Telstra Exploiting “Vulnerable” Customers Facing High Penalty Rate

telstra

Telstra, Australia biggest telecommunications provider has reached an agreement with the Australian Competition and Consumer Commission (ACCC) after the watchdog completed an 18-month investigation into Telstra’s conduct.

Rod Sims, ACCC chair was shocked by what the investigators found out, as per his statement to the media.

The telco has admitted it breached consumer law and could face a penalty of up to $50 million. “This is huge. This is right off the scale in terms of behaviour we have taken to court in relation to telecommunications,” Mr Sims said.

He added, “This is exploiting vulnerabilities in the most extreme sense, it is extremely concerning behaviour. We must be sending messages to companies that this sort of behaviour cannot be going on.”

According to the investigation, Telstra has been selling mobile phone products and plans to consumers who did not understand and could not afford them. The inquiry was launched after serious concerns were raised by a number of financial counsellors in rural and remote areas. 

Last year, for instance, financial counsellors told ABC that consumers were being sold unaffordable phone plans and were then aggressively pursued by debt collectors.

In a statement, ACCC revealed, “Sales staff at five licensed Telstra-branded stores signed up 108 Indigenous consumers to multiple post-paid mobile contracts which they did not understand and could not afford between periods of January 2016 to August 2018.”

With this, Telstra admitted to unconscionable conduct, something that has defined by the ACCC as a harsh and oppressive business behaviour.

An Indigenous young woman from Broome told the media that she feared she would go to jail when she received legal threats from a debt collector over her outstanding Telstra bill. But she is just one among numerous customers who only spoke English as a second or third language who were pursued by Telstra.

“In some cases, sales staff at the Telstra licensed stores did not provide a full and proper explanation of the consumer’s financial exposure under the contracts and, in some cases, falsely represented that consumers were receiving products for ‘free’,” the ACCC revealed.

Often times, sales staff also manipulated credit assessments, so consumers who otherwise may have failed its credit assessment could enter into post-paid mobile contracts.

Given that the average debt per consumer was more than $7,400. 

Andrew Penn, Telstra chief, apologized for the company’s shortcomings. “I have spoken often about doing business responsibly, including about these failings, since earlier this year. I am determined we have a leadership position and hold ourselves accountable in this regard,” he said.

He cited the impact of this impediment on vulnerable customers is significantly devastating and promised to take steps in providing full refunds with interest, to waive debts and allow most customers to keep their devices to make things right.

The Federal Court will decide at a later date whether the orders sought are appropriate. Should the court impose, the penalties would be the second-highest total penalties ever imposed under Australian consumer law,

The Federal Court will decide at a later date whether the orders sought are appropriate.

Peters prevented food distributor from engaging with other ice cream makers, ACCC alleges

One of Australia’s largest ice cream suppliers has been accused of depriving consumers of choice and cheaper prices by hindering competition within the market.

The Australian Competition and Consumer Commission (ACCC) has accused the Australasian Food Group, which trades as Peters Ice Cream, of engaging in anti-competitive dealings that stopped other companies from selling ice cream at convenience stores and petrol stations.

Peters makes ice creams such as the Drumstick, Maxibon, Connoisseur, Frosty Fruits and Billabong.

The competition watchdog has launched Federal Court action against Peters, alleging between 2014 and 2019 Peters engaged in exclusive dealing by entering into an agreement with food delivery company PFD Food Services to distribute its single-wrapped ice creams across the country.

Exclusive dealing occurs when one person trading with another imposes restrictions on the other’s freedom to choose with whom, what, or where they deal. It is against the law only when it reduces competition.

ACCC chair Rod Sims said the commission would argue “Peters’ conduct effectively raised barriers of entry, which hindered or prevented potential new entry into the market to supply single-serve ice cream products to petrol and convenience retailers”.

According to the ACCC, the agreement contained a condition that PFD could not distribute any competing ice cream products in certain locations around Australia.

Peters allegedly rejected requests by PFD to distribute other ice cream products to petrol stations and convenience stores.

The ACCC alleges that, for new ice cream and frozen dessert entrants, PFD was the only distributor capable of distributing single-serve ice creams to national petrol and convenience retailers on a commercially viable basis.

Unlike PFD, other potential distributors did not have a national frozen food route to these retailers.

A spokesperson from Peters said the company intended “to vigorously defend any proceedings”.

“AFG has confidence in its position and the arguments that support it,” the spokesperson said.

The ACCC will also argue it was not commercially viable for new entrants to incur the cost of establishing their own distribution network to distribute single-wrapped ice creams across Australia.

“We allege that, as a result of the agreement and Peters’ conduct, other ice cream suppliers had no commercially viable way of distributing their single-serve ice creams to national petrol and convenience retailers,” Mr Sims said.

“We also allege that a substantial purpose of Peters engaging in the conduct was to protect its market position from competitors, as one of only two major suppliers of single-wrapped ice creams, who together held a combined market share of over 95 per cent during the relevant time,” Mr Sims said.

He said the agreement with PFD “reduced competition and may have deprived ice cream lovers of a variety of choice or the benefit of lower prices when purchasing an ice cream at one of these stores”.

The Peters spokesperson said for years there had been “an extensive number of commercially viable distribution options available for the delivery of ice cream products around Australia to petrol and convenience retailers”.

During the course of the ACCC’s investigation, Peters advised the ACCC, without admission, that it had recently entered into a new agreement with PFD that no longer included a term restricting PFD from distributing ice cream products for other ice cream producers.

The ACCC is seeking declarations, pecuniary penalties, a compliance program order and costs.



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Trivago loses appeal after misleading Australian consumers over cheap hotel deals | Australian Competition and Consumer Commission (ACCC)


Travel booking website Trivago has failed to appeal a federal court ruling it misled Australian consumers about cheap hotel deals in its TV advertising and on its website.

Trivago aggregates prices from other booking sites such as Expedia, as well as hotel websites, with the supposed aim of finding the best deal for would-be travellers and holidaymakers.

In January, federal court Justice Mark Moshinsky found the Netherlands-incorporated company showed big-spending advertisers higher up in results for hotel deals and above the cheapest options.

“Contrary to the impression created by the relevant conduct, the Trivago website did not provide an impartial, objective and transparent price comparison service,” Moshinsky said.

“The fact that Trivago was being paid by the online booking sites was not made clear,” he wrote in his judgment.

Trivago was also found to have misled customers for its price comparison because in listings it would compare the price for standard rooms with a luxury room at the same hotel, which made it appear as though people were saving money.

The Australian Competition and Consumer Commission took Trivago to court in August 2019 over the ads, which aired over 400,000 times between late 2013 and mid 2018.

Trivago appealed the original decision and on Wednesday, the full federal court upheld Moshinsky’s judgment.

ACCC chair Rod Sims said the win sent a warning to price comparison sites about misleading consumers with the results recommendations.

“We brought this case because we were concerned that consumers were being misled by Trivago’s claims that their site was getting the best deal for consumers, when in fact they were shown the deals that benefited Trivago,” Sims said in a statement.

“Trivago’s conduct meant that consumers may have paid more for a room at a hotel than they should have, and hotels lost business from direct bookings despite offering a cheaper prices.”

Guardian Australia has sought comment from Trivago.

The ACCC is seeking orders for declarations and injunctions from Trivago, as well as penalties and costs. Those orders will be decided by Moshinsky at a date to be determined.



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Free AFL wristbands with button batteries recalled by ACCC amid child safety fears


Free wristbands containing button batteries that were handed out before Saturday night’s AFL grand final in Brisbane have been recalled due to child safety fears.

More than 31,000 of the light-up wristbands were distributed to fans at the Gabba stadium where Richmond defeated Geelong to win their second consecutive premiership.

A product safety recall has been issued, with details released on the Australian Competition and Consumer Commission (ACCC) website.

“The battery compartment of the wristband is not adequately secured and the button batteries in the product are easily accessible. The product contains two button batteries,” the recall said.

“In addition, the batteries may pose a choking hazard to young children.”

The ACCC has advised the wristbands should be thrown away where young family members would have no chance of retrieving them.

“Consumers … should immediately dispose of the wristband by placing it in an outside household rubbish bin, out of reach of children,” the statement said.

The recall has advised the wristbands should be thrown away where young family members would have no chance of retrieving them.(ABC News: Lily Nothling)

Wristbands recall was ‘about time’

Three Australians have died since 2013 after swallowing button batteries.

Last week, the Conway family from the Gold Coast shared their heartbreak after their three-year-old daughter Brittney died in July after ingesting one of the tiny batteries.

The Gabba wristbands used LED bulbs to create different colours at the first AFL grand final to be held outside of Melbourne.

Kidsafe Queensland chief executive officer Susan Teerds said it was “about time” but their distribution “should never have happened in the first place”.

“A lot of people don’t know how dangerous these batteries are, so we still have a long way to go to raise awareness,” Ms Teerds said.

Ms Teerds added that the ACCC was proposing to the Federal Government that all Australian products with button batteries must have a secure, child-resistant department.



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ACCC taking tougher stance against unfair contract terms for small business


The Australian Competition and Consumer Commission, through its chairman Rod Sims, has expressed its intention to take a tougher stance against unfair contract terms that affect small businesses.

In a recent address to the National Press Club, Sims called on the Federal Government to make such contract terms between big and small businesses illegal and subject to harsh penalties.

And the Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, has thrown her support behind the Commission’s tougher stance.

“It’s hard to believe that in 2020 it is still not illegal for a big business to impose unfair contract terms on a small business,” Carnell said. “Small businesses has been waiting for changes to level the playing field for too long.

“In November 2016, Treasury legislation amendment (Small Business and Unfair Contract Terms) Act 2015 took effect, that legislation was reviewed in 2018 and here we are, another two years on and small businesses continue to be adversely impacted by big businesses with legal impunity,” Carnell added.

“It’s clear that change is long overdue. My office has been advocating for unfair contract terms legislation to be strengthened for a considerable time now, most recently in our COVID-19 Recovery Plan and our comprehensive submission to Treasury’s Review of Unfair Contract Term Protections for Small Business, in March this year.”

The ASBFEO has recommended that:

  • Unfair Contract Terms be made illegal.
  • Significant penalties and infringement notices to apply to breaches.
  • Enforcement capabilities of regulators enhanced to determine if terms are unfair.
  • Legislation extended to cover all contracts valued up to $5 million.
  • Definition of a small business be changed to those with less than $10 million turnover.

“Currently where a standard form contract contains an unfair contract term, the only way for a small business to take action is through the court system. And even if the term is proven to be unfair, there is no penalty to the big business,” Carnell said.

The ASBFEO noted that Phase I of the Access to Justice Inquiry found small businesses are unlikely to take action when faced with an unfair contract term in their standard form contract.

“Understandably, they are reluctant to damage commercial relationships and lack the resources and time to pursue litigation,” Carnell said. “By making unfair contract terms illegal, the Australian Competition and Consumer Commission (ACCC) would be able to penalise big businesses. The sooner unfair contract terms between big businesses and small businesses is made both illegal and subject to big-stick penalties, the better.”





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NBN battle between the ACCC and the Government


Communications Minister Paul Fletcher has issued a Statement of Expectation to the ACCC over their position on NBN pricing, writes Paul Budde.

IT CAME AS A SURPRISE to many in the telecoms industry as well as in the legal profession that the Government issued a Statement of Expectation (SoE) to the Australian Competition and Consumer Commission (ACCC).

In my opinion, what this means is that the Government would like the ACCC to facilitate NBN Co to increase their prices. I will come back to this in a bit more detail. But in essence, the Government would like to create a better financial position for the NBN to put it up for sale. The alternative I have advocated now for many years is to write down some of the NBN costs.

Perhaps the SoE is not directly a declaration of war, but most certainly a clear indication that the Government is not happy with the ACCC.

My interpretation here is that the NBN is costing far more than the Government had anticipated. Remember that Malcolm Turnbull talked about costs of $25 billion and the NBN to be finished by 2016 under the Multi Technology Mix (MTM) plan that he had designed after the Coalition Government abandoned the previous fibre to the home (FttH) plan. This was a political construct, not one designed by independent market or industry experts. The Government should bear the costs of any mistakes made in developing this plan.

However, the SoE is basically asking the ACCC to change direction in order to assist the Government in recouping its money. This is most certainly not in the interest of the consumers and the competition, and the ACCC (the Australian Consumer and Competition Commission) is established to look after them, not after the political interest of the Government.

With the cost of the NBN now being more than double the Government initial estimate, NBN Co very understandably does have a financial problem. Recently, the Government looked at yet another estimate of the value of the NBN. We do not know what the outcome of that is, however, it’s interesting that Minister for Communications Paul Fletcher soon after comes out with this unprecedented request to the ACCC. A key element of it is the request to review the constructions of how the costs of the NBN are treated in the price setting. My interpretation here is that the suggestions made by the Government would eventually result in higher wholesale prices and that, of course, will filter through to higher retail prices.

Already for several years, many experts have indicated that the high NBN costs in relation to what it provides (a second-rate rather than a top-notch infrastructure) are making it increasingly more problematic if not outright impossible to recoup that investment, for example, by getting a premium sale price for the NBN.

However, increasing the retail price is not a viable solution. Around the world, we can clearly see that there is very little price elasticity in telecoms pricing. If the subscription costs are getting too high, people will simply not buy it. So bearing in mind that NBN is a monopoly, the ACCC is correct to look at consumer affordability rather than at the what the costs are for the Government.

Call for an NBN user revolt to send a message to the Government

It is amazing that the Government, it seems, still does not value the importance of the NBN to our nation. The social and economic benefits far outweigh any financial return on the investment. We only need to look at the impacts of COVID-19 on our society and our economy to understand the immense value of the NBN as national infrastructure. Rather than making access more expensive because the NBN has cost too much, the Government should look at lowering the access costs, especially to those people in society that are hardest hit.

One of the most contentious issues is NBN Co’s consideration to eliminate the lowest cost tier of the NBN (12/1Mb/s), forcing these people to the higher cost packages. So far, this has not happened, but we need to be vigilant as that issue is still on the agenda. The ACCC wants to keep the entry-level to the NBN at a price not higher than $35.

I would argue that everybody should be able to get access to the higher speed package (25Mb/s) for that same price, simply as a national interest issue to provide better quality broadband to those who most need it.

Having explained what the intention of the Government seems to be, it was very heartening to see the ACCC coming out swinging. First, it is important to mention that they are an independent agency and the Government can not directly intervene — it can change the laws, but as they stand, they cannot interfere with them.

In this respect, it is also worrying that in the Statement, the Government asks the ACCC to brief the Government well before the issue their announcements. I can see that the Government wants this, but I also fear that this could result in it trying to intervene with these announcements. This is in line with a general power grab from politicians taking it away from the bureaucracy — this undermines our democracy.

The ACCC responded immediately without directly referring to the Statement. They have clearly indicated that their role is to ensure the best outcomes for consumers and for competition.

There have been ongoing concerns that the current wholesale prices are already too high; the SoE could see these prices rise even further rather than fall. The pressure put on these prices by NBN Co either reduces the viability of retail competition or they result in higher retail prices. The NBN is a monopoly and is therefore in a very strong position to misuse their market powers in a way that results in outcomes worse for customers and the competition.

NBN cost blowout means it is poor value for money

We absolutely need a strong and independent ACCC to safeguard the telecoms market. The reaction from the industry has been lacklustre, but they better stand up as it will make their already bad position even worse.

It is obvious that the Government is putting pressure on NBN Co to create a better financial outcome. However, it would be unfair that the financial miscalculation of the costs of the NBN as mentioned above should be worn by the users. Sooner or later, the Government will have to face that issue, bite the bullet and write off, let us say, 50 per cent of the costs in the name of national interest. It is not that difficult to create an acceptable political message around such a decision.

In the meantime, the ACCC needs all our support to ensure that they can remain independent and that they will be able to continue to act in the best interest of the customers and of the competition and not in the (political) interest of the Government.

The initial signs coming out of the ACCC are encouraging; they are defiant. Let us see how they go and/or how much pressure the Government is going to use to recoup as much of its costly investments in the NBN as possible.

The sad thing is that rather than ensuring that all Australians will receive the best quality broadband at an affordable price, the political battle that continues to fester keeps hampering such an outcome.

Linked to that, you might recall that I and others asked the Minister to issue an SoE for the NBN. We are still interested to hear what the Government thinks the NBN is all about. Is it indeed a national infrastructure project for the social and economic benefit of Australia, or is it just a commercial investment with the aim to maximise its value. Obviously, the Minister shied away from providing his expression on the NBN and did not issue such an SoE. So we still don’t know what the Government’s expectations are of its national NBN investment.

We saw a similar level of government action or inaction before it privatised Telstra and aimed to maximise its sales price. I see this SoE as a similar attempt to up the sales price for the NBN. Interestingly, when the Telstra sale occurred, Paul Fletcher, then at Optus, was a fierce opponent of the Government’s protection of the Telstra monopoly.

Paul Budde is an Independent Australia columnist and managing director of Paul Budde Consulting, an independent telecommunications research and consultancy organisation. You can follow Paul on Twitter @PaulBudde.

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Record quad bike deaths this year as first stage of new ACCC safety standards take effect


As consumers get their first chance to compare the stability of different makes of quad bikes, Farmsafe Australia has reported a record number of deaths from the popular machine.

Sixteen people have died in quad bike accidents this year, and 50 have been injured.

Farmsafe Australia chair Charles Armstrong said the record number of deaths might be due to a lot of activity around the big harvest while a lot of friends and family have been at home on farms during the holiday period.

Safety information now required

On Sunday, the first stage of the mandatory safety standard came into effect following the Government’s acceptance of a recommendation by the Australian Competition and Consumer Commission (ACCC) to introduce the standards in two stages.

In the first stage, all new and imported second-hand quad bikes sold in Australia must be tested for lateral static stability, display the angle at which the quad bike tips onto two wheels on a hang tag at the point of sale, and carry a rollover warning label on the quad bike.

The owner’s manual must also include rollover safety information.

The new standard will allow consumers to compare bikes, but three major US and Japanese manufacturers have already said that the requirements are too hard and they are pulling out of the market.

Sixty per cent of fatalities occur when drivers are crushed underneath the bikes, according to the ACCC, but there has not been a single fatality from a bike fitted with a roll bar.

Despite the record number of deaths, mandatory rollover protection will not be introduced until October next year.

Rollover protection effectiveness ‘a lottery’

Tony Webber, the chief executive of the Federal Chamber of Automotive Industries, said rollover protection was a poor solution to the problem, one that was rejected by the US regulator and other governments in the EU, UK and New Zealand, and they should not be installed on quad bikes.

“You just don’t strap something onto a product, as it changes the whole dynamics of the vehicle,” he said.

“It’s a lottery whether you are saved by a rollover protection device or are hit by it.”

Tony Webber said he did not think any of the members of the Automotive Chamber would be supplying quad bikes with rollover protection when it became mandatory in October next year.

Consumers can make comparisons

A quad bike safety sticker.
The new safety stickers will include a number indicating the degree of slope at which the bike will flip over.(Supplied: ACCC)

ACCC Deputy Chair Mick Keogh said manufacturers had been testing the bikes to determine what angle they would roll, and that information would be displayed on quad bikes for sale.

“The first point at which it moves from four wheels to two wheels is the tilt angle, and that is to be indicated on the hang tag,” he said

He wants to reduce the frequency of rollovers by allowing consumers to choose more stable vehicles.

Next year there will be a minimum stability standard, and bikes will need a rollover protection device.

Mr Keogh said most bikes were close to the minimum standard now, but he was hoping manufacturers would make changes.

“Marginal adjustments to things like wheelbase widths can have an impact on stability.”

Subsidies available

In the meantime, Mr Armstrong hopes that people will fit their own devices, given the number of government subsidies to reduce the cost of retro fitting roll bars to older bikes.

He thinks imports will be safer as well.

“There is a requirement on imported second-hand quads to have a crash protection device fitted.”

A quad bike with roll over protection bar lying on its side in a paddock.
John Lowe walked away without a bruise because he fitted roll over protection on his quad bike before he hit a wombat hole and overturned.(Image supplied (John Lowe))

Farmer says rollover bars saved his life

John Lowe rolled his bike while on a neighbour’s property looking for a stray bull.

“I dropped it into a wombat hole, and it tipped over sideways,” he said.

He was lucky. He had already spent $1,400 fitting two kinds of safety equipment to his bike.

“I knew that if it kept on going over I had a crawl space underneath that would have kept me safe.

Mr Lowe is surprised at the resistance from some manufacturers and farmers to putting rollover protection on bikes.

After his own close call, he wants to make sure the people he employs are safe.

“If we’ve got a young fella or lass coming to work with us I’d find it hard to live with us if I put them in a wheelchair.”

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Google spreading ‘misinformation’ about new rules, says ACCC chief


The News Media Bargaining Code proposed by the ACCC would give Google and Facebook three months to negotiate revenue-sharing deals with media companies before independent arbitrators are called in to impose a compulsory arrangement.

In the open letter published on Monday, Google argued the new code would lead to user data being handed over to big news publishers, and “hurt” search results by prioritising news above other forms of content.

Google Australia boss Melanie Silva said the code would force Google to provide users with “dramatically worse” search results and “would put the free services you use at risk in Australia”.

On the Google search page in Australia the company placed a warning marked with a yellow exclamation mark that said: “The way Aussies search every day on Google is at risk from new government regulation” with a link to the letter.

Treasurer Josh Frydenberg said the new code was necessary because the ACCC had found a “significant bargaining power imbalance” between Australian news media businesses and the digital platforms. “The government remains committed to introducing this significant reform with a world leading mandatory code,” he said.

The consultation period for the new code ends on August 28.

Rob Nicholls, an associate professor in business law at the University of NSW, said Google had adopted a “very aggressive” approach and its threat that users may be charged for search was unlikely to eventuate.

“Clearly it is a considered threat and it is a significant one but I think it would be problematic for Google to try to charge for search when there are alternative zero cost search engines around,” he said.

Google also sent a message to Australian YouTube content creators on Monday and warned they could receive fewer views and earn less under the code.

However, Timothy Dwyer, Associate Professor in the Department of Media and Communications at the University of Sydney, said this appeal to creatives was a “total misrepresentation” of the code.

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“This code is about professionally produced news and the investment in resources people make to produce news, it is not about people putting up videos about how to repair your car,” he said. “The idea that is it going to harm consumers is blackmail.”

Mr Dwyer said Google’s alert on its search page about the code was “contemptuous” of the consultation process.

“It is a scare campaign and using the home page demonstrates the unequal market power that the ACCC is seeking to address,” he said. “It is an abuse of power.”

The local tech community has warned the new code could hurt innovation. “The government should not intervene to prop up out-of-date business models,” Jackie Vullinghs, principal at tech investment firm Airtree Ventures said.

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Google delays local licensing deal, prepares for ACCC fight


Google currently has deals in place with Solstice Media, publisher of InDaily and InQueesland, Private Media, publisher of Crikey, Schwartz Media, publisher of The Saturday Paper and Antony Catalano’s Australian Community Media. It was also in talks with a number of other publishers. But several industry sources familiar with Google’s plans said that the launch will now be delayed until the tech giant has more clarity on how the code, which could be legislated by the end of this year, will affect it financially. Google declined to comment.

Ms Silva has previously argued that the timing of the content program was coincidental, however documents seen by The Sydney Morning Herald and The Age show a loophole that allows Google or a publisher to terminate the agreement if legislation or a code of conduct was introduced in Australia.

Google has made few public comments since Ms Silva condemned the code, but sources familiar with the company’s thinking said it is concerned about multiple components, including a requirement to inform publishers of algorithm changes in advance.

“Our hope was that the Code would be forward thinking and the process would create incentives for both publishers and digital platforms to negotiate and innovate for a better future – so we are deeply disappointed and concerned the draft Code does not achieve this,” Ms Silva said when the code was announced. Instead, the government’s heavy handed intervention threatens to impede Australia’s digital economy and impacts the services we can deliver to Australians.”

Under the ACCC’s proposed code Google and Facebook will have three months to negotiate revenue-sharing deals with media companies before an independent arbitrator is called in to impose a compulsory arrangement. Publishers will be able to negotiate directly with the tech giants or work together in groups to receive payment. The tech giants would also required to come up with a way to recognise original content and would need provide 28 days’ notice of changes to algorithms and policies that will affect news content and advertising.



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Google, Facebook profits won’t be wiped out by publishers’ payments: ACCC


“Google said that the amount of content that it uses from publishers generates about 20 million euros in revenue,” Mr Guerin said. “They went into negotiations and said ‘we want to be fair’ and offered €30 million to the entire industry. The publishers (about 300) were very unhappy. They came back with a figure of €120 million.”

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Under the ACCC’s proposed code Google and Facebook will have three months to negotiate revenue-sharing deals with media companies before an independent arbitrator is called in to impose a compulsory arrangement. Publishers will be able to negotiate directly with the tech giants or work together in groups to receive payment, but Mr Sims and Communications Minister Paul Fletcher have not put a dollar figure on the total amount Google and Facebook are likely to pay.

However, Mr Sims said it would not wipe out the tech giants’ profits. Google Australia posted a 2019 a pre-tax profit of $134 million while Facebook Australia’s profit was $22.7 million in 2019.

“When it goes to arbitration, there’s three things the arbitrator takes into account,” Mr Sims said. “One is the direct, but much more importantly, the indirect value of media on the platforms and I realise that is complex. Secondly, the cost of journalism, the cost to produce the media content. And thirdly, don’t put an undue burden on the platforms.

“The news media businesses shouldn’t be asking for Google and Facebook to cover all their costs. Google and Facebook shouldn’t be insisting they cover none of the costs, so it is something in the middle. Likewise, you shouldn’t be asking Google and Facebook to pay something that completely wipes out all of their profit.”

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Communications Minister Paul Fletcher has brushed off suggestions the tech giants will leave the market and expects them to “comply” with the law. In some countries where legislation has been introduced, Google has retaliated by removing the ‘News’ function from its service or has stopped publishing small excerpts of press articles below web links, also called snippets.

“Having worked on a number of issues where we have sought to establish a legal framework, which digital platforms operating in Australia are required to comply with, the result has been that those companies comply with the law in operating in Australia,” Mr Fletcher said. “Things get said from time to time during the process but when a law is passed the experience has been they comply with the law.

“So examples like Spain and Germany where essentially Google ceased providing click through to particular publishers because it did not accept the legal consequence under laws that have been made in those countries that there should be a payment … the ACCC has extensively considered how the market behaviour these issues have generated in other markets and its advice to the government is that this is a model which it believes will work.”



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