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Google, Facebook should pay publishers for news, says Microsoft

The United States should not oppose a proposed Australian code which requires Facebook and Google to pay news publishers, instead it should “copy it”, Microsoft’s president and chief legal officer, Brad Smith said in a blogpost — putting the company at odds with Google and Facebook.

“As the 21st century began, 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 said. “But one thing is clear – the internet and social media have not been kind to the free press.” “What is wrong with compensating independent news organizations for the benefits the tech gatekeepers derive from this content?” Smith added. Citing the attack on the US Capitol on January 6, he said that there was a greater need for a strong press.

In July last year, Australia released a draft News Media Bargaining Code, for consultation, which forces platforms like Facebook and Google to pay Australian news companies for their content. The code also requires platforms to give news companies nearly a month’s notice of any changes to its algorithms which may affect referral traffic to news sites, or those affecting rankings of paywalled news, and “substantial changes” to how news is displayed, and even advertising of news.

Unsurprisingly, both Facebook and Google have pushed back against the code. While Facebook said that it would stop Australians from sharing news, Google went as far ahead to say that it would pull the plug from its services in Australia, if the code were to be implemented.

Microsoft said that in the eventuality Google stopped its services in Australia, its Bing search service would remain in Australia and that it is prepared to share revenues with news organisations under the proposed rules. Smith revealed that he and Microsoft CEO Satya Nadella spoke to Australia’s Prime Minister Scott Morrison, assuring him that “even if Google wanted to leave Australia, we would stay”.

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However, it is worth noting that the current code applies to Facebook and Google, and not to Bing, and could give the latter an opportunity to grab market share in  in the country.

By the company’s own admission, the Bing search service has less than 5% market share in Australia which is substantially smaller than the 15-20% market share it has in the US. “But, with a realistic prospect of gaining usage share, we are confident we can build the service Australians want and need. And, unlike Google, if we can grow, we are prepared to sign up for the new law’s obligations, including sharing revenue as proposed with news organizations,” Smith said.

“Our endorsement of Australia’s approach has had immediate impact. Within 24 hours, Google was on the phone with the Prime Minister, saying they didn’t really want to leave the country after all,” he said. “And the link on Google’s search page with its threat to leave? It disappeared overnight. Apparently, competition does make a difference.”

Google recently signed a deal with news publishers in France, agreeing to pay them for content appearing as preview snippets in search results. Facebook also said that it will start paying news publishers in several countries, including in India.

It is not the first time that Microsoft has taken aim at rival tech companies over burning regulatory issues. Earlier, the company said that Apple’s App Store fees should be looked into, after a number of app developers started criticising the mandatory 30% tax applied on in-app purchases on Apple.

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