The mice squeaked and the elephants roared, but the ACCC ignores the people who matter – readers

​The proposed code is designed to force Google and Facebook to share some of their advertising revenue with the media that produces the stories found and shared on their digital platforms.

The once mighty media giants of News Limited and Nine Entertainment are claiming hundreds of millions in lost revenue. Google and Facebook trivialise the amounts, while being increasingly vocal in their opposition to the code.

Google fired the first warning shot by enlisting users (almost all of us) in its outrage, running scare campaigns on its platforms threatening that search as we know it will no longer be free and available.

Facebook, which up until now had stayed out of the fray, told its users (not quite all of us) that it would withdraw the ability to share news stories.

Treasurer Josh Frydenberg piped up in support of the ACCC, and effectively News Limited and Nine – reminding the digital giants that they better take it seriously as the Government is “not playing poker”.

And the stakes are high for Google and Facebook, not because they are too worried about a few hundred million dollars of lost revenue in Australia, but because of the repercussions of the legislation elsewhere. The world is watching and if Australia succeeds then other countries will no doubt follow suit.

Old Media v New: can government do Murdoch’s bidding and force Google to pay for news?

But there is also much more to this than revenue sharing. A much-overlooked part of the proposed code is that it will force the platforms to give 28 days’ advance notice of changes they make their algorithms.

The algorithms are the real guts of the intellectual property that makes Google and Facebook so good at serving up the right content (including ads) to the right audience at the right time. It is the reason why advertisers prefer them to the old-fashioned and heavy handed methods of old media – serve an ad to enough eyeballs and hope that some of the right people will see it some of the time.

The notion that Google and Facebook are enriching themselves on the content of media companies is a fallacy. As Alan Kohler and others have pointed out the benefits often flow the other way. It is worth noting that advertisers are staying right out of the debate. They know why they spend more money with digital platforms – because it works; the old way, increasingly, does not.

The algorithms are to Google and Facebook what the secret recipe is to Coca-Cola. And although they have not yet publicly voiced their opposition to the prior disclosure demand of the ACCC code, it is unlikely they will accede to it.

Nor is prior disclosure practical. How could they give such prior knowledge to participants to the code in Australia and not to other media companies – here or elsewhere? And what would the media companies actually do with that knowledge?

And how would that affect our national broadcasters and news producers – ABC and SBS – which the ACCC is suggesting should be excluded from the code?

Dangerous ground

The ACCC is on dangerous ground. It has been bamboozled by the mainstream media giants and the government into introducing a code of conduct that will not do the job. Under the pretext of “addressing the imbalance” between old media and new, the ACCC is instead running the risk of creating new imbalances by excluding the ABC and SBS and the rest of the online media sector, the majority of which are unlikely to be included in any revenue sharing without major amendments to the code.

And, above all, there is nothing in the code that will benefit consumers. Consumers want targeted content and the ability to choose how, when and where they read their news. The code’s only purpose is to prop up old media for a little while longer.

There is much work to be done to try to curtail the reach and power of Facebook and Google but forcing them to share revenue with old media companies using outdated business models is not the way to go. Consumers of news beware.