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It’s a multi-billion dollar Aussie battle between the tech giants and Australia’s news giants, including Rupert Murdoch’s News Corp., over snippets. The battle demonstrates the folly of looking at the tech economy through the wonky prism of competition theory and policy.
Snippets include the short extracts of news stories that appear on Facebook and in Google news searches. A Google search for the latest Donald Trump folly will produce a string of snippets, including headlines and one-sentence summaries from scores of media sources. The reader then clicks on the snippet and is taken to the media company’s website for access to the full report.
Facebook and Google do not pay for snippets, which are supplied without cost by media companies that seek exposure for their content. Media companies such as News Corp. can sell ads around the full version of the stories that appear on their websites. Or they could charge readers by selling subscriptions.
In Australia, as elsewhere, news organizations argue that Facebook and Google are unfairly grabbing advertising dollars using free snippet content supplied by the media companies. To compensate, the news companies say the tech giants should pay for the use of the snippets. On the other side, theoretically, tech giants could also request payment from media companies for access to their internet platforms.
Enter the Australian Competition and Consumer Commission (ACCC), which operates one of the world’s most activist competition enforcement agencies. In July, ACCC chair Rod Sims announced a “draft mandatory code,” which would enable Australian media to “bargain with” Google and Facebook to “quickly secure fair payment for news content.” To make sure the bargaining takes place fairly and promptly, Sims said a government-appointed arbitrator would move to force a deal after 45 days.