data practices. They'll have to publish what types of data they collect, what data they make available to other businesses or foreign governments and how users can opt out of having their private data harvested.
Transparency alone will not change their behaviour, but it will mean users are better informed about the practices of digital platforms and it will foster a debate about what practices are appropriate. It is a vital step in developing a regulatory framework that controls digital platforms and forces them to comply with community standards and, importantly, expectations.
This bill and my amendment are temporary measures. As the internet and digital technologies evolve the policy challenges and opportunities will also evolve. The important thing today is to lay the foundations for future regulation. There will be occasions when tech companies engage in behaviour that is unfair, unethical or dishonest. When they do it is entirely appropriate for government to intervene. There is nothing special about tech that allows them to do as they please. But the longer we wait to create a framework for regulating platforms, the harder it will be to hold them to account. So we must start work today, work to build a framework that protects Australians and their privacy and ensures tech companies act fairly, ethically and honestly.