Facebook and Google will be forced to pay Australian media sites to feature their news or face fines totalling hundreds of millions of dollars, under new laws set to come into force this year.
Australia has unveiled its plan to introduce a new royalty-style system, requiring the two tech giants to share the revenue they generate from advertising alongside news content.
Treasurer Josh Frydenberg said it was “about a fair go for Australian news media businesses”.
“It’s about ensuring that we have increased competition, increased consumer protection, and a sustainable media landscape. Nothing less than the future of the Australian media landscape is at stake.”
Since the start of the year, many news sites have been forced to shed jobs as advertising spend has plummeted.
The draft code is open to consultation until the end of August, and is expected to be brought into law later this year. It will initially just apply to Google and Facebook although could be broadened out to other digital firms in future.
The move to push forward with the code comes after talks over a voluntary deal between the tech giants and media firms ground to a halt.
Under the new plans, companies will be required to negotiate with media outlets in good faith over using their news content, and will have three months to come to an agreement. If the tech firms are found to be breaching the code, they could face fines of up to A$10m (£5.4m) per breach or 10pc of annual local turnover, depending on which is larger.
Rod Sims, the chair of Australia’s competition watchdog, the Australian Competition and Consumer Commission, said this could mean penalties of “up to hundreds of millions” for Google and Facebook.
Australia is not the first country to take such steps to protect independent journalism, and both Spain and France have attempted similar steps, with little success.
In Spain, for example, Google pulled its Google News service after the country made it mandatory for the platforms to pay publishers. Meanwhile, last year, Google stopped showing news snippets from European publishers on search results for its French users.
On the latest move by Australia, Mel Silva, managing director of Google Australia and New Zealand, said it “sends a concerning message to businesses and investors that the Australian government will intervene instead of letting the market work”.
“It does nothing to solve the fundamental challenges of creating a business model fit for the digital age.”
In the past, the company has argued that media outlets benefited more from having their news content in its News section, than it did from having them there. Last year, for example, it said it made only around A$10m in revenue from news-linked advertising and news-related queries accounted for slightly more than 1pc of total queries on Google Search in Australia.
Facebook’s Australia and New Zealand head, William Easton, said the company was “reviewing the Government’s proposal to understand the impact it will have on the industry, our services and our investment in the news ecosystem in Australia”.
The step comes just days after both Google and Facebook were dragged before US Congress for a hearing into tech market abuse. In the UK, meanwhile, in early July, the competition watchdog called for the Government to pass new legislation to curb the two companies’ dominance in online advertising.