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Media & Entertainment

Google sweetens article fees to defuse Australian news spat

Facebook bans article sharing over legislation that would require it to pay

SYDNEY -- Google has struck a deal with Australia's biggest media groups to host articles on its site ahead of pending legislation that compels Big Tech to pay fees for news, while the country's Facebook users were left in the dark Thursday after the social media platform terminated the sharing of such content there.

Media mogul Rupert Murdoch's News Corp announced it had struck a multiyear licensing deal with Google on Wednesday, granting the company access to the conglomerate's content.

"This is an important moment for our company, but an even more important moment for journalism and the people it serves, no matter how they consume news," Michael Miller, an executive chairman of subsidiary News Corp Australia, said Thursday.

Under the deal, Google's News Showcase platform will host articles from The Australian, The Wall Street Journal and other News Corp outlets worldwide. The transaction value has not been disclosed, but there will be "significant payments by Google," according to a News Corp statement.

News Corp Australia, the country's biggest media group, is the latest domestic news platform to cut a deal with Google. Seven West Media, which holds television stations along with newspapers, has entered a preliminary agreement to provide content to News Showcase. It's been reported that Nine Entertainment reached a deal as well.

Both Seven West and Nine will reportedly receive payments of at least 30 million Australian dollars ($23 million) a year. Since Nine earned a net profit of A$140 million in the previous fiscal year ended June, such a sum will be a substantial boost to earnings.

Australia's big media groups had previously been resistant to participating in News Showcase. Chris Janz, the chief digital and publishing officer for Nine, said last month that such an arrangement "is exactly what you would expect from a monopoly."

The compensation that had been offered by Google "is not something that would sustain more than a handful of journalists over an extended period of time," Janz added.

Less than a month after that statement, the media companies decided to reach a compromise with Google.

"It does sound to me that Google obviously offered a model that Australian news organizations felt sufficient for their purposes, and that may have meant that perhaps they have increased the share of revenue that is coming to them," said a media industry source.

The Australian government played a role in breaking the stalemate.

Treasurer Josh Frydenberg revealed that he held talks with Facebook CEO Mark Zuckerberg and with Google CEO Sundar Pichai between Sunday and early Monday.

"Everything I have heard from parties both in the news media business and in terms of the digital platforms is that these are generous deals," Frydenberg told reporters Wednesday. "These are fair deals. These are good deals."

It has been speculated that compensation for news pieces came up during Frydenberg's discussions with Zuckerberg and Pichai. The topic aligns with what is contained in a bill submitted to parliament last December, which would essentially require tech companies to pay for using articles. Frydenberg has spearheaded that proposed legislation.

U.S. tech heavyweights came out strongly against the bill. Google suggested it would cease search services in Australia if the legislation is passed without amendments.

Google commands over a 90% search engine market share in Australia, so its absence would have a huge impact on consumers. The government may have moved to avoid the ultimate standoff.

The bill as it stands would require tech companies to pay media outlets and publishers for the right to link articles in search results. The proposal has already passed the lower chamber Wednesday, and the likelihood is that the bill will soon become law.

"The best scenario Google could possibly hope for is that it is amended to only apply to Showcase rather than the whole of organic search," said Belinda Barnet, senior lecturer at Swinburne University.

The specific applications to be affected by the law will be determined separately following the passage of the bill. Frydenberg said previously he would apply the law to Google search services and Facebook's news feed.

But on Thursday, Frydenberg did not elaborate on what platforms he would target, citing his desire to not "preempt decisions around the designation process." He added, however, that "if commercial deals are struck [between media and tech groups], that changes the equation."

If the designation is indeed confined to News Showcase, Google will be able to limit the fallout since it has already entered into deals on that platform.

On the same day News Corp announced its deal with Google, Facebook abruptly cut off Australian users from the platform's news feeds. It remains uncertain whether Australia will bridge the divide with Facebook.

Meanwhile, Big Tech looks to resolve similar conflicts surrounding usage of news articles raised by regulators in Europe, Canada and elsewhere. Google also offers News Showcase to Germany, Brazil, and Great Britain, among other markets. Over 500 content providers have decided to join the platform, according to Google.

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