Google slams arbitration system in Australia’s new media code

The new arbitration system would determine commercial arrangements between Google and news companies.

By   |  Published: 28th Sep 2020  11:19 am

San Francisco: Google has slammed Australias draft News Media Bargaining Code again, saying that the highly unusual, largely untested, one-sided arbitration system in the proposed law will not allow fair negotiations and no business can operate with that level of uncertainty.

The new arbitration system would determine commercial arrangements between Google and news companies.

The system being proposed is called ‘binding final-offer arbitration’, referred to in the US as ‘baseball arbitration’.

“It isn’t used in any of the eight other mandatory codes in Australia. In fact, without the two parties’ consent, it’s never been used in Australian law before,” Mel Silva, VP, Google Australia & New Zealand, said in a blog post on Sunday.

In ‘baseball arbitration’, if the two sides can’t reach an agreement, each puts forward a single final offer and the arbitrator picks one, guided by set criteria.

This system is usually put in place if there’s not much dispute over the value of the product or service being discussed and the parties are already close in price.

“But with the media code, some of the amounts being suggested by news businesses about how much we should pay to provide links to their stories defy commercial reality,” Google said.

The reality is that “baseball arbitration often fails and doesn’t produce quick outcomes”.

Google last month termed the proposed changes unfair, while warning users that the new regulation will affect Google Search and YouTube.

Google even warned Australians that the proposed “News Media Bargaining Code” could even lead to their data being handed over to big news businesses.

“We don’t oppose a code governing the relationship between news businesses and digital platforms but right now, the way the law is drafted isn’t fair or workable,” Silva argued.

The draft code also says the arbitrator should consider news businesses’ production costs — but not Google’s.

“Again, that’s a significant amount of money, given we invest $1 billion each year in Australia to improve the services 22 million Australians use daily. This investment includes initiatives to directly support Australian news companies, like our digital skills training program for local newsrooms,” Google informed.

On April 20, the Australian Government announced it had directed the Australian Competition and Consumer Commission (ACCC) to develop a mandatory code of conduct to address bargaining power imbalances between Australian news media businesses and each of Google and Facebook.

The draft code would allow news media businesses to bargain individually or collectively with Google and Facebook over payment for the inclusion of news on their services.

Google said it is happy to negotiate fairly and, if needed, see a standard dispute resolution scheme in place.

“But given the inherent problems with ‘baseball arbitration’, and the unfair rules that underpin it here, the model being proposed isn’t workable for Google”.