Earlier this year the Morrison Government introduced world-first laws recognising robust journalism’s role in maintaining democracy and civil society, one that should not be eroded by foreign-owned tech giants.
Last week it caved in to pressure from Google and Facebook, watering down the laws to such an extent that their effectiveness is now questionable.
The laws would have forced Google and Facebook to share some of the profits they make from using news produced by newspaper and television companies. Under the original plan, they would have had to agree on how much they would pay news publishers for their content. If they couldn’t reach an agreement with publishers then an independent arbitrator would decide for them.
That will still happen, but the Government has also accepted the tech giants’ argument that they provide hundreds of millions of dollars of value to publishers by driving internet traffic to their sites. Under the new rules, news publishers will now be forced to pay Facebook and Google for the web traffic.
Essentially, the Government has succumbed to a determined campaign by the tech giants, which were worried the success of the Australian regulation might result in similar regulations being adopted in other parts of the world.
Facebook threatened to stop showing news by Australian media companies in its feeds, meaning news outlets receive nothing at all, while Google said it would stop Australians from receiving improvements to its search and other services.
The government insists the revised “two-way value exchange” won’t result in the publishers handing more money to the internet platforms than they receive
But there is little doubt it will reduce the revenue publishers receive from Facebook and Google – perhaps by a large amount – and this will in turn limit the funding available for journalism.
The question is how much?
Nine estimated that the industry collectively could expect about A$600 million a year from the tech giants, while News Corp suggested the number is closer to A$1 billion.
Against this is the value placed on the eyeballs the tech platforms bring to the media companies. Google has claimed it directed more than three billion visits to publishers in 2018 worth A$218million. Facebook estimates its referrals to media companies in January to May this year – just five months – were worth A$196m.
We’re a long way off knowing how much media companies will end up with after they have negotiated with the online behemoths, or had their claims arbitrated.
But two things are certain.
Firstly, media companies will receive less money as a result of the Government’s capitulation to the internet giants. And secondly, the process is likely to get even more bogged down in claim and counterclaim and cost more.
Ultimately, journalism and Australia will be the losers.
It’s hard to believe that just nine months ago, the Australian share market was in the midst of a 36 per cent plunge.
As we look at the steady gain in share prices since March, it’s almost as if the Covid-19 pandemic never happened. The ASX-200 looks on track to regain the high hit at the end of February, when the pandemic was little more than a mystery illness in Wuhan.
Nowhere is the turnaround in market sentiment more evident than in the initial public offering market, that is, when companies join the share market by selling shares to investors.
Australia is in the midst of what can only be described as an IPO frenzy, with companies of all shapes and sizes taking to the boards in just about any sector you care to name, but in particular the tech sector.
Shares in investigations management software company Nuix (I didn’t know such a thing existed either) have roared up 63 per cent on the first day of trade for the A$1.7b company. Doctor Care Anywhere – which offers a digital platform that supports healthcare customers “across the patient journey” according to its prospectus – rose 16 per cent on their first day. And shares in construction company Maas rose 35 per cent on debut.
But not all have been a success.
Shares in the A$1.3b Dalrymple Bay coal port float sank from their issue price as investors worried about how sustainable coal-linked assets would be.
And others were spurned by investors before they even made it to the sharemarket. Oyster company East 33 abandoned plans for an ASX listing because of challenging market conditions and increased geopolitical tensions.
Law firm HWL Ebsworth abandoned its float amid investor concern about whether the firm would be able to retain its top lawyers after they became shareholders instead of partners.
For the most part, however, the IPOs have been snapped up by investors and the pipeline of new companies coming to the market early next year also looks strong.
There might be reason for caution. The last time the IPO market was this hot was just before the tech wreck in 2000. It might, once again, indicate an overextended market.
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