Will India make Google, FB pay for news?

The Big Story
Will India make Google, FB pay for news?
Indian Prime Minister Narendra Modi and Google CEO Sundar Pichai on a video conference. The Australian prime minister Scott Morrison has discussed his country’s new law, pertaining to Google and Facebook among others, with India.Courtesy: ANI

Should India look to make Australia's new laws on the subject the template for future? There’s a strong case for the Modi government to do so, if only to safeguard the future of the domestic news industry, the fourth pillar of the country’s robust democracy.

Round one has gone to Australia. And by the looks of it, this could also mean game, set and match for Canberra.

After resisting strongly for weeks and months, US digital economy giants Google and Facebook have acquiesced to a new law passed by Australian Parliament that forces these, and other similar companies, to pay media organisations for news and other content that is consumed on their platforms.

India, UK, France, others examining Australian model

This is now likely to become the template across the world as regulators in India, the UK, France and elsewhere look to follow Australia’s lead in this matter. Australian Prime Minister Scott Morrison has said has discussed the new law with his counterparts in India, the UK, France and Canada.

The next chapter in this story could play out in India, the largest open online market. The Modi government has displayed its willingness to take on Big Tech.

“The code is a significant microeconomic reform, one that has drawn the eyes of the world on the Australian parliament,” Australian Treasurer Josh Frydenberg said in a statement, adding that the new law will ensure “news media businesses are fairly remunerated for the content they generate”.

Australian prime minister Scott Morrison has played his card against Google and Facebook. The next chapter of this story could be essayed in India as it is a enormous market for social media entities.
Australian prime minister Scott Morrison has played his card against Google and Facebook. The next chapter of this story could be essayed in India as it is a enormous market for social media entities.Courtesy: ANI

Next battleground may be India

The next chapter in this story could play out in India, the world’s largest democracy, the largest open online market (China is larger, but it is closed to the likes of Google, Facebook, etc.). The Modi government, has, in recent weeks, displayed in ample measure its willingness to take on Big Tech and force these giant digital monopolies to conform to local standards and domestic laws.

Both these companies – and others like Twitter, Instagram, etc. – make billions of dollars in advertising on content produced by media organisations without paying a single penny to the newspapers that produce that content.

There is a line of thought in India which believes that any move to force these global super-monopolies to share ad revenues with domestic content generators will be in line with Atma Nirbhar Bharat (Self-Reliant India).
There is a line of thought in India which believes that any move to force these global super-monopolies to share ad revenues with domestic content generators will be in line with Atma Nirbhar Bharat (Self-Reliant India).Courtesy: Getty Images

Winds of change across the digital world

Many countries in Europe have launched investigations into this matter. Even in the US, there is talk of initiating action to mitigate this situation in a way that safeguards the interests of all stakeholders – the digital giants that disseminate news to a wider, global audience, the media houses that produce that content, the general public that consumes that content and governments around the world, which have a sovereign right to tax profits being generated in their jurisdictions.

Any move to force these global super-monopolies to share ad revenues with domestic content generators will also be in line with the government’s goal of achieving an Atma Nirbhar Bharat (Self-Reliant India).

An estimated 40 per cent of all searches on Google pertain to news. Then, Google and Facebook direct about 80 per cent of all external traffic to news websites.

India’s media industry struggling

In recent years, Indian media houses, like their counterparts in the West, have been grappling with falling readership of their physical content and Generations Y and Z prefer to consume their news online – many of them via social media forwards or keyword searches.

This has led to widespread layoffs across the sector and especially in smaller centres where alternative job opportunities are limited. Following the Australian lead, several commentators have noted how the move will help strengthen the media, which has emerged as a foundational pillar of democracy.

An estimated 40 per cent of all searches on Google pertain to news. Then, Google and Facebook direct about 80 per cent of all external traffic to news websites. Given such dominance, it is no surprise that these two companies account for between 70 per cent and 80 per cent of all news consumed digitally. As more and more people turn to the internet to consume news, this share will rise further, shrinking the revenue share of news content producers.

Why a new law is necessary

An article dated February 25, 2021 in The Times of India, the country’s leading English daily, points out: “Now think of a scenario where Google and Facebook are by law or regulation obliged to pay a fair share of earnings from digital distribution of news. This is what will happen: 1. Domestic news industry, vital to India’s democracy, is financially viable. Because its revenues from digital news distribution increase. 2. Hundreds of thousands of jobs in the news industry are saved over time in a country where increasing the proportion of white collar employment is a critical goal of public policy and 3. The government gets more tax revenue because it is far easier to collect tax from the domestic news industry than from multinational tech companies.”

Though India has come late to this party – apart from Australia, countries such as France, Canada and the UK are far ahead of the curve vis-à-vis India – it can leverage its huge market size and massive internet subscriber base and also benefit from the experience of these countries to draft regulations that strikes a fair balance between the rights of all the stakeholders.

Already, there are calls for India’s anti-trust watchdog, the Competition Commission of India (CCI) to initiate suo moto investigations into the misuse of their dominant position by Big Tech. Alternatively, the government can follow the Australian model and open a limited period consultation window to take in the views of all the parties and then draft rules on this subject.

A text message to India’s Ministry of Electronics and Information Technology remained unanswered at the time of filing this story.

There are calls for India’s anti-trust watchdog, the Competition Commission of India, to initiate suo moto investigations into the misuse of their dominant position by Big Tech.

Having conceded the principle of revenue sharing in Australia, Big Tech will find it difficult to argue otherwise in India and other jurisdictions.

A government official told India Global Business that the ministry was prepared to play hardball with Big Tech if they threaten to withdraw their services from India – as they initially did in Australia.

Many experts in India and government abroad will be keeping a close eye on what steps, if any, India takes next. The future of the world’s existing digital media business model will depend on it.

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India Global Business
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