Baseball arbitration underpins Australian content deals worth “ten times” what tech companies have agreed with publishers in Germany and the UK, the regulator says.

Lessons from the country’s media bargaining code and the wide-ranging inquiry which preceded it were shared with INMA World Congress delegates by chairman of the Australian Competition and Consumer Commission Rod Sims in its final session last week.

Sims – described by INMA’s Robert Whitehead as the “rockstar regulator” in the space – explained how the ACCC had identified the pressure points which had led to lucrative content deals between Google and Facebook and publishers. Whitehead had estimated their value to be ten times that of those in Germany and the UK, and “still five times higher” than those in France, where legislation is in force.

Sims said he was “delighted” with progress so far, noting that the Australian legislation has “achieved its purpose”.

Australia’s news media and digital platforms mandatory bargaining code followed an inquiry into media issues which delivered 23 recommendations, of which others are “getting worked through”, he said.

Sims said use of copyright laws would not have worked with parties with the enormous market power of Google and Facebook. “You can’t have a commercial negotiation with someone with monopoly power,” he said.

Instead, the ‘negotiate-arbitrate’ regime, went direct to the heart of problem: “They did not like the idea of arbitration at all, because they were in complete control,” he said.

The idea of final-offer arbitration – known as ‘baseball arbitration’ – avoids ambit claims, “which would have been enormous”.

Sims said that the unusual structure of the ACCC as competition regulator and “enforcer” with infrastructure to follow the process through had already been used in negotiations between mines and port owners, and was “readily transferrable”.

He said that the need for the legislation came from within the ACCC, despite claims in a ‘don’t let big business run the internet’ campaign in which Sims said participants “usually meant don’t let News Corp run the internet”, adding that News was “not even one per cent of (the size of) Google and Facebook”.

“No company could stand up against that.”

Specifically, Sims said the Big Tech companies were concerned about the threat of arbitration and designation, and “did not want that as an international precedent.

“We don’t need to activate these, so that’s complete success.”

On the subject of collective bargaining – which is holding up negotiations in the US – Sims said Australia was “almost unique” (with New Zealand) in that its law gives the ACCC the power to authorise uncompetitive behaviour. This has already been used to allow regional publishers’ group Country Press Australia to negotiate.

He said the presumption had been that there was no wider value to journalism: “Well, there absolutely is, and there’s particularly value to Google and Facebook, and we believe they should pay for that value.”

Early drafts had “a few things wrong”, Sims said, describing as an attempt to legislate for notice on algorithm changes as “a bit of overreach”, adding that the regulator had always “had in mind a lump sum, and never intended per link payments”.

Suggesting that the legislation was “just a favour to Rupert Murdoch” was “the other Google line”, but Sims stressed the regulator’s independence. “This was absolutely our idea,” he said, adding that Murdoch was one of four major players in Australia and it was “not right that Murdoch was in a monopoly position in Australia. We had a lot of contact with the other players.”

But he said “there was no question having media on side helped facilitate a positive government response.

“But it was our recommendation, it came about because we saw an clear bargaining imbalance, a market failure that negatively affected journalism. We and I believe journalism is critical to any society’s functioning.”

In the discussion that followed, Damien Geradin, a partner in competition law specialist Geradin Partners, said Australia’s approach was “infinitely better”, while France’s forced negotiations “without a backstop, went nowhere”.

Next cab off the rank is the more complex issue of ad tech, on which Whitehead commended Geradin’s report and drew attention to the complexity of actions such as a case underway in Texas.

Geradin pointed to the scale of the problem, with Google Search taking US$145 billion of online advertising’s US$400billion, and Facebook another US$70 billion. “That leaves very little else for the others, including news publishers and othrs including games and weather,” he said.

“It gives (news publishers) access to only a tiny fraction, but they still need to use Google. News publishers have had a rough deal.”

One problem is the complexity of ad tech issues, with “many players having only a limited understanding of the value chain”. He said with inquiries around the world, Google would “have to deal with this, and will have to make concessions” but he anticipated that despite fighting hard, there will be a point where “they’re in a corner – probably in next couple of years – and will either make concessions or pull out by divesting bits and pieces”, taking the solution into their own hands as they did in Australia.

He said the ACCC had been “very clever and pragmatic, and really identified the press points, and it went relatively fast,” but that they “will only concede if they’re in a corner”.

As for the future, Whitehead asked what ‘peace’ looked like.

“I don’t see peace in the future,” said Geradin. “In the long run, news publishers and platforms are competitiors, going after dollars and attention. You will always need some sort of referee.”

Peter Coleman

Main picture: ACCC chair Rod Sims; (above) Robert Whitehead, who is a director of Australia’s McPherson Media