Facebook Inc FB and Alphabet Inc GOOG GOOGL subsidiary Google will have to pay Australian media for news content, a development that may be replicated elsewhere in the world, Bloomberg reported Wednesday.
What Happened: The country’s parliament passed the legislation on Thursday (local time).
Australia’s Treasurer Josh Frydenberg said that the new law will ensure “news media businesses are fairly remunerated for the content they generate,” according to Bloomberg.
“The code is a significant microeconomic reform, one that has drawn the eyes of the world on the Australian parliament.”
On Tuesday, the government made last-minute changes to the then-proposed law that included a two-month mediation period. The changes would give the tech giants and media more time to negotiate commercial deals.
“Thankfully, after further discussion, the Australian government has agreed to changes that mean fair negotiations are encouraged without the looming threat of heavy-handed and unpredictable arbitration,” said Nick Clegg, Facebook’s vice president of global affairs, in a blog post.
Why It Matters: The two tech giants in the crosshairs of the law reacted differently — Google rolled out a news showcase platform and made content agreements with Australian publishers, and Facebook wiped its feeds clean off of news from the country’s publishers.
The social media giant’s actions also affected Australian government websites catering to emergency services and pandemic response.
Clegg wrote that the decision to suspend news from its feed wasn’t taken lightly or suddenly. The executive said the company had to act quickly because “it was legally necessary to do so before the new law came into force, and so we erred on the side of over-enforcement.”
“In doing so, some content was blocked inadvertently. Much of this was, thankfully, reversed quickly.”
Price Action: Facebook shares closed nearly 0.6% lower at $264.31 on Wednesday and fell 0.2% in the after-hours trading. On the same day, Alphabet Class A shares closed 1.15% higher at $2,083.81 and rose nearly 0.1% in the after-hours session. The company's Class C shares closed 1.17% higher at $2,095.17 and rose almost 0.2% in the after-hours session.
Image: Obi Onyeador via Unsplash
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