Australia to Force Google and Facebook to Pay For News Content

Australia will force Alphabet Inc.’s Google (GOOGL) and Facebook Inc. (FB) to pay media outlets for news content as its government seeks to become the first country to hold digital giants to account for content they use.

“It is only fair that the search engines and social media giants pay for the original news content that they use to drive traffic to their sites,” said Josh Frydenberg, Treasurer of Australia. “Over the next three months there will be much to do as a mandatory code is developed and Australia seeks to become the first country in the world to successfully require payment for content.”

The government has asked the Australian Competition and Consumer Commission (ACCC) to prepare a draft for a mandatory code of conduct between media outlets and digital platforms to be submitted by July, and legislated shortly after, Frydenberg said.

The mandatory code will include revenue sharing, transparency of ranking algorithms, user data access, news content presentation, and the penalties and sanctions for non-compliance.

Australia’s advertising market is worth almost A$9 billion a year and has grown more than eight-fold since 2005, according to Frydenberg. For every A$100 spent by advertisers in Australia on online advertising, excluding classifieds, A$47 goes to Google, A$24 to Facebook and A$29 to other participants.

Moreover, a report by the ACCC competition watchdog showed that more than 98% of online searches on mobile devices are with Google, while Facebook has approximately 17 million users who are connected to its platform for at least half an hour a day.

Looking at the digital giants’ ratings, TipRanks data shows that the consensus of Wall Street analysts view both Alphabet’s Google and Facebook as a Strong Buy. Alphabet’s $1,524.69 average price target implies 21% upside potential in the coming year, while Facebook’s $225.52 average price target means shares are projected to gain 26% in the next 12 months.


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