From the chaos ensuing in the Land Down Under, Microsoft looks primed and ready to make the most of it.
Putting forth staunch support, Microsoft has endorsed an Australian proposal that would require tech gatekeepers like Facebook and Google to share revenue with local independent news organizations.
The ACCC proposed News Media Bargaining Code has been drafted with the aim to govern relations between financially agonized traditional media avenues and the market devouring internet giants, who go on to capture a significant share of advertising revenues.
And in clamouring for other countries to follow Australia’s example in ensuring news outlets be paid for stories published online on their platforms, Microsoft has taken a big swipe at rivals Facebook and Google, both of whom have unsurprisingly opposed the move.
The reaction from both Facebook and Google has been nothing short of dramatic. Facebook has publicly stated that should the Australian parliament veto the new law, it would stop its Australian users from sharing news on its Facebook and Instagram platforms. Google, on the other hand, has gone a step further, threatening to pull its search service out of the country entirely if the new law gets introduced.
Precisely where Microsoft intends to creep into the frame.
Under the proposed News Media Bargaining Code, US-based tech giants Google and Facebook would be mandated to negotiate payments to every which individual news organization(s) who publishes content on their platforms.
Expressing their displeasure, Google and Facebook, in tow with some leading internet architects, have countered how the draft stands to severely undermine their business models and the functioning flow of the internet itself.
As it is, both Facebook and Google have not enjoyed the best of relations with the publishers, to say the least.
In fact, despite experimenting with approaches aplenty, Facebook has a somewhat complicated relationship with publishers. Even though publishers have leaned on the social network to reach their audience, they have also struggled to make money from the service. In the past, on Facebook’s part, it tried including a product called Instant Articles, where publishers could host their content stories on Facebook’s network in lieu of a cut of ad sales. Presently, Facebook does pay some publishers to share stories inside a dedicated News section of its main app.
As for Google, the California-based company has commenced paying select media outlets to display curated content on its news app. Reportedly, it has also set aside approx. $1 billion to cover their program’s initial years.
At pleasant ends to Facebook and Google’s policies for paying publishers, Microsoft has had no such gripe. Compensating news organizations through licensing deals for MSN, Microsoft’s confident chirping stems also from the fact that the company has forked out more than $1 billion since 2014 in the area.
As such, even if the proposed Australian law becomes reality, it would only serve to apply to Facebook and Google, exempting Bing under its current terms.
In Microsoft President Brad Smith’s argument of “stepping up to revive independent journalism”, the company is looking to fill in the vacuum if Google and Facebook follow through on their threats and decided to pull out from Australia, be it partially or completely.
Overarchingly, Microsoft’s manoeuvre could help them press an advantage in markets where it has failed to make significant headway. According to StatCounter, Google reigns supreme in the search engine market in Australia with 94.5% of the share, compared to Bing’s 3.6%, and DuckGoGo’s 0.87%. While Bing occupies 15% to 20% of the market in the United States, this could be the perfect storm for making up ground in Australia.
Analysts believe that, given Bing’s interfacing capabilities and overall flexibility, the shift to Bing in the foreseeable future would not only be smoother, but the users too could be better off for it.
Coupled with Microsoft’s intent and preparedness to sign up for the new law’s obligations, unlike Facebook and Google, it is indeed giving itself every chance of pulling off a calculated strategy.
That aside, in the recent past, there have been similar cases in Europe over attempts to regulate how content is used by both sides.
Potential fallout for Alphabet Inc.-owned Google here could spell further trouble. Their dominance of global advertising space has seen the tech titan come under intense scrutiny from watchdogs’ world over.
If the company backs down in Australia, the pay-for-news law risks becoming a template for jurisdictions including Canada and the European Union that are following the quarrel and keen to shorten Google’s lead.
Facebook may also want to mull over an unprecedented step that may stop Australians from sharing news on its platform, as it can have severe repercussions.
Effectively, any proposal that helps reduce the bargaining imbalance that favors tech gatekeepers should be welcome.
By leading the campaign in Australia, Microsoft looks is in pole position to expand its market.
Stay tuned for more updates.