SYDNEY (Reuters) – The US government has asked Australia to overturn a proposed law that would make it the first country in the world to coerce Facebook Inc and Alphabet Inc. Google to pay for news that is sourced from local media.
In a submission calling for the government to “suspend” the plan, assistant US trade representatives Daniel Bahar and Karl Ehlers advised Australia to “learn more about the market and, where appropriate, develop a voluntary code”.
Under the law, which has broad political support and currently stands before a senate committee, Google and Facebook will be subject to mandatory price arbitration if a commercial agreement on payments to Australian media cannot be reached.
“The US government is concerned that attempts, through legislation, to regulate the competitive position of certain players … clearly detrimental to two US companies, could lead to dangerous results,” the document said, under the letterhead of the Executive Office of the President.
Such a move could also “raise concerns regarding Australia’s international trade obligations,” he said.
The Australian government announced the legislation last month after an investigation found the tech giant wields too much market power in the media industry, a situation it says poses a potential threat to a well-functioning democracy.
Asked for response to the US submission, Australian Treasurer Josh Frydenberg said in a statement that the government was “committed to proceeding with a mandatory code” that would address “the imbalance of bargaining power with digital platforms and media companies.”
The code follows an 18-month review by the Chair of the Australian Competition and Consumers Commission (ACCC) and “extensive consultations” covering the views of Google and Facebook, he added.
An ACCC investigation found that for every A $ 100 spent on online advertising, A $ 53 goes to Google, A $ 28 goes to Facebook and A $ 19 goes to other media companies.
Following intense but unsuccessful lobbying by the Australian governments of the two tech giants to overturn proposed laws, which they deem unfair, Google and Facebook suggested they may be forced to limit their offerings in the country.
($ 1 = 1.3014 Australian dollars)
Reporting by Paulina Duran in Sydney; Edited by Richard Pullin