Microsoft tells Biden administration to adopt Australia’s pay-for-news plan

Making Google and Facebook cough up could help USA’s currently fragile democracy, argues Pres Brad Smith

Microsoft has said the USA should copy Australia’s plan to force Google and Facebook to pay for links to news content and suggested that doing so will help improve social cohesion and strengthen democracy.

But Google has fired back with a statement asserting that Microsoft’s motives are impure. “Of course they'd be eager to impose an unworkable levy on a rival and increase their market share,” wrote Kent Walker, Google’s chief legal officer.

Microsoft’s suggestion to the Biden administration came from company president Brad Smith arrived in a Thursday post that opens: “As the dust slowly settles on a horrifying assault on the Capitol, it’s apparent that American democracy is in a fragile state.”

Smith attributed much of that fragility to disinformation spreading on social media and “the erosion of more traditional, independent and professional journalism.”

Despite Microsoft pouring billions into loss-making media ventures, creating new options for advertisers inside Xbox games and boasting annual search-driven ad revenue in the billions, Smith blamed others for the media’s problems.

“The internet eroded the news business as dotcoms like Craigslist disrupted advertising revenue, news aggregators lured away readers, and search engines and social media giants devoured both,” Smith wrote.

Smith also says Microsoft knows that news content is essential to win loyal users for a search engine. “Access to fresh, broad and deep news coverage is critical to retaining strong user engagement,” he writes, then asserts that Google and Facebook must have reached the same conclusion and that having them pay for news is therefore reasonable.

Australia’s proposal, he says, offer a “creative” way to get around past failed attempts to have web giants pay for news, by allowing collective bargaining by media companies to erode the monopoly power of web giants and handing final decision-making power to an independent arbitrator.

Smith also points out that Microsoft’s decision to support Australia’s plan and pay local news outlets quickly saw Google CEO Sundar Pichai call Australian prime minister Scott Morrison, then asserts that Pichai only did so once the prospect of increased competition roused him to action.

“At the end of the day, what is wrong with compensating independent news organizations for the benefits the tech gatekeepers derive from this content?” Smith asks, adding: “These are now pressing questions for the Biden administration. Facebook and Google persuaded the Trump administration to object to Australia’s proposal. However, as the United States takes stock of the events on January 6, it’s time to widen the aperture.”

Google’s riposte again states that Australia’s proposal is unworkable and is not supported by local business groups.

+COMMENT

Google’s spent the last few weeks pointing to plenty of opposition to Australia’s plans from within the tech industry, academia and even Sir Tim Berners-Lee. But Australia’s right-of-centre government isn’t listening to those voices.

What is wrong with compensating independent news organizations for the benefits the tech gatekeepers derive

It is almost certainly listening to Australia’s largest media companies as their political values are close to the government’s. Those media companies are also just-about fellow ideological travellers and seldom give government representatives a rough ride.

Rupert Murdoch’s News Limited, Australia’s largest print news publisher, has not yet become as strident as Fox News in the USA, but is fiercely pro-government and seldom bothers to hide its contempt for Google, social media, and public broadcasters.

Microsoft and Smith surely know that advancing Australia’s model in the USA has painted a target on the company at a time when left-of-centre media outlets already stands accused of wilful falsifications and bias, while big tech is felt to exercise too much power. Smith must feel that the software giant can ride that out, and thread the needle with an argument that big tech can be tamed if Microsoft – the original big bad of big tech – forces the sector to share some wealth in the cause of common good.

But Microsoft surely knows that its proposal is unlikely to be actioned by the Biden administration, which has a pandemic to quell, a busted economy to defibrillate, allies to re-engage, and a foe - China – that has more weapons and cunning that any it faced in the cold war.

So why has Microsoft bothered? Google’s observation that Redmond’s real aim is making life hard for rivals seems apposite. But Google’s stance also shows that what it and Facebook fear most of all is viable competition because neither company has ever really had to fight for dominance. ®

Bootnote

The Register is not eligible to receive payment under Australia's plan and reports this story as industry news that potentially reboots the business models the world's most powerful technology companies.