Google and Facebook threats are proof of why a news media bargaining code is needed

Fine, then – we’ll take our search engine and leave.

This was Google’s response in a Senate hearing regarding the proposed news bargaining code in which Google and Facebook will be required to pay for news articles displayed on its platforms.

In Google’s assessment the proposed code is unworkable, and if introduced, the tech giant would stop offering its search function in Australia. At the same time, Google claims this is not a threat but “a reality”. Facebook’s ultimatum, made in September last year, is that it may block news content on its site in Australia.

Let’s call Google’s and Facebook’s responses for what they are – cold corporate bullying, and in itself a very clear illustration of why the code is needed, and more regulations beyond that, to address the monopolistic behaviour of big tech.

In his inaugural address on 20 January, 1981, President Ronald Reagan said the following:

“Government is not the solution to our problem. The government is the problem.”

In this one line, we can find one of the reasons why the US and the world have allowed a handful of technology companies to grow to a size and global dominance never before seen.

Underlying Reagan’s ideology was the firm belief that the market is best left alone as it regulates itself. The problem is that it doesn’t. An unregulated market doesn’t strive for balance, it strives for extremes and dominance of the few.

A free-market economy is a potent driver of innovation and wealth, both individual and communal. But without governments as the honest broker and arbiter in the marketplace, it moves towards increased ownership concentration, and in the worst-case scenario monopolistic/oligopolistic situations. This is where we’re at with Google and Facebook.

The fact that the Australian federal government is taking a stand and assisting an industry vital to the health of our democracy is to be commended. The cynical take (and in part correct) is that our largest and most dominant legacy media companies, Nine Entertainment and News Corp Australia, have lobbied the government hard for the code.

But this doesn’t take away from the fact that the code is needed, provided it also includes local, regional and public service media.

One of the core arguments against the code is that it will kill the internet where free hyperlinking is a key feature. There is some merit in this argument, but there are ways of dealing with this via minor tweaks to the code to make sure the internet remains as open and free as possible.

There are several reasons why Google and Facebook are making such severe ultimatums. One is financial (more so for Google than for Facebook). But to my mind the main reason is about control and power.

The code proposes that the two tech companies must notify media companies about any changes in their search algorithms. This is to assist media companies in planning and making publication decisions. If this becomes part of the code, it will be a real snub to the power of the two companies.

Watching this space

The world is currently watching the standoff between the two global bullies and Australia. A lot is at stake. If enough countries develop and pass similar regulations and laws as the news bargaining code, it would limit the global influence of Google and Facebook. But the current imbroglio with tiny Australia pales in significance when you consider the major anti-trust cases the two tech giants have coming in the US.

Given the downward reputation spiral the tech companies are on (at times referred to as the techlash), it seems a strange strategy that they have resorted to threats and bullying.

A more constructive approach would have been to view the long consultation time for the Australian code as an opportunity to deal with ‘techlash’ and negotiate with the various stakeholders in good faith.

If Google does indeed withdraw its search function in Australia, we’re in uncharted waters. Money-wise, it’s peanuts for Google. But what happens if competitors fill the void after Google? Not only in Australia, but in many jurisdictions around the world? Eventually it will start to hurt, financially and reputation-wise.

We’re now several light years away from the original Google corporate slogan “Don’t be evil”. When push came to shove, it turned out that Google was not a ‘special’ company. It’s driven, like most other corporations, by revenue and profit maximisation, and social responsibility seems low on the agenda.

It will be interesting to see if Google users will start voting with their feet and turn to alternative search engines and products. There are a few but not that many – yet.