Feb 4, 2021 - Technology

Tech coughs up money for news as regulatory threats loom

Illustration of a megaphone made of newspaper
Illustration: Eniola Odetunde/Axios

Tech giants spooked by threats of regulation around the world are finally starting to pay news companies for their content, giving the struggling news industry a glimmer of hope at a critical time during the pandemic.

Why it matters: Without government intervention, experts predict that many quality news outlets will eventually crumble, leading to a more serious global misinformation problem.

  • “I think it's a moment where people understand the importance of news publishing, given the events of 2020," said David Chavern, president and chief executive of the News Media Alliance, which represents thousands of U.S. news publishers.
  • "People understand now's the right moment to do something for news,”

Driving the news: Australian regulators have introduced a new bargaining code that would make it the first country to force both Google and Facebook to pay news publishers for their content or else be subject to hefty fines.

  • Both Facebook and Google have warned that if the code takes effect, they will pull their services from the region, arguing that the law isn't fair and would make it commercially unviable to operate in Australia.
  • Facebook says it would block users from being able share news links in Australia. Google says it would have to stop making Google Search available in the country.
  • Other tech giants can be added to the code if regulators find enough evidence that their size or scope could drive a power imbalance with news companies.
  • Microsoft threw its support behind the code Wednesday, suggesting its Bing search engine could become a strong substitute for Google in the region.

The big picture: Australia's code of conduct will serve as a litmus test for many countries around the globe on the best ways to update their laws.

  • The European Parliament approved a copyright directive in 2019 that includes a provision that members states can use as a framework to force tech platforms to pay publishers for their content.
  • France became the first member state to ratify the law shortly thereafter. Google last month finally agreed to pay French publishers for their content after months of tense negotiations with publishers.

In the U.S., lawmakers have moved slower than their foreign counterparts, but Australia’s efforts have caught the attention of some members of Congress, Chavern said.

  • Bipartisan bills previously introduced in the House and Senate would allow newspapers to collectively bargain with dominant online platforms over money, attribution, branding and other issues.
  • Sen. Amy Klobuchar (D-Minn.), who will lead the antitrust subcommittee, told Axios' Ashley Gold on Wednesday that she plans to reintroduce one such bill.
  • She previously introduced the Journalism Competition and Preservation Act with Sen. John Kennedy (R-La.), which picked up then-Senate Majority Leader Mitch McConnell as a co-sponsor.

Be smart: The global proposals have forced tech giants to create new features that steer money to news outlets without having to totally reimagine their businesses.

  • Google said last fall it would pay publishers $1 billion for their content to appear in a new product called the Google News Showcase.
  • Facebook has spent millions of dollars paying publishers to be a part of its Facebook News tab. Facebook News launched last week in the U.K.

The bottom line: Tech giants are showing that they’re willing to pay for quality news — but only on terms they find acceptable.

Go deeper: The power pendulum is swinging back to news companies.

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