Facebook and Google have been ordered to pay Aussie media companies for publishing their news

Facebook and Google will be forced to pay Australian media companies for publishing their news stories, under a world-first mandatory code of conduct, after negotiations with the two global digital giants failed.

Treasurer Josh Frydenberg and Communications Minister Paul Fletcher ordered the Australian Competition and Consumer Commission to draw up a compulsory code of conduct to correct the imbalance of bargaining power between local media companies and global technology platforms.

This follows complaints from local media companies that Facebook and Google didn’t genuinely engage in negotiations over a voluntary code.

The government was motivated to act by the collapse in advertising caused by the coronavirus-induced economic downturn, which put further pressure on the viability of media companies.

The new code being involved by the competition watchdog, headed by Rod Sims, will include enforcement, penalties and ways to mapped out arguments between the worldwide platforms and native media companies.

It will include sharing of revenue generated from news, ranking and display of local news content on Facebook and Google’s sites also as data sharing.

Facebook and Google have a stranglehold over the digital advertising market and benefit greatly from the content of news publishers on their platforms, social media, search queries and digital video.

The ACCC found a significant portion of search queries on Google – 8 to 14 per cent – led to the appearance of the company’s Top Stories results page, indicating a value of news content because of the amount of searches.

The ACCC has been directed to come up with a draft conduct code before the end of July, with an agreement to be finalized soon after.

The coronavirus pandemic played a key role in the government moving to rush forward with the mandatory code of conduct.