In the global media landscape right now, “A” stands for Australia.

The country is the setting of a titanic struggle between its news media giants, led by Australian media tycoon Rupert Murdoch, and digital behemoths Facebook and Google over the substantial revenues generated from news. With the Australian government firmly backing the country’s media companies, the score at the moment is Murdoch and friends: 2, Facebook and Google: 0.

The battle has attracted attention around the world, including in India, where articles – like this one in Economic Times – are doing the rounds, pitching for similar moves by the Indian government.

Nothing less than the future of news media businesses around the world is at stake in this fight, which started last year when the Australian government’s Competition Commission came up with a new draft law. It proposed a slew of measures to force Google and Facebook to pay for news content shown in Google News, Google searches, and on Facebook.

The proposed law, the first such in the world, is called the News Media Bargaining Code, and it was tabled in Australia’s parliament last December. It is expected to pass into law soon but it is already having a major impact even before it becomes law. Last week, Facebook blocked users in Australia from posting or seeing any news links on its newsfeed. Google, meanwhile, took a more conciliatory stance and struck a deal with Murdoch’s News Corp.

The argument in favour of the proposed law in Australia points to a simple statistic: for every $100 of online advertising spend, $53 goes to Google, $28 to Facebook, and $19 to everyone else. The media business relies on earning revenues and profits from advertisements and subscriptions, with ad spends contributing the major share. That’s how both TV and print media businesses work.

The rise of digital news has wreaked havoc on their old business model. Firstly, most of the content is given away for free, so subscription revenues take a hit – although the Covid pandemic has accelerated a shift towards paywalls and digital subscriptions. Secondly, most of the ad revenue goes to Google and Facebook, so there’s very little left for the publishers. There is a cost to producing the content, which is shouldered by the publishers, who get little money for their efforts.

In India, this has led to a situation where, increasingly, media companies have struggled to survive, often becoming beholden to political masters in the process.

The pressure on Google and Facebook in Australia is to force them to share some of their considerable riches with the companies that actually produce the content hosted on their platforms. This is fair enough, and the principle is one that Google claims it does not disagree with. However, both Google and Facebook also say they are not forcing anyone to use their platforms and services, and publishers are most welcome to opt out if they don’t want their content used. This, of course, is not really an option, since Google and Facebook, to the chagrin of competitors, are practically global monopolies.

Last June, after the draft of the Australian law had been circulated for comments, Google launched a licensing programme to pay publishers for high-quality content.

“This program will help participating publishers monetize their content through an enhanced storytelling experience that lets people go deeper into more complex stories, stay informed and be exposed to a world of different issues and interests,” wrote Brad Bender, Google’s vice president of product management (news), in his blog while announcing the launch. The first three countries to see launches were Australia, Brazil and Germany. But in Australia, it was the regional media, rather than Murdoch’s News Corp, that Google partnered with.

Now, under pressure, Google has relented. In their deal last week, News Corp announced “a historic multi-year partnership with Google to provide trusted journalism from its news sites around the world in return for significant payments by Google.” Facebook, after its initial tough stance, also unblocked news links from its newsfeed in Australia on Monday after amendments were added to the proposed law.

As the deal-making happens all around, the question is: who will benefit?

Murdoch and his ilk, according to Kevin Rudd, the former prime minister of Australia. In a message posted on YouTube, Rudd voiced his doubts.

“I always get a little bit suspicious when the Murdoch media get really excited about something, and they’re really excited about this,” he said. “I get doubly suspicious when Scottie from Marketing [Australia’s current prime minister, Scott Morrison] bridges this legislation to make the Murdoch media really happy...I don’t believe anyone’s content should be nicked but the bottom line is this: we’ve got to ask ourselves, what’s actually going on here? What concerns me most as someone who’s been in the political process a bit is, what’s the public policy objective here?”

Rudd expressed his suspicions that media diversity is not the public policy goal being served by the News Media Bargaining Code bill.

“Doubt number one: If Murdoch and the others are able to charge Google and Facebook for content, what happens to the money?” he asked. “Does all that money just go neatly into Rupert’s pocket? Well, what about regional newspapers, local newspapers, what about public interest journalism, in other words, the stuff that actually keeps media diversity alive?”

His second doubt related to the position of the country’s national broadcaster, ABC, which, in his view, was becoming a mouthpiece for the current government, which controls its purse strings.

Here in India, it’s not just public broadcasters paid for with taxpayer rupees that are sucking up to the party in power and becoming party mouthpieces. The television news media is largely a bazaar of competing sycophants, each trying to out-shout the other with their daily dose of propaganda. Sycophancy is a competitive business these days, and the state of journalism is correspondingly dire.

To make matters worse, media diversity has been shrinking, with a handful of companies and individuals owning entire bouquets of channels, websites and newspapers. In this environment, getting the government involved in regulating the relationship between the news media and platforms such as Google and Facebook is an invitation to take the cosy relationship between big media and the government even further.

There is no doubt that Google and Facebook gain from the content produced by news media companies, just as there is no doubt that the companies also gain from the millions of hits that Google and Facebook bring. They both need each other, although the need is probably greater on the side of the news media – there’s a lot of stuff other than news on Google and Facebook. The platforms can manage without news content, although Google would be far less useful without it.

There is also little doubt that as matters stand, journalism is dying for want of a financially viable business model. What Google and Facebook pay content creators is less than peanuts. There is also a huge problem when it comes to news with only counting numbers of hits, without distinctions based on quality and veracity. It rewards the viral even if the viral is fake and sensational. Even within the terms of what and how it pays, the devil is in the details. For instance, traffic from certain countries is worth more than others.

With the new law, such details need to be looked at carefully. Google had objected to the draft bill in Australia saying it contained “an obligation to share details about our algorithm changes that would provide an unfair advantage to large news businesses and help them feature more prominently in organic search results at the expense of other businesses, creators and website owners”. Now, it has struck a global deal with Murdoch’s News Corp. Will this help News Corp stories to show up more prominently in search results?

It would be to the benefit of Big Tech and the profession of journalism if some model that enables content creators to be suitably compensated for their work is worked out without government regulation and without Big Media cornering all the gains. The example of Australia will be followed in countries around the world. The lobbying has already begun. A few days ago, Australian prime minister Scott Morrison spoke to India’s Narendra Modi, and the proposed news media law figured in their conversation.

A healthy democracy requires a financially sustainable and diverse media landscape that is not reduced to a state of permanent cheerleading for whichever party is in power. Big Tech, led by people such as Google’s Indian-origin chief Sundar Pichai, would do well to step up and help create such a media landscape as they face an imminent worldwide shakedown from Big Media backed by state power.