Microsoft President Brad Smith told Axios in an interview that the United States and other countries should consider adopting media rules such as those Australia is about to enact soon to force technology companies to pay publishers. for the content.
Why it matters: Both Facebook and Google have said that they cannot run their businesses normally under the current code and warn that if Australia approves it as expected, they will withdraw some of their services from the country.
“I would be the first to recognize that we recognize that this is an opportunity to combine good business with a good cause, “Smith told Axios.
- Microsoft supported Australia’s planned code, suggesting that it could help even the playing field in the search and make Microsoft’s Bing search engine a more viable competitor for Google.
- Smith noted that Microsoft, which has a revenue sharing program with publishers through Microsoft News, would be able to bring more revenue to publishers in Australia if it had more market share.
- “We cannot share revenue unless we have revenue to share,” he said.
Update quickly: The new negotiating code is due to be handed over to Australian lawmakers this Friday and approved in the next two weeks. That would make Australia the first country to force Google and Facebook to compensate news publishers or face heavy fines.
- In response, Facebook says it can block users from sharing news links in Australia. Google says it may have to stop making Google Search available in the country.
- Other tech giants can be added to the code if regulators find enough evidence that their size or scope could create an imbalance of power with news companies.
Several fundamental principles of the code could be adopted in the United States and other countries, Smith argued, regardless of the wholesale rules.
- “We must not be too quick to conclude that we cannot innovate in the United States as Australians are,” he said.
- US lawmakers have already proposed giving news editors an antitrust exemption similar to an Australian code clause that would allow them to come together to negotiate jointly against technology platforms.
- Smith said this is an area where the U.S. could follow Australia’s example, along with imposing transparency obligations on platforms and requiring them to go through an external arbitrator to negotiate payments with publishers for links to their content.
Between the lines: Google and Facebook have specific problems with the arbitration clause in the Australian code, which would also see a government-appointed panel set the payment rate if the parties are unable to reach an agreement.
- Sources say the tech giants fear that the involvement of third-party arbitrators could help publishers make irrational demands.
The other side: Smith said that this style of negotiation, commonly known as baseball arbitrage for its use in the MLB, “encourages reasonable negotiation.”
- “This is a tried and true subject across the world,” he said.
The big picture: Both Google and Facebook have in recent months created new features that direct money to the media without having to completely reinvent their business.
- Google started to launch its “Google News Showcase” product in the UK and Argentina. Facebook launched its Facebook news guide last week in the UK
What to watch: News Corp, the global publishing giant headed by Rupert Murdoch, has been aggressively lobbying for such reforms, as it has a sizeable portion of the Australian newspaper market.
- Smith said he did not speak to anyone at the company after Microsoft spoke out in favor of the law last week, but that News Corp has since sought out others at Microsoft.
The end result: “Sometimes, it takes someone who has a powerful microphone to ensure that many voices are heard and that is not a bad thing,” argued Smith.
Go deeper: Technology spends money on news as regulatory threats approach