Indian govt must intervene to tackle Big Tech, as Australia has done

Last week, Australia’s parliament passed a law that requires platforms such as Google and Facebook to negotiate a “fair” remuneration for the content they use and share from local media companies.

The passage of the much-contested law known as the News Media and Digital Platforms Mandatory Bargaining Code (NMBC), marks a significant milestone in a long, festering battle between publishers of news and platform corporations – a fight that on the surface, appears to be all about money.

Simply put, the Code allows for a government-appointed arbitrator to decide on the final price a platform will have to pay to an Australian news publisher, in case the two sides fail to reach a mutual agreement. The NMBC is increasingly being billed as a model template that other countries, including Britain, Canada and several member nations of the European Union, are planning to emulate.

In India too, there is a growing clamour for the government to act much in the same manner. Many, in fact, would argue that the reasons for the Indian government to intervene is even more compelling.

Also read: Indian newspapers demand Google pay for news

A vibrant and independent media is critical to shaping a national public sphere, which, in turn, defines the quality of a democracy. Any development that undermines the viability and sustenance of the news media business, therefore, also impoverishes the public sphere and undermines democratic capacity.

The rapid technology-driven changes in news consumption in recent years have increasingly caused Indians to access both news and communications from digital platforms (a trend that unexpectedly exacerbated during the COVID-19 pandemic) and have made the Indian legacy media financially unviable.

One must note in particular that the news media businesses in India derive close to two-thirds of their revenue from advertisements and are, thus, able to provide news to their audiences at a price much lower than what it takes to produce it. Understandably, this model now stands broken.

In FY 21, advertising revenue is projected to contract to 46 per cent for the print media and 7 per cent for television, according to consulting firm KPMG. The print media will make from advertisement half of what it made five years ago. Digital ad revenue, on the other hand, is expected to grow 12 per cent in 2021 and touch a level three and half times more than what it was five years ago.

Also read: West Virginia newspaper publisher sues Google, Facebook

Digital is the future of news, but the digital news business model is badly skewed against the content provider. The market architecture is such that it is controlled by a few technology giants such as Google and Facebook, who corner much of the revenue, leaving a small, “unfair” share for publishers of the news content.

This arrangement, moreover, is opaque in its functioning and monopolistic in nature. It hurts the sustainability of the news media industry and harms independent journalism. That is why, governments around the world, especially mature democracies, are stepping in. So should India.

There is one more reason for the Indian government to be proactive. In Australia, there is a powerful Rupert Murdoch and his News Corp, which are quite capable of taking on the tech giants. Similarly, the traditional media industry in the European Union(EU) too is well-resourced to make a case against the unfair practices of the platform corporations.

India, however, neither has a Murdoch-equivalent, nor are the news publishers here organised or financially endowed enough to protect their interests. The onus, therefore, rests on the Indian government, to level the field between the domestic media industry and multinational platforms such as Google and Facebook.

That said, as recent developments in Australia and elsewhere in the world have shown, companies like Google and Facebook don’t fall in line so easily. A mere wish of the government or a call for fair play will not just do the trick. The NMBC in Australia is an outcome of nearly four years of hard work, starting with the Digital Platforms Services Inquiry in 2017.

Also read: Google, Australia hurl threats as row over payment for news intensifies

During this period, the Australian Competition and Consumer Commission undertook multiple investigations into the functioning of the digital platforms, documented instances involving violation of fair play, collected submissions and evidence from all stakeholders and worked closely with the domestic media business to address their pain points.

Similarly, the EU’s proposal in December to bring two comprehensive legislations – the Digital Services Act and the Digital Markets Act – to “rebalance the rights and responsibilities of users, intermediary platforms, and public authorities … based on European values”, were an outcome of decade-long investigations and interventions.

In this period, the EU has fined Google thrice – totalling more than US$9 billion – for anti-trust practices, brought changes to its copyright laws to acknowledge and protect the interests of content creators and considered a digital tax on big-tech companies.

India is far from the trajectory of such experiences, but that doesn’t mean it would be disadvantaged, if the government were to step in to protect the domestic news media business. On the contrary, it has a late comer’s advantage. It can lean on the work done by regulators in Europe and Australia to design its intervention, primarily in the following four areas of concern:

• Sharing of revenues from news between platforms and news publishers
• Reforming copyright rules to protect content creators in a digitalising world
• Holding platforms responsible for the social impact of their businesses
• Ensuring a level-playing field in tax obligations of platforms and publishers

For now, we focus on the first of these areas, as this is where India lags the most and the urgency of intervention is most pronounced. Moreover, the developments in Australia and elsewhere provide an immediate and supporting context.

Also read: Facebook ‘re-friends’ Australia, agrees to pay for content from media houses

The ecosystem of digital advertising is incredibly complex, comprising numerous discrete but connected entities that perform different roles – advertisement design, providing server space, optimising revenue flows, connecting advertisers and publishers etc. An overwhelming part of the value chain is either owned or controlled by platform corporations like Google and Facebook, which is how they corner a lion’s share of the digital advertising pie.

Despite getting short-changed, publishers give in because they need the platforms for their content to be discovered and shared. Staying on the wrong side of Google and Facebook, many fear, would be even worse. In other words, Google and Facebook might be abusing their position of dominance in digital search, sharing and advertising.

That is why, the Competition Commission of India (CCI) needs to be tasked with the responsibility of undertaking a holistic and comprehensive inquiry into all aspects of the publisher-platform relationship in the Indian context ─ digital advertising technology services, digital advertising agency services and digital display advertising services.

The CCI must investigate if there is any concentration of market power in the hands of one or more suppliers of these services, examine pricing transparency and study how information is made available to advertisers, publishers and other market participants, and evaluate the auction and bidding processes used in the supply of digital display advertising.

It is imperative that the CCI satisfies itself that competition and efficiency are not being affected by supplier behaviour – that is to check if vertically integrated suppliers are not preferencing their own services, or that advertising agencies are indeed acting in the best interests of their clients.

For example, it might want to ascertain if, while providing search services, Google is not giving preference to an advertising tool or cookie collector it owns, partners or controls. Such an inquiry would also demand CCI studies the impact of mergers and acquisitions in these relevant markets.

All of this may appear to be a tall order. But to yield some quick results, the work of regulators in other countries and many of our friendly governments may come handy for the competition watchdog here. In other words, India can always go for a wholesome second bite of the apple. As for the issue of copyright rules, social responsibility and fair taxation, we can tackle it on another day.

(The author is an independent journalist)