Sorrell speaks out against Australia's news media bargaining code

Mariam Cheik-Hussein
By Mariam Cheik-Hussein | 20 January 2021
Martin Sorrell

Sir Martin Sorrelll, the founder of WPP and of pure-play digital ad group S4 Capital, has raised concerns about Australia’s news media bargaining code, saying the current legislation will negatively impact the entire digital ecosystem.

The code, which was detailed last month by the government, aims to address the “unequal bargaining power” between Facebook and Google and govern how the tech giants will pay news companies for content. 

In a submission to a Senate inquiry on the code, Sorrell argues that while his business S4 Capital agrees a code in some form is needed, he says the current framework will not make the local news media sector more sustainable.

“The proposed provisions fundamentally change how the open internet is used, resulting in negative impacts that will ripple across the digital ecosystem (including but not limited to the businesses and employees of those digital platforms included in the inquiry),” Sorrell says.

“Most importantly, based on shifts in how digital platforms operate in Australia as a result of the Code’s provisions, Australia’s small and medium business community will experience negative knock on impacts; perpetuating imbalances with other sectors in the economy and digital platforms. A community already struggling due to the 2020 Bushfire Season and COVID-19.

“Above all, the suggested benefits of the proposed code provide a short term solution for a narrow benefiting audience while providing a global precedent with far wider reaching implications for private enterprise, digital platforms and the internet.”

Sorrell notes S4 Capital’s interest in the code as a digital marketing company which benefits from the ability for businesses to grow through search engines and online advertising.

In his submission, he highlights two primary concerns with the code; the payment of snippets and notice requirements around algorithm changes.

According to Sorrell, the payment of snippets doesn’t achieve the core purpose of addressing bargaining power imbalance between digital platforms and news outlets. Instead, Sorrell argues that it provides an immediate solution for an intimate group of benefactors, allowing them to utilise stronger bargaining powers with digital platforms, while diminishing this power for independent news publishers.

Sorrell also highlights that forcing digital platforms to include and pay for links to news websites, which isn't done anywhere else in the world, would limit the free and open nature of the internet for the benefit of a small number of news businesses, giving them an advantage over everyone else.

“Whilst the Code provides an arbitration solution to help prevent this imbalance, the proposed arbitration method is outdated and ironically doesn’t achieve a commercially balanced solution,” he says.

“Instead, potentially incentivising publishers to not pursue good faith negotiations with digital platforms.”

Sorrel also notes that the required 14 days' notice of algorithm changes and ‘internal practices’ to news publishers, which is down from 28 days, reflects an “outdated” understanding of the technology and “spears the very heart of it”.

“In addition to disrupting the digital platform’s business through notice period delays, there is a power imbalance that immediately occurs between news publisher recipients and other search engine users through the content included in the notice,” he says.

“A mandated special treatment for a specific subset of users would disadvantage everyone else. Where any notice is required, we submit a best case scenario that ensures preferential treatment is limited would be for a general notice from digital platforms regarding major changes to be provided to the world at large, via perhaps a blog post.”

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