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News Corp wins big from Australian government’s tiff with hi-tech

Feb 21, 2021

The Australian government has long been supported by Rupert Murdoch’s News Corp, so it came as no surprise that it took up the mantle from Mr Murdoch, who has spent the past decade crusading for tech companies to pay news publishers such as his own for their news content.

Mr Murdoch often spoke about how unfairly in his view, companies like Google and Facebook were displaying news from sites owned by his company and other news media organizations, without contributing to its cost.

The search and social media giants countered they were actually promoting the news publishers content, displaying headlines, and links to the publishers sites. Readers would then be directed to those sites and be subjected to advertising and promotion from the publishers.

When many companies introduced paywalls, Google, Facebook and others were directing their own users to subscribe to those organizations, otherwise they couldn’t access the articles. Again the tech companies said they were promoting the news publishers’ products.

It is unclear how the Australian government took up the mantle, other than as a result of its close association with News Corp, but it has now resulted in putting forward legislation forcing the tech companies to pay publishers for the privilege of effectively promoting their wares and brands.

On Wednesday News Corp announced it had signed a global deal with Google. In announcing the deal, which was prompted by the Australian legislation, the company conceded it would not have been possible without Mr Murdoch, and his son Lachlan’s quest of many years standing.

The Australian legislation, despite calls from some parliamentarians, imposes no requirements on news publishers to direct compensation towards journalism.

Robert Thomson, Chief Executive of News Corp, however in commenting on Wednesday’s inking of the global deal with Google said that the deal would have “a positive impact on journalism around the globe as we have firmly established that there should be a premium for premium journalism.”

“I would like to thank Sundar Pichai and his team at Google who have shown a thoughtful commitment to journalism that will resonate in every country. This has been a passionate cause for our company for well over a decade and I am gratified that the terms of trade are changing, not just for News Corp, but for every publisher,” Thomson said Thursday.

“The deal simply would not have been possible without the fervent, unstinting support of Rupert and Lachlan Murdoch, and the News Corp board. For many years, we were accused of tilting at tech windmills, but what was a solitary campaign, a quixotic quest, has become a movement, and both journalism and society will be enhanced.”

“Particular thanks are certainly due to the Australian Competition and Consumer Commission’s Rod Sims and his able team, along with the Australian Prime Minister, Scott Morrison, and Treasurer Josh Frydenberg, who have stood firm for their country and for journalism,” he said.

The Australian media landscape is controlled by News Corp and Nine, the merged Nine television network which is also the operator of the Fairfax newspaper group. These two giants have dominated the media scene in Australia for decades. The legislation put forward by Scott Morrison’s government has been championed by these two organisations which will be paid the lion’s share of any compensation from the proposed legislation.

News Corp is by far the largest and most dominant media company in Australia. It owns two-thirds of newspapers sold in the country. It owns daily newspapers in most of the capitals, regional and suburban newspapers; is the controlling shareholder in Foxtel which owns Fox Sports and REA Group; owns outright Sky News, and multiple magazine titles. In addition Lachlan Murdoch owns a national network of FM radio stations. News Corp has two of the top 10 news sites in Australia including the national portal, news.com.au, which is the third most popular site in the country. It also prints, assists with other services, and builds websites for many non-News Corp owned newspapers and online portals in Australia. Nine’s newspapers are also largely printed by News Corp.

News Corp is presently facing scrutiny in Australia with calls for a Royal Commission into its ownership of media assets. The main proponent of the calls, former Prime Minister Kevin Rudd, put his case to a Senate inquiry into media diversity which began deliberations on Friday morning.

“The problem that we’ve seen within Facebook’s actions in the last 24 hours is that they give us a graphic example of what a very large new media monopoly can do to abuse its power,” he told the inquiry.

“The problem with the government’s current response to the challenges of the digital media marketing code is that it seeks to solve one problem, by enhancing the power of the existing monopoly – that’s Murdoch.”

Mr Rudd was the first witness at the Senate inquiry. He was followed by the head of News Corp in Australasia Michael Miller and the company’s corporate affairs, policy and government chief Campbell Reid, a long-time former editor of the organization, and former Chairman of AAP. Following the meeting with News Corp’s executives, Hugh Marks, Nine’s CEO fronted the Senate inquiry.

Mr Miller took issue with a number of assertions Mr Rudd made to the inquiry, and agreed to provide a submission rebutting the former prime minister’s claims. The News Corp Australian chief was grilled extensively about Rupert Murdoch’s involvement in the company’s Australian operations. Mr Miller said Mr Murdoch had not been in Australia for two years, and over the past 5 five years he would have visited only two or 3 times. He said Mr Murdoch did not have regular contact with editors. Mr Reid said, when he was editor, he would hear from the company’s co-chairman on a very occasional basis.

Mr Miller denied claims the company engaged in character assassinations. In response to questions about examples, he responded that News Corp generated 700,000 news stories a year and was not familiar with them all. Asked specifically about a headline referencing ‘Dictator Dan,’ referring to Victorian Premier Dan Andrews, the News Corp boss said the headline reflected the premier’s handling of the Covid-19 pandemic, for which he has been criticized strongly, not only by News Corp, but other media including the ABC’s Leigh Sales.

When Facebook refused to come to the table, announcing Thursday it was quitting providing news to Australian users – because of the legislation – News Corp publications, including Sky News went on the attack, slamming not only the company, but founder Mark Zuckerburg personally. Together with the Australian government, and for that matter, the Opposition, Facebook has been criticised for putting ‘profit before people.’

“They may be changing the world, but that doesn’t mean they should run it,” Australian Prime Minister Scott Morrison said Thursday, ironically in a post on Facebook. “We will not be intimidated by this act of bullying by BigTech, seeking to pressure parliament as it votes on our important News Media Bargaining Code.”

“I am in regular contact with the leaders of other nations on these issues. We simply won’t be intimidated, just as we weren’t when Amazon threatened to leave the country and when Australia drew other nations together to combat the publishing of terrorist content on social media platforms,” the Australian prime minister said.

The deal involving News Corp and Google, being a global deal, does not just include the Australian news assets, but also The Wall Street Journal, Barron’s, MarketWatch, and the New York Post. And in the UK: The Times, The Sunday Times, and The Sun. Fox News was not part of the deal as it is separately owned from News Corp.

The landmark three-year agreement with the world’s leading search engine includes the development of a subscription platform, the sharing of ad revenue through Google’s ad technology services, the cultivation of audio journalism, and what it describes as meaningful investments in innovative video journalism by YouTube.