02/12/2021

For Rupert Murdoch and Friends, “Protecting the Free Press” Means Getting the Government to Kill Competition

Chris Marchese
Chris Marchese Counsel

What do you get when you cross Rupert Murdoch’s News Corp. with Microsoft? Answer: Australia’s crony capitalist Media Bargaining Code. 

If passed, Australia’s Media Bargaining Code will force only a few arbitrarily chosen tech businesses like Google and Facebook to pay Australia’s intentionally chosen media conglomerates like Rupert Murdoch’s News Corp. empire for linking to their websites.

Although billed as a tool to help struggling news businesses negotiate “fairly” with American tech firms, the proposed law has been found not only to breach Australia’s trade obligations but also to be a naked subsidy to politically powerful interests. It would force Google and Facebook not just to carry links and content from conglomerates like News Corp. but also to pay them for these links–a mandatory transfer of money meant only to further line the pockets of Australia’s most politically savvy and well-connected media outlets.

As we wrote earlier this month, the proposal would fundamentally damage the free and open internet. This isn’t just rhetoric: as the inventor of the World Wide Web points out, the Code “risks breaching a fundamental principle of the web by requiring payment for linking between certain content online.” In other words, Australia would set the precedent that if you want to share a link to content, then you need to pay for that link. 

Australia claims this is necessary because the news industry is struggling and tech is to blame. But even if that were true, Australia’s Code makes no sense. 

As the inventor of the World Wide Web points out, the Code “risks breaching a fundamental principle of the web by requiring payment for linking between certain content online.” In other words, Australia would set the precedent that if you want to share a link to content, then you need to pay for that link. 

Why does it apply only to the likes of Google and Facebook, but not to Microsoft, which has a higher market cap and more employees than both Google and Facebook? And why didn’t the Australian government analyze any other non-American news platforms that might be in scope? If the goal is to help struggling news media, why does the Code disproportionately benefit News Corp., which just this month posted record profits? Better yet, why is News Corp. even a beneficiary at all? 

Perhaps anticipating these questions, Microsoft released a blog post today that tries to paint a far rosier picture. According to Microsoft, the proposal doesn’t apply to its own products only because its competing search engine, Bing, doesn’t have enough users. 

It’s notable that Microsoft is no longer saying, as it did last week, that it will voluntarily comply with the Code; instead it has set up a new hurdle of 20% market share–once it gets there, then it’ll comply. Microsoft assures us that it’d be happy to comply with the law in order to strengthen the free press–just not now. 

Microsoft’s support of the proposal is opportunistic at best. Tired of competing in the market, Microsoft is now turning to the government to stack the deck in its and Bing’s favor. 

As the owner of Bing, Microsoft knows full well that the internet relies on the free sharing of information, including links to information. And so it understands that if its competitors have to pay for linking to information–even information they don’t use–it’ll put them at a competitive disadvantage.

To disguise this attempt to curry special favors from the Australian government, Microsoft has cloaked its support of the Media Bargaining Code in concerns about the news industry. Microsoft has gone so far as to argue that its support of the Code illustrates how it cares more about misinformation than other tech businesses. 

But this ignores Microsoft’s own actions. If the company’s concern were genuine, it would look internally first: a recent study showed that Bing is plagued by disinformation and does significantly worse than Google Search in combating it. Additionally, Microsoft might also examine its decades-long relationship with News Corp.—another “sensational, less reliable content” producer with a “70 per cent stranglehold on print readership,” as former Australian Prime Minister Kevin Rudd put it.

To disguise this attempt to curry special favors from the Australian government, Microsoft has cloaked its support of the Media Bargaining Code in concerns about the news industry.

But even if we assume the best of Microsoft, the Code is still awful policy. If enacted in Australia or here, it would serve only to entrench large media conglomerates like News Corp. and hurt the news industry overall. 

First, by applying only to certain media outlets, the law puts excluded outlets at a significant disadvantage. Whereas News Corp. is guaranteed a subsidy from tech, others have to earn their money the old-fashioned way: in the marketplace. 

Second, because it applies only to some outlets, it puts pressure on smaller ones to sell to conglomerates, which means the industry will become even more consolidated. And third, by giving this advantage to some and not others, it erects a new barrier to entry, making it even harder for a newcomer to set up shop.

But even if the Code were written to be generally applicable, it would still inflict harm on the news industry. Consider that, thanks to Google and Facebook’s linking, millions have discovered niche publications that lack household name recognition. 

Publications like Vox rely on users sharing and clicking links to their sites to gain followings. Google and Facebook ensure these links are discovered. But a Code that makes it infeasible for news platforms and search engines to exist will make it harder for the Daily Beasts and Daily Dispatches of the world to compete. That’s not a model for an open internet where independent and diverse voices can be heard.

All of this is unnecessary, too. Google already allows publications to opt out of its search results. So if a publisher really feels that its links shouldn’t be shared, then it needn’t have them shared. Most welcome the web traffic, however. And Google welcomes working with them, which is why the general-purpose search engine model has been so successful at driving traffic to publishers. 

To be clear, Microsoft is correct in saying that a free press is vital to a free democracy. But Australia’s Code isn’t a law tailored to promote either; it’s a special-interest giveaway that threatens the free and open internet and the free press itself.

In return for making the internet worse for all users, News Corp. and other Australian media conglomerates get a guaranteed, government-mandated subsidy from Google and Facebook. That’s a price not worth paying. Not by Google, not by Facebook, and not by the public. 

Australia shouldn’t fall for this; the United States mustn’t fall for this.

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