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Australia's antitrust chief claims victory after Facebook standoff

[February 24, 2021] By Byron Kaye and Colin Packham

CANBERRA (Reuters) - The architect of Australia's laws forcing Google and Facebook to pay media companies for content claimed victory on Wednesday, though critics said last-minute changes to appease Facebook favoured Big Tech over smaller news outlets.

After tense negotiations prompted Facebook to cut off news in the country last week, Australia offered a host of technical concessions and the social media giant said it would restore news as the revamped bill looked set to become law this week.

While Facebook said its concerns had been met and opposition lawmakers warned that smaller media players may be overlooked, Australian Competition and Consumer Commission Chair Rod Sims said the bargaining power imbalance had been righted.

"The changes the government's done are things that either don't matter much or are just to clarify things that, at least in Facebook's mind, were unclear," Sims, who helped draft the original laws, told Reuters.

"Whatever they say, they need news. It keeps people on their platform longer. They make more money," he said.

The endorsement from Australia's top antitrust regulator will bolster the government's argument that its hardline approach worked and may offer encouragement to countries such as Canada and Britain which have said they plan similar laws.

Other countries have introduced legislation forcing so-called Big Tech players to negotiate with media companies for licensing fees for links that draw traffic, and advertising revenue, to their platforms.

However, Australia will be the first country where a government arbitrator effectively sets the rates tech giants will have to pay if negotiations with media companies fail.

The last-minute changes include an extra two-month mediation period between any failed talks and state intervention and give the government discretion to release Facebook from the process if it proves it has made a "significant contribution to the sustainability of the Australian news industry".

Facebook's vice president of global affairs, Nick Clegg, said the company had "erred on the side of over-enforcement" with its news blackout - which inadvertently blocked some government pages - because it needed to act quickly before the new legislation was introduced.

The agreed changes "mean fair negotiations (with publishers) are encouraged without the looming threat of heavy-handed and unpredictable arbitration," he wrote in a blogpost he internet needs new rules that work for everyone, not just for big media corporations. B, adding: "The internet needs new rules that work for everyone, not just for big media corporations."

SMALL MEDIA, BIG CONCERNS

While the Australian Senate backed the changes before sending the amended bill back to the lower house, where it was expected to pass soon, opposition lawmakers and smaller media firms warned that giving the government power to spare tech giants its involvement could leave niche outlets without compensation.

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Smartphone with Google app icon is seen in front of the Australian flag in this illustration taken January 22, 2021. REUTERS/Dado Ruvic/Illustration/File Photo

"The big (media) players could successfully negotiate with Facebook or Google. The minister then doesn't designate them, and all the little players miss out," independent senator Rex Patrick, who opposed the amended legislation, told Reuters.

Lee O'Connor, owner and editor of regional newspaper The Coonamble Times, said the changes appeared to weaken safeguards for smaller players.

"It's the vagueness of the language that's the main concern, and the minister's discretion is part of that," O'Connor said.

Antitrust regulator Sims dismissed the concerns.

"If Google and Facebook don't do deals with even the smaller players, my view is they'll get designated (as subject to intervention)," he said.

If Google and Facebook did deals with all Australia's major outlets, which account for up to 90% of the country's media content, "why the hell would they muck it all up and not do the other 10%? It makes no sense," Sims said.

DEAL DELUGE

After threatening to withdraw its search engine from Australia over the laws, Alphabet's Google instead struck deals with most large Australian publishers, including a global arrangement with News Corp.

Television broadcaster and newspaper publisher Seven West Media became the first media company to announce a Facebook deal, saying late on Tuesday it had signed a letter of intent to reach a content supply agreement within 60 days.

Rival Nine Entertainment Co said on Wednesday it was now in talks with Facebook.

Clegg said Facebook had invested $600 million since 2018 to support the news industry, and planned at least $1 billion more over the next three years.

"Facebook is more than willing to partner with news publishers. We absolutely recognize quality journalism is at the heart of how open societies function," he said.

He said Facebook was in active negotiations with publishers in France and Germany after agreeing deals for content in Britain and the United States.

(Reporting by Colin Packham and Byron Kaye; Writing by Jonathan Barrett; Editing by Jane Wardell, David Clarke and Mark Potter)

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