"While Facebook and Google need journalism, they

don’t need any particular media company... All the media

companies need Facebook and Google. What they’ve
done is intermediate themselves between journalists and
people who want to view the content, for their own
financial advantage, obviously... Many market failures
you don’t have to address. But this one is really
important because it affects journalism, and therefore it
affects society. Journalism is the classic public good: We
all benefit from it."
Rod Sims AO, Chair of the ACCC (2011 – 2022)

1
 Submission to the Economic Development, Science and Innovation Committee
News Publishers Association

Fair Digital News Bargaining Bill

1 November 2023

Introduction

1. This submission to the Economic Development, Science and Innovation Committee

("Committee") is made on behalf of the News Publishers' Association of New Zealand
Incorporated ("NPA") in support of the Fair Digital News Bargaining Bill (the "Bill").

About NPA

2. NPA is an industry association whose membership consists of regional and national New
Zealand news media companies. NPA's role is to champion the news media industry of New
Zealand, including through representing its members’ interests in areas such as government
affairs, media regulation and public funding of journalism.

3. NPA's members include NZME Limited ("NZME"), Stuff Limited ("Stuff"), Allied Press Limited
("Allied Press"), The Gisborne Herald Company Limited ("Gisborne Herald"), Ashburton
Guardian Company Limited ("Ashburton Guardian"), Greymouth Evening Star Co Limited
("Greymouth Star"), National Media Limited ("Wairarapa Times-Age"), The Westport News
Limited ("Westport News"), The Beacon Printing & Publishing Company Limited ("The
Whakatane Beacon"), and The Wairoa Star Limited ("Wairoa Star").

NPA strongly supports the Bill: it is critical to address the market failure and support
the continued availability of NZ news content that underpins society

4. NPA strongly supports the enactment of the Bill, as do NPA's members (reflecting the
widespread support for the Bill from across Aotearoa New Zealand's news media sector). The
Bill is critical and urgent legislation that is necessary in order to:

(a) address the significant imbalance in market power between certain global digital
platforms (the "Digital Platforms") and the producers of New Zealand news media
("NZ News Media");

(b) enable NZ News Media to negotiate fair compensation that reflects the value of the
news content they produce that appears on, or is used by, the Digital Platforms;
and

(c) therefore, support the availability of professional journalism in New Zealand, and
independent New Zealand news content, which is the fundamental cornerstone of
a functioning democracy.

5. The evidence demonstrates that there are strong public policy reasons for the Bill:

(a) The findings are clear from a number of competition specialists, regulators, and
policy makers around the world that there is a market failure in the production of
news and journalistic content. That market failure is due to the significant
bargaining imbalance between the Digital Platforms and news media, that means

2
 that news media do not (in the absence of legislative intervention) have the ability
to negotiate fair compensation for the use of their news content by Digital Platforms
(see Appendix One for examples of such findings).

(b) Without legislation to bring global Digital Platforms to the negotiating table, it is
apparent that certain Digital Platforms will continue to refuse to engage in good
faith negotiations with NZ News Media to provide fair compensation for the use of
their news content. For example, even following the Commerce Commission's
authorisation of collective bargaining by NZ News Media, Meta has continued to
refuse to enter a commercial agreement with NZ News Media, 1 and it has been
reported that "it is widely considered that Google has made a deal to head off the
prospect of any legislative interference" (i.e. that the prospect of the Bill, which had
been announced, was critical to bringing Google to the negotiating table). 2
Furthermore, even to the extent existing agreements have been reached with any
Digital Platforms in light of the prospect of the Bill, there is no guarantee of future
agreements beyond their current term. Accordingly, the Bill is necessary to both
bring Digital Platforms to the bargaining table now, and provide certainty that any
current agreements will continue and that Digital Platforms will return to the
bargaining table in future.

(c) In the absence of such fair compensation there will continue to be an acceleration
of the decline in the viability and sustainability of NZ News Media, and therefore on
the availability of the news content and journalism that underpins our democracy.
Reflecting this, in New Zealand:

(i) Annual newspaper advertising revenue has fallen from $533 million in
2011 to $210m in 2020 (a $323 million (more than 60%) reduction).3

(ii) Since 2003, newspaper firms have only earned $1 in digital advertising
for every $4 lost in print ads.4

(iii) As NZ News Media struggle to maintain the resources necessary to

continue to produce New Zealand news content they have had to make
difficult decisions to reduce staff, limit coverage or close.5 For example,
the number of journalists employed fell by more than 50% between 2006
and 2018 (from 4,284 to 2,061).

(iv) The Ministry for Culture and Heritage ("MCH") has observed that local
and community news, investigative journalism and local reporting on

1 (20 June 2023). Google agrees to news deal, but Facebook and others won't talk without pressure. Stuff. Retrieved from:
https://www.stuff.co.nz/national/politics/opinion/132327428/google-agrees-to-news-deal-but-facebook-and-others-wont-talk-
without-pressure
2 (14 June 2023). Google to start paying for NZ news content shared via News Showcase. Stuff. Retrieved from:
https://www.stuff.co.nz/business/300905755/google-to-start-paying-for-nz-news-content-shared-via-news-showcase
3 (9 December 2022). Proactive release of Cabinet Material: Supporting commercial bargaining for online news. Retrieved
from: https://mch.govt.nz/sites/default/files/projects/cab-rel-online-news-151222.pdf
4 (9 December 2022). Proactive release of Cabinet Material: Supporting commercial bargaining for online news. Retrieved
from: https://mch.govt.nz/sites/default/files/projects/cab-rel-online-news-151222.pdf
5 See for example:
- (2 June 2023). Rotorua Weekender publishes final edition. Rotorua Weekender. Retrieved from:
https://www.nzherald.co.nz/rotorua-daily-post/news/rotorua-weekender-publishes-final-
edition/WGL7LENBTRAIFDMC6IUOPCRVH4/
- (16 May 2018). Stuff closes 15 community titles and sells another. Stuff. Retrieved from:
https://www.stuff.co.nz/business/103957279/stuff-closes-15-community-titles-and-sells-another

3
 international news have been the areas of journalism that have suffered
the most.6

(d) In the absence of fair compensation, those declines in the viability and
sustainability of the NZ News Media sector are only going to accelerate
exponentially further again due to the proliferation of Digital Platforms using
generative Artificial Intelligence ("AI") based chatbots that train themselves using
professionally produced journalistic / news content, and then use those inputs to
provide services to users without compensation or attribution to the news media
organisations that produced that content, nor any direction of audience traffic to
those news media websites. As the News Corp CEO outlined to the INMA World
Congress of News Media earlier this year: 7

We have been characteristically candid about the AI challenge to

publishers and to intellectual property. It is essentially a tech triptych.
In the first instance, our content is being harvested and scraped
and otherwise ingested to train AI engines… Secondly, individual
stories are being surfaced in specific searches. And, thirdly, original
content can be synthesized and presented as distinct when it is
actually an extracting of our editorial essence. These super snippets,
distilling the effort and insight of great journalism, are potentially
designed so the reader will never visit a news site, thus fatally
undermining journalism and damaging our societies. [Emphasis
added]

(e) The decline in the viability and sustainability of the NZ News Media sector is a
significant public policy issue for New Zealand. A diverse and independent media
sector is the backbone of a healthy democracy. In particular, a strong media
sector that produces quality, fact-based news at both the local and national levels
is essential for holding the powerful to account, communicating credible and
reliable information to communities (including during times of crises, such as
pandemics and natural disasters), and countering the spread of misinformation and
disinformation.

(f) The Bill supports the viability and sustainability of the NZ News Media by
facilitating commercial remuneration for the use of New Zealand news content. In
other words, it enables a competitive and commercial response to a market failure,
rather than requiring Government funding or subsidies to support the important
public policy outcomes of a strong media sector. As Australia’s communications
minister, Paul Fletcher, said in explaining the rationale for the equivalent Australian
News Media Bargaining Code:8

What we're trying to do is replicate the ordinary commercial

dealings that would occur in a market where there wasn't a huge
imbalance of bargaining power. [Emphasis added]

6 https://mch.govt.nz/strategic-framework-sustainable-media-
system#:~:text=As%20a%20result%2C%20New%20Zealand,in%20the%20media's%20operating%20environment.
7 (10 August 2023). News Corp. CEO Says "Negotiations Are Well Underway" With AI Companies for Content Payments. The
Hollywood Reporter. Retrieved from: https://www.hollywoodreporter.com/business/digital/news-corp-ceo-generative-ai-
payments-
1235561197/#recipient_hashed=2e338371486a80419c47c36edcc0b4a5ac2b6d13707a3697d32fb1bdca87cf85&recipient_salt=
7be110e98f59e5e7d5b2161d65204dcff85926dd5aecb66d4cd0913802703744
8 (25 February 2022). Australia's Standoff Against Google and Facebook Worked – Sort Of. Wired. Retrieved from:
https://www.wired.co.uk/article/australia-media-code-facebook-google

4
 Replicating commercial dealings, rather than requiring ongoing Government
funding, is important. That is both to reduce the burden on the taxpayer to support
the continued provision of journalistic content, but also, as outlined in the
explanatory note to the Bill, to support public trust in the media:

it is not desirable for the Government to continue funding the news

media industry directly, because it increases the risk of eroding
public trust in the media… Government funding is not required if
news media entities are empowered to bargain for the value of their
news content.

(g) Many of New Zealand's closest international peers have enacted, or are in the
process of enacting, equivalent legislation to enable balanced and fair commercial
bargaining between news media and Digital Platforms to protect the production
and sustainability of local journalism. For example:

(i) Australia has introduced the News Media Bargaining Code, which the Bill
is modelled on;

(ii) Canada has passed the Online News Act (C-18), which again has been
based on the Australian News Media Bargaining Code;

(iii) in the UK, its Parliament is currently considering the Digital Markets,
Competition and Consumers Bill, which could require certain Digital
Platforms to be "designated" for the purposes of facilitating commercial
remuneration from Digital Platforms to news media; and

(iv) in the US, the Journalism Competition and Preservation Act is being
considered to facilitate commercial negotiations between Digital
Platforms and news media.

A failure to introduce similar legislation here would make New Zealand an outlier,
which will further imperil the quality and sustainability of NZ News Media and
content compared to our closest peers (with those adverse effects exacerbated
further again given the market failure has been addressed in Australia, enabling
increased investment in journalism in that country, that would inevitably lead to
further key New Zealand journalistic talent being lost to Australia).

(h) The evidence demonstrates that such legislation successfully achieves its stated
policy outcomes. For example:

(i) the Australian Treasury conducted a review of the first year of the
Australian News Media Bargaining Code and found the regime to be a
success, enabling a number of commercial agreements to be reached
that would not have been in the absence of the Code, and to employ
additional journalists and make investments in news production: 9

Looking back at its first year of operation, it is reasonable

to conclude that the Code has been a success to date.
Over 30 commercial agreements between digital platforms

9(November 2022). News Media and Digital Platforms Mandatory Bargaining Code. The Code's first year of operation.
Australian Treasury.

5
 (Google and Meta) and a cross-section of Australian news
businesses have been struck, agreements that were
highly unlikely to have been made without the Code.

… On the evidence available to the review, at least some

of these agreements have enabled news businesses to, in
particular, employ additional journalists and make other
valuable investments to assist their operations. [Emphasis
added]

(ii) Rod Sims AO, the former Chair of the ACCC, has observed the
significant contribution that the Code has made to news media production
in Australia (in excess of AUD$200m of payments to news media
businesses – both small, medium and large):10

The NMBC has been successful by any measure. It has

almost completely met the objective set for it, and more
quickly than initially hoped for. Few other government
measures can claim the same…

Australia’s News Media Bargaining Code (NMBC) is seen

as world leading for allowing media businesses to bargain
on broadly equal terms, and so commercially, with
dominant digital platforms. Based on my close
observation, it has facilitated over $200m being paid
annually by Google and Facebook to news media
businesses, large, medium and small. (2) Further, these
media businesses feel they could successfully bargain on
much more equal terms with the dominant platforms in
ways not imaginable prior to the NMBC legislation being
passed. [Emphasis added]

(iii) Nine Entertainment has submitted that the investment facilitated by the
News Media Bargaining Code has enabled it to "[invest] in its newsrooms
– including new journalist hires and product investments to enhance the
impact of our public interest journalism for our audiences",11 and
Guardian Australia submitted that it "underwent a significant expansion
since the agreements were completed. Our newsroom has grown by over
40 journalists, while our commercial and operations team has expanded
by over 10 FTEs. Not all of these roles were a direct result of the funding
from Google and Facebook, but the financial security of these contracts
gave management the confidence to bring forward investments that
would otherwise have been made in subsequent years."12

10 Judith Neilson Institute for Journalism and Ideas. Instruments and objectives; explaining the News Media Bargaining Code.
A report by Rod Sims AO – Former Chair of the Australian Competition and Consumer Commission. Professor, Crawford
School of Public Policy. The Australian National University.
11 Nine Entertainment, p 1.
12 Guardian Australia, p 3.

6
 (i) It is not just news media businesses that support this type of legislation. Some key
Digital Platforms support such legislation. For example, Microsoft has endorsed
the equivalent legislation in Australia: 13

Microsoft fully supports the News Media Bargaining Code. The

code reasonably attempts to address the bargaining power
imbalance between digital platforms and Australian news
businesses. It also recognises the important role search plays, not
only to consumers but to the thousands of Australian small
businesses that rely on search and advertising technology to fund
and support their organisations. While Microsoft is not subject to the
legislation currently pending, we’d be willing to live by these rules if
the government designates us. [Emphasis added]

6. Accordingly, NPA strongly supports the Bill. It is critical to help ensure the sustainability,
viability and independence of the New Zealand news media sector into the future, and there
are strong public policy reasons and evidence underpinning the Bill.

7. While NPA strongly supports the Bill, the remainder of this submission:

(a) outlines specific aspects of the Bill that NPA considers should be further improved;
and

(b) dispels myths that the Committee is likely to hear from certain Digital Platforms in
opposition to the Bill.

NPA's specific suggestions on the Bill

8. To ensure the Bill best achieves its objectives, NPA submits that the following improvements
should be made.

(1) Ensure that the definition of "Digital Platform" specifically includes generative AI / chatbot
services

9. As outlined at paragraph 5(d) above, increasingly generative AI based chatbots train

themselves using journalistic / news content professionally produced by news media
organisations.14 Indeed, The Washington Post has published data showing that of the 10
million websites used to build one chatbot dataset, 13% of content came from “news and
media”.15 Similarly, News Corp's CEO has observed: 16

“As these AI engines are being trained, and they’re using professional content
to be more professional themselves – people certainly will talk about open

13 (3 February 2021). Microsoft Supports Australian Government Proposal Addressing News Media and Digital Platforms.
Microsoft. Retrieved from: https://news.microsoft.com/en-au/2021/02/03/microsoft-supports-australian-government-proposal-
addressing-news-media-and-digital-
platforms/#:~:text=Microsoft%20fully%20supports%20the%20News,platforms%20and%20Australian%20news%20businesses.
14 AI chat bots typically operate through web scraping techniques. Web scraping involves accessing and extracting data from
millions of websites using an automated program, which is then "fed" into the chatbot so that it is able to respond to users'
queries and generate new content. See: (18 September 2023). How Web Scraping Can Improve Chatbot Performance. Smith
AI. Retrieved from: https://smith.ai/blog/how-web-scraping-can-improve-chatbot-performance
15
(23 April 2023). AI should pay for news content: Rod Sims. Financial Review. Retrieved from:
https://www.afr.com/companies/media-and-marketing/ex-accc-boss-rod-sims-says-chatgpt-ai-should-pay-for-news-content-
20230416-p5d0vb
16 (8 March 2023). News Corp in talks with AI firm about compensation. Financial Review. Retrieved from:
https://www.afr.com/companies/media-and-marketing/news-corp-in-talks-with-ai-firm-about-compensation-20230308-p5cqcp

7
 source, but clearly they are using proprietary content… The more specialist the
AI gets, for example, in business, they’re obviously using Dow Jones (publisher
of the Wall Street Journal) content.”

10. Reinforcing this is the recent research by the News Media Alliance, a trade group that
represents over 2,200 newspaper publishers in the United States:

"It is impossible to know exactly what data is fed into the large learning models
because many have not publicly confirmed what is used. In its analysis, the
News Media Alliance compared public data sets believed to be used to train the
most well-known large language models, which underpin A.I. chatbots like
ChatGPT, with an open-source data set of generic content scraped from the
web.

The group found that the curated data sets used news content five to 100 times
more than the generic data set. Ms. Coffey said those results showed that the
people building the A.I. models valued quality content.

The report also found instances of the models directly reproducing language
used in news articles, which Ms. Coffey said showed that copies of publishers’
content were retained for use by chatbots. She said that the output from the
chatbots then competes with news articles.

“It genuinely acts as a substitution for our very work,” Ms. Coffey said, adding:
“You can see our articles are just taken and regurgitated verbatim.""17

11. However, while such AI based chatbots use journalistic / news content as inputs to provide
their services to users, they are doing so without compensation or attribution to the news
media organisations that produced that content, nor any direction of audience traffic to those
news media websites.18 This poses a serious (and rapidly accelerating) existential threat to
NZ News Media. As industry commentators have observed: 19

“The advertising model as we know it — getting people to go to your website

and view it — that’s going to break…I don’t see how that sustains”... AI agents
and foundational models, instead, will capture the ad dollars as advertisers pay
to get their messages included in generated responses.

12. One of the biggest threats will likely be from products like Google’s new Search Generative
Experience ("SGE")20 – which is entirely geared towards creating answers to search queries
that keep the user in the Google environment (i.e. instead of providing a list of answers, it
provides a written answer), but of course Google's model is trained on high quality content
(such as journalistic content that NZ News Media have invested in to produce) to give it the

17 (31 October 2023). News Group Says A.I. Chatbots Heavily Rely on News Content. New York Times. Retrieved from:
https://www.nytimes.com/2023/10/31/business/media/news-artificial-intelligence-
chatbots.html?unlocked_article_code=1.60w.zUpv.o3JM-opsME8q&smid=nytcore-ios-share&referringSource=articleShare
18 Chatbots may use the content scraped from news websites in a number of ways, including to:
- Provide users with up-to-date information in response to queries about current or past events, or the contents of the
news cycle more generally;
- Provide users with personalised updates on current events that they may be interested in (which usually involves the
chat bot tracking a users' online activities to determine their interests and preferences); and
- Generate its own news stories based on information it has retrieved from existing news stories.
19 (14 August 2023). Forget SEO: Why 'AI Engine Optimization' may be the future. VentureBeat. Retrieved from:
https://venturebeat.com/ai/forget-seo-why-ai-engine-optimization-may-be-the-future/
20
(10 May 2023). Supercharging Search with Generative AI. Google. Retrieved from:
https://blog.google/products/search/generative-ai-search/

8
 knowledge to create that answer. However, while Google will use NZ News Media content
for that SGE service, in the absence of good faith remuneration negotiations, it is difficult to
see how NZ News Media could receive fair remuneration for the use of that content nor how
they could choose to opt out of their content being used in that way (given opting out would
result in not being searchable by Google at all, which is essential for discoverability).

13. Reflecting this, and the bargaining imbalance between news media and global AI / chatbot
platforms, Rod Sims AO (former Chair of the ACCC) has observed that it is necessary for
digital media bargaining codes to encompass not only the global giant search and social
media Digital Platforms, but also generative AI / chatbot Digital Platforms:21

The logic is the same. The media companies cannot successfully bargain
with the generative AI companies, just as they couldn’t bargain with
Google and Facebook. If media companies are having their content out in the
public but not getting compensated for it, you are under-provisioning for
journalism and that’s bad for society. We don’t want anything that sees
journalism getting unrewarded for what they’re doing. These [AI] players
weren’t around when we did the news media bargaining code, but I think it’s a
big issue that will arise firstly as the deals in Australia get renegotiated.
[Emphasis added]

14. Accordingly, NPA submits that it is critical that the definition of "digital platform" in the Bill
expressly encompasses Digital Platforms that use New Zealand news and journalistic
content to inform generative AI / chatbot services. However, NPA is concerned that the
current drafting of the Bill does not make that clear.22 Therefore, NPA submits that the
definition of "digital platform" should be amended as follows:

7 Meaning of digital platform

(1) In this Act, digital platform means—

(a) a content host, search engine, social media platform, or other

similar Internet service that makes news content produced by news
media entities available to people in New Zealand; or

(b) an artificial intelligence, machine learning algorithm, chatbot or

other similar service that uses news content produced by news
media entities to provide services to people in New Zealand; or

(c) any other Internet service prescribed as a digital platform by

regulations made for the purposes of this definition.

(2) The Commerce Act exemption should be extended to enable collective bargaining
agreements to include market allocation and output restriction provisions

21
(23 April 2023). AI should pay for news content: Rod Sims. Financial Review. Retrieved from:
https://www.afr.com/companies/media-and-marketing/ex-accc-boss-rod-sims-says-chatgpt-ai-should-pay-for-news-content-
20230416-p5d0vb
22 While certain AI chatbot services may arguably fall within the definition of a "search engine", which the Bill defines as "an
Internet service that allows users to search multiple Internet sites or databases and returns results containing information
related to the subject matter of the search (including aggregated information and links to content", NPA is concerned that
operators of AI chatbots may be able to avoid the regime by arguing that their software differs materially from how a typical
search engine functions.

9
15. Clause 116 of the Bill provides a specific exemption from section 27 of the Commerce Act,
and the price fixing provisions in sections 30 and 30C(1) of the Commerce Act, for registered
NZ News Media entities to engage in collective bargaining with Digital Platforms.

16. NPA agrees that providing this specific exemption from the Commerce Act is necessary to
enable NZ News Media to collectively bargain with Digital Platforms – including as the
standard Commerce Commission authorisation process for collective bargaining is costly,
time-consuming and cumbersome and, therefore, not a practical solution to the market
failure identified. Demonstrating this:

(a) In addition to the Commission's filing fee (NZ$36,800), to seek authorisation

businesses will also need to engage lawyers and economists, which means that
costs could run into the hundreds of thousands of dollars. Those costs undermine
the very rationale of collective bargaining, which is to support the financial viability
of NZ News Media.

(b) Seeking authorisation is a time-consuming process. The Commission's target is

120 working days to make a decision (i.e. over six months), and it typically takes
longer than that. For example, NPA's 2021/22 collective bargaining application
took nearly one year to be granted. These time periods are not practical in
circumstances where NZ News Media require urgency.

17. However, while NPA supports the specific exemption, to be effective NPA submits that the
exemption needs to specifically cover all elements of sections 30 and 30C(1), not just the
"price fixing" provisions. That is because a collective bargaining arrangement could, by
necessity, also involve elements not just relating to price, but also elements relating to the
production of content and the parties to which content is supplied (for example, a collective
bargaining agreement that says a group of news media entities will supply certain volumes of
news content to the counterparty Digital Platform). 23

18. Therefore, for the exemption to be effective, it is also necessary for it to provide an
exemption from the "output restriction" and "market allocation" provisions in sections 30 and
30C(1). Accordingly, clause 116(2) of the Bill should be amended as follows:

(2) The provisions registered news media entities are exempt from are—

(a) section 27 of the Commerce Act 1986; and

(b) sections 30 and 30C(1) of the Commerce Act 1986 to the extent
that they apply to price fixing.

(3) The exemption for Digital Platforms should be amended

19. Clause 56 of the Bill enables the Broadcasting Standards Authority ("Authority") to exempt
a Digital Platform from the bargaining process if, in the Authority's opinion, the operator
"already makes a fair contribution to sustainable production of New Zealand news content."

20. However, NPA is concerned that such a subjective standard could be used by Digital
Platforms to delay designation as a covered platform (for example, by Digital Platforms

23 For example, in relation to NPA's application for authorisation of collective bargaining, the Commission said "[w]e consider
that there are reasonable grounds to believe that the Proposed Arrangement contains a cartel provision", referring to "[a] cartel
provision is a provision of an agreement between competitors that has the purpose, effect or likely effect of price fixing,
restricting output, and/or allocating markets: section 30A of the Act." See: paragraph [43] and footnote 52.

10
 arguing that discretionary grants constitute a "fair contribution"), and therefore, to delay their
participation in a bargaining process to reach agreement on fair commercial remuneration for
the use of NZ News Media content.

21. Accordingly, NPA submits that such a subjective standard must be avoided. Further, given
the cause of the market failure that needs to be remedied through the Bill is the significant
imbalance in bargaining power, NPA submits that the sole criterion for whether a Digital
Platform can receive an exemption should be where the Authority is satisfied that there is not
an imbalance of bargaining power between the Digital Platform and NZ News Media.

22. Therefore, NPA submits that clauses 56 should be amended as follows:

Exemptions from bargaining process

(1) The Authority may exempt an operator of a digital platform from the
bargaining process, on the terms and conditions (if any) it thinks fit, if, in the
Authority’s opinion,—

(a) the operator already makes a fair contribution to sustainable

production of New Zealand news content the Authority is satisfied
that there is not an imbalance in bargaining power between the
operator and the relevant news media entities; and

(b) granting the operator an exemption is necessary or desirable to

promote the purpose of this Act as specified in section 3; and

(c) the exemption granted is not broader than is reasonably

necessary to achieve its purpose.

(4) The Bill should provide additional information protections

23. Under clause 65 of the Bill, if parties to a bargaining process enter into a news content
agreement, they are required to provide the Authority with copies of the relevant agreements
(and are liable for civil penalties if they fail to do so).

24. While NPA supports that process of providing relevant materials to the Authority, the
contents of such documents are likely to be confidential, and their disclosure (for example,
under the Official Information Act) may cause commercial prejudice to both NZ News Media
and the Digital Platforms involved, or cause issues if the contents are market sensitive to
entities listed on the stock exchange.

25. Therefore, NPA submits that the Bill should contain clear provisions protecting such
information from disclosure or publication by the Authority where disclosure would "be likely
unreasonably to prejudice the commercial position of the person who supplied or who is the
subject of the information". Accordingly, NPA submits that clause 82(3) of the Bill should be
amended as follows:

(3) The Authority must not publish or disclose, or direct an authorised person to
publish or disclose, any information or document under subsection (2)(f) unless
the Authority is satisfied that appropriate protections are or will be in place for
the purpose of maintaining the confidentiality of the information or document (in
particular, information that is personal information within the meaning of the
Privacy Act 2020) and that such publication or disclosure would not be likely

11
 unreasonably to prejudice the commercial position of the person who supplied
or who is the subject of the information.

Dispelling the myths of the Big Tech Digital Platforms

26. Based on experiences overseas and in New Zealand (for example during NPA's Commerce
Commission authorisation process), NPA expects that the Committee will hear the usual
"myths" from Digital Platforms as to why the Bill should not be enacted. To pre-empt those
arguments, NPA provides the following responses:

The Big Tech Myth NPA's response

There is no imbalance of
bargaining power
between Digital Platforms
and New Zealand news
media
The Commerce
Commission's collective
bargaining authorisation
is sufficient
Not true.
Arguing that there is no imbalance in bargaining power is a view that is contrary to the
analysis of numerous competition specialists, regulators, and policy makers around the
world – see Appendix One.
Not true.
While an authorisation can permit NZ News Media to collectively negotiate with the
Digital Platforms, it does not place any obligations on the Digital Platforms to engage
with the News Media Entities, or to treat the News Media Entities in a fair and equitable
way during these negotiations.

Demonstrating this, as outlined at paragraph 5(b) above, even following the Commerce
Commission's authorisation of collective bargaining by NZ News Media, Meta has
continued to refuse to enter a commercial agreement with NZ News Media,24 and it has
been reported that "it is widely considered that Google has made a deal to head off the
prospect of any legislative interference" (i.e. that the prospect of the Bill, which had
been announced, was critical to bringing Google to the negotiating table).25

Accordingly, even with the Commerce Commission's collective bargaining authorisation

The financial situation of
news media is their own
fault
granted, the evidence demonstrates that the Bill is necessary to bring the Digital
Platforms to the bargaining table, and provide certainty that any current agreements will
continue and that Digital Platforms will return to the bargaining table in future.
Not true.
The financial issues facing the news publishing sector are being experienced all around
the world and it is recognised that, irrespective of news publishers taking significant
steps to adapt their business models, the significant bargaining imbalance with the
Digital Platforms is a significant cause by undermining news publishers' ability to "gain a
return from content" that they produce.

As the joint Ofcom and CMA advice to the UK Department for Digital, Culture, Media &
Sport outlined:26

24 (20 June 2023). Google agrees to news deal, but Facebook and others won't talk without pressure. Stuff. Retrieved from:
https://www.stuff.co.nz/national/politics/opinion/132327428/google-agrees-to-news-deal-but-facebook-and-others-wont-talk-
without-pressure
25 (14 June 2023). Google to start paying for NZ news content shared via News Showcase. Stuff. Retrieved from:
https://www.stuff.co.nz/business/300905755/google-to-start-paying-for-nz-news-content-shared-via-news-showcase
26 (November 2021). CMA. Platforms and content providers, including news publishers: Advice to DCMS on the application of a
code of conduct at [6] – [8].

12

The financial situation of
news media is due to
competition from digital
classified (such as Trade
Me and eBay), and has
nothing to do with Google
and Meta
Digital Platforms already
make significant
contributions to NZ News
Media
27 (24 January 2023). USA v Google. Retrieved from:
https://storage.courtlistener.com/recap/gov.uscourts.vaed.533508/gov.uscourts.vaed.533508.1.0_2.pdf
There is no single solution to the challenges facing news
publishers, but a key element is ensuring that the
relationship between the major digital platforms and
publishers is fair for both sides in terms of access to
consumers and the opportunity to gain a return from content
provided to them… [Emphasis added]
Further, while NZ News Media have made significant investments in adapting their
business models to the digital environment, the issue is that digital advertising
ecosystem (the end-to-end supply chain) is controlled by Google, thereby enabling itself
to monetise advertising sales even when it has not made any investment in the content
(such as journalism content) that has attracted the audience attention to that
advertising. For example, as the US Department of Justice has outlined in the US:27
…competition in the ad tech space is broken, for reasons that
were neither accidental nor inevitable. One industry behemoth,
Google, has corrupted legitimate competition in the ad tech
industry by engaging in a systematic campaign to seize control
of the wide swath of high-tech tools used by publishers,
advertisers, and brokers, to facilitate digital advertising…
Google, a single company with pervasive conflicts of
interest, now controls: (1) the technology used by nearly
every major website publisher to offer advertising space for
sale; (2) the leading tools used by advertisers to buy that
advertising space; and (3) the largest ad exchange that
matches publishers with advertisers each time that ad
space is sold. [Emphasis added]
Not true.
While undoubtedly the introduction of digital classified competitors (such as Trade Me
and eBay) impacted the revenue of news publishers, that is not the concern that NZ
News Media are seeking to have addressed through the Bill. NZ News Media embrace
fair competition from alternative providers of advertising services – such as digital
classified providers. However, there is a big difference between the business models of
digital classified providers and the Digital Platforms such as Google and Meta that
generate audience and revenue by harnessing the content of news publishers without
permission or remuneration. NZ News Media are not seeking to prevent competition,
rather they are seeking a backstop to enable fair and good faith commercial
remuneration for the use, by the Digital Platforms, of the professional news and
journalistic content that they have invested in.
Not true.
While both Google and Meta operate discretionary funding / education initiatives, such
initiatives are in no way a substitute for the ability of news publishers to engage in
meaningful negotiations with the Digital Platforms for fair and commercial remuneration.
13
 This point has been well summarised by the News Media Alliance in relation to
Google:28

While Google, through the Google News Initiative, has donated

grant funding to the news media industry and provided some
useful advice, none of this is sufficient given the benefit to
Google from news content and Google’s substitutive nature.

Similarly, such discretionary programmes operated by Meta (such as its "Accelerator"

programme) also do not reflect the provision of fair or sustainable remuneration for
Meta's use of New Zealand journalism content, nor reflect a sustainable solution for the
news publishing industry. Rather they reflect a unilateral determination by Meta of what
funding it is willing to provide and who to, in the nature of a one-off payment or training
initiative, or for self-serving reasons to further bind publishers to Meta's platforms. As
Stuff's (then) CEO has previously said of Meta's support programmes: "[t]hey are
designed to bind news media more tightly to their platforms, to increase publishers’
reliance on Facebook and therefore ensure a supply of high quality content for
Facebook for free.”29

In summary, such programmes offered by either Google or Meta:

- are very short-lived and on their terms, and do not enable news publishers to
plan with certainty around such programmes, nor engage in any long-term
forecasting about likely future revenues from the Digital Platforms.
- are very limited compared to the benefit they generate from New Zealand
news content.
- do not reflect the provision of fair or sustainable remuneration for the use of
New Zealand journalism content, nor do they reflect a sustainable solution for
industry.
- are in no way a substitute for fair and reasonable remuneration, and the
commercial certainty that would be provided from a commercially negotiated
arrangement.

Newstalk ZB radio host, Mike Hosking, has summarised well the difference between
such discretionary support programmes in New Zealand and the ability in Australia to
negotiate commercial outcomes under the Australian News Media Bargaining Code,
describing the discretionary support programmes as “training days . . . with cups of tea
and biscuits… Who would you rather be – News Corp, Channel 7, Channel 10 and the
ABC banking millions? Or would you rather be in New Zealand where they are
launching a training and grants programme?"30

Digital Platforms do not Not true.

benefit from New
Zealand news media The evidence demonstrates that Digital Platforms derive enormous financial benefits
content from the news that they use on their sites. In particular:

28 (June 2020). News Media Alliance. How Google Abuses Its Position as a Market Dominant Platform to Strong- Arm News
Publishers and Hurt Journalism. Retrieved from: http://www.newsmediaalliance.org/wp-content/uploads/2020/06/FinalAlliance-
White-Paper-June-18-2020.pdf
29 (17 November 2021). Now Meta wants to teach our news organisations to "develop better business models". The Bit.
Retrieved from: https://www.thebit.nz/opinion/now-meta-wants-to-teach-our-news-organisations-to-develop-better-
businessmodels/
30 (7 November 2021). Meta's moves to boost our media underwhelms observers. RNZ. Retrieved from:
https://www.rnz.co.nz/national/programmes/mediawatch/audio/2018819284/meta-s-moves-to-boost-our-media-
underwhelmsobservers

14
 - the news content used on those platforms draws consumers to those
platforms, and that in turn leads consumers to spend time on those platforms,
and engage with those platforms in ways that are heavily monetised.
Irrespective of whether a Digital Platform directly monetises a particular news
item (by including advertising alongside that particular news item), there is
significant value for the Digital Platforms in using such content on their
platforms. That is because once a consumer is drawn to a platform, that
provides the opportunity to monetise that attention through the provision of
advertising.
- in relation to Google:
o "News" is one of the key five icons under the search bar in Google
Search, demonstrating that the surfacing of news content is one of
the key aspects of Google's business model.
o Four of the top five overall "trending" searches on Google in New
Zealand during 2022 were searches that would surface news content
– namely "Locations of interest", "Australian Open", "Covid cases
today NZ", and "All Blacks vs Ireland".31 That is consistent across
different years. As NPA outlined to the Commerce Commission
during its authorisation application, in 2019 all top five "trending"
searches were searches that would surface news content - namely
"Rugby World Cup", "New Zealand vs England", "Cricket World Cup",
"Christchurch Shooting", "Stuff News NZ".32 This again demonstrates
that access to news content is a significant draw to Google's
platforms.
o Google derives enormous financial benefits from the news that it uses
on its sites by using news to draw consumers to its platforms (by
making a visit to Google part of the online "habit") and by presenting
trustworthy content produced through publishers' investment in
journalism (which contributes to consumers' trust in Google as a
source of accurate information), with that in turn leading consumers to
spend more time within Google's eco-system, enabling Google to
gather additional data about users that it can monetise in other ways.
o A 2023 study by Fehr Advice concluded that Swiss media content
generates approximately CHF385m (~NZD$735m) of revenue for
Google in Switzerland each year.33
- in relation to Meta:
o "According to a Reuters Institute report, up to 40% of Australians
used Facebook for news between 2018 and 2020 - making it the
country's most popular social media and messaging platform for
news".34
o It has been estimated in Canada that media pages account for 8.9%
of Canadian content on Facebook pages, with 5.3% of interactions
being triggered by journalistic content, therefore enabling "Facebook

31 Google. See what was trending in 2022 – New Zealand. Retrieved from: https://trends.google.com/trends/yis/2022/NZ/
32 Google. See what was trending in 2019 – New Zealand. Retrieved from: https://trends.google.co.nz/trends/yis/2019/NZ/
33 (17 March 2023). Study on ancillary copyright and related rights Overview. Fehr Advice. Retrieved from:
https://fehradvice.com/wp-content/uploads/2023/04/EN_VSM_TwoPager64.pdf
34 (18 February 2021). Facebook Australia row: How Facebook became so powerful in news. BBC. Retrieved from:
https://www.bbc.com/news/world-australia-56109580

15
 to raise nearly a third of a billion dollars over the past two and a half
years" from content produced by Canadian media.35
o The inclusion of journalistic content on Meta's platforms drives
significant value for Meta (whether that is posted to Facebook by
news publishers or organically by Facebook users), by drawing
consumers into Meta's ecosystem to access news content, increasing
consumer engagement and generating further consumer content on
the Facebook platform through comments underneath news links.
That in turn further maximises Facebook's access to "consumer
attention" and enhances their ability to collect further consumer data,
predict consumer behaviour and target advertisements to highly
stratified audience segments (irrespective of whether those
advertisements themselves are served alongside news content).

There is a "two way" Not true.

value exchange between
Digital Platforms and new
media, and Digital
Platforms drive more
value to New Zealand
news media than they
receive
Bargaining Code laws
only benefit large
publishers, not small
ones
It is well recognised that the significant bargaining imbalance means that the Digital
Platforms "capture a large proportion of this joint value" and, therefore, to the extent
there is any "two way" value exchange, it is significantly weighted in the favour of the
Digital Platforms.36 This was well articulated by the recent joint UK Ofcom and CMA
advice:37
Where platforms have strong bargaining power it is likely that
they will capture a large proportion of this joint value. Indeed, if
many content providers view the services of platforms as being
must have, it is possible that the platforms could capture almost
all of this joint surplus. Accordingly, although the value creation
is two-way, the publisher may have to accept current terms
based on little or no financial remuneration for content even if the
consequence is that the majority of joint value is retained by
the platforms. [Emphasis added]
Not true.
A regime that enables all NZ News Media (whether large or small) to negotiate in good
faith, on a fair footing, will benefit all media organisations regardless of size. Indeed,
given the current imbalance of bargaining power and lack of negotiating resources, it is
inevitable that smaller publishers (including regional and Māori news media entities) will
achieve negotiation / remuneration opportunities via the Bill that they could not
otherwise achieve. As the Australian Treasury review of that country's media
bargaining code found:38

Over the Code’s first 12 months of operation, Google and Meta

have reached commercial agreements outside the Code with a
range of large and small news businesses serving metropolitan
and regional areas. [Emphasis added]

35 (2 October 2020). Facebook profits from Canadian media content, but gives little in return. The Conversation. Retrieved from:
https://theconversation.com/facebook-profits-from-canadian-media-content-but-gives-little-in-return-146385
36 (November 2021). CMA. Platforms and content providers, including news publishers: Advice to DCMS on the application of a
code of conduct at [5.8].
37 (November 2021). CMA. Platforms and content providers, including news publishers: Advice to DCMS on the application of a
code of conduct at [5.7] – [5.10].
38 (November 2022). News Media and Digital Platforms Mandatory Bargaining Code. The Code’s first year of operation.
Australian Treasury.

16
 Furthermore, the Bill introduces new (more streamlined) "collective bargaining" options
for NZ News Media, with collective bargaining being an option that the Commerce
Commission has previously concluded was particularly beneficial for smaller news
publishers:39

Smaller news media companies appear most likely to gain

from membership of the Collective to the extent the Proposed
Arrangement facilitates successful negotiations with the Digital
Platforms that would not otherwise occur. Absent the Proposed
Arrangement, the Digital Platforms may have less incentive to
engage meaningfully with these smaller news media companies
given the relatively low volume and value of their content.
[Emphasis added]

Bargaining Code laws Not true.

undermine the efficient
operation of markets by
representing a "subsidy"
It is the current imbalance of bargaining power that is sending inefficient market signals
– namely, that the Digital Platforms are able to benefit from valuable journalist content
without paying fair and reasonable remuneration. It is those significant inefficient
market signals ("market failure" in the words of Rod Sims AO) that need to be
addressed through the Bill by enabling the negotiation of remuneration that reflects a
fair and reasonable market-based price. That is the opposite of a subsidy – it is a
framework to enable a fair commercially based value exchange.

Indeed, to the contrary, by enabling a fair commercially-based value exchange, it means

Bargaining Code laws
are a "tax" on Digital
Platforms
that NZ News Media can be sustainable without requiring any subsidies or funding from
the Government.
Not true.
As above, the Bill enables the negotiation of remuneration that reflects a fair and
reasonable market-based price. That is the opposite of a "tax" – rather it is a framework
to enable a fair commercially based value exchange to prevent Digital Platforms from
obtaining an improper windfall from using other parties' content without remuneration.

Concluding comments

27. NPA is grateful for the opportunity to submit to the Committee on the Bill. As noted, NPA fully
supports the Bill, and considers it critical and urgent to help support the continued availability
of professional journalism in New Zealand, and independent New Zealand news content,
which is the fundamental cornerstone of New Zealand's democracy.

28. NPA requests the opportunity to make an oral submission to the Committee. All enquiries can
be directed to:

Brook Cameron
General Manager - NPA
brook.cameron@npa.co.nz

29. In addition, to assist the Committee enclosed with this submission is a report that Rod Sims
AO has written about the Australian News Media Bargaining Code.

39 News Publishers’ Association of New Zealand Incorporated [2022] NZCC 35 at [210].

17
18
 Appendix One

Extracts from competition specialists, regulators, and policy makers identifying the
significant bargaining imbalance between the Digital Platforms and news publishers

New Zealand Broadcasting
Minister, Willie Jackson
(2022)
New Zealand Manatū
Taonga – Ministry for
Culture & Heritage (2022)
New Zealand Commerce
Commission (2022)
UK Ofcom and CMA advice
to the Department for
Digital, Culture, Media &
Sport (2021)
"The bargaining imbalance between these platforms and our news media does not lend
itself to fair negotiation or payment. While some commercial arrangements have been
reached with larger news media companies, I am considering how the Government can
support the whole sector so that fair recognition is given. Too many businesses are hurting and
something must be done to rectify the situation."
"The Australian Competition and Consumer Commission (ACCC) has found that Google and
Facebook have substantial bargaining power in dealings with news media businesses in
Australia. We consider that this same bargaining imbalance exists in New Zealand and is
evident by the limited number of New Zealand media companies that have been able to enter
into commercial discussions."40
"While media companies are dependent on the Digital Platforms for a relatively significant
segment of news consumers, the Digital Platforms are less dependent on any given news
media company for New Zealand news content. We consider that this in turn is likely to
result in an imbalance of bargaining power in favour of the Digital Platforms."41
"The challenge facing the government and regulators is to ensure that the benefits from the
relationship are shared fairly and this division is not distorted by the bargaining power of the
platforms. Large platforms are ‘must have’ partners for individual publishers in a way
that individual publishers cannot be to the platforms."42

A small number of online platforms have become key gateways for the online world, and
therefore also for news consumption in the UK. The findings of the Cairncross Review and
CMA’s market study into online platforms and digital advertising suggest that this
position gives them significant power over news publishers. In particular, Google and
Facebook were identified in the Cairncross Review and the CMA’s market study as being by
far the most important digital platforms for publishers.43

"There is an imbalance in bargaining power between large platforms and content providers,
including news publishers. Each publisher needs Google and Facebook more than the
platforms need them".44

"Overall, it is clear that publishers receive a significant proportion of their traffic from Google
and Facebook. Where publishers rely on a platform for access to a significant share of
viewers/customers, this can give the platform significant bargaining power"45
UK Cairncross Review "The way in which news stories are disseminated and ranked by online platforms not only
(2019) affects the way people engage with news content, as described in Chapter 2, but also affects

40 Ministry for Culture and Heritage's submission on Statement of Preliminary Issues, page 1.
41 Draft Determination at [123].
42 (November 2021). CMA. Platforms and content providers, including news publishers: Advice to DCMS on the application of a
code of conduct at [11].
43 (November 2021). CMA. Platforms and content providers, including news publishers: Advice to DCMS on the application of a
code of conduct at [1.2].
44 (November 2021). CMA. Platforms and content providers, including news publishers: Advice to DCMS on the application of a
code of conduct at [2.17].
45 (November 2021). CMA. Platforms and content providers, including news publishers: Advice to DCMS on the application of a
code of conduct at [2.27].

19

UK CMA Online platforms
and digital advertising
market study (2020)
the financial sustainability of news publishers. The bargaining power of the two sides is
notably unequal."46
"Publishers of online content rely on Google and Facebook to host content or for referrals of
traffic to their online properties, which they can then monetise by displaying advertising to
these visitors. However, online publishers face an imbalance of bargaining power with
Google and Facebook, which disadvantages their businesses in a number of ways."47

"As a consequence of this reliance on Google and Facebook for traffic, publishers told us
that they suffer from an imbalance of bargaining power when dealing with these
platforms. This was an issue that was also raised as part of the Cairncross Review, which
concluded that ‘Google and Facebook also increasingly control the distribution of publishers’
content online’ and that as a consequence ‘these platforms can impose terms on publishers
without needing to consult or negotiate with them’."48

"We consider that the last two examples indicate that Google and Facebook are able to use
their bargaining power to extract terms in relation to content and data sharing which
have the effect of reinforcing their market power. Although publishers are entering into a
commercial relationship with the platforms and benefit from the user traffic that is generated
through sharing their content on Google and Facebook’s platform, we nevertheless agree with
the publishers that they have very little choice but to accept the terms offered by these
platforms, given their market power."49

OECD Competition
Committee's Competition
issues concerning news
media and digital platforms
(2021)
Rod Sims AO, Chair of the
ACCC (2011 – 2022)
"Publishers, including national and regional newspapers, have expressed a number of specific
concerns to us about how this imbalance of bargaining power can manifest itself. One
concern we have heard is that Google and Facebook are effectively able to ‘free-ride’ on
publishers’ content to draw in consumers and catch their attention, then monetising by serving
those consumers adverts. This has the effect of reducing the incentive of publishers to invest in
producing quality content in the future."50
"Across jurisdictions, governments have been urged to intervene. Some are concerned that the
competitive dynamics of online markets and, more specifically, the commercial relationships
between news publishers and large digital platforms heavily affect the sustainability of public
interest journalism. More specifically, digital platforms’ market power and the imbalance
of bargaining power between news publishers and digital platforms seem to heavily
affect the online monetisation of news content and threaten the viability of news
businesses. This may have consequences reducing quality and coverage of news as well as
exacerbating social harms caused by mis-information (i.e. false or inaccurate information not
disseminated with the intention of deceiving the public) and dis-information (i.e. false,
inaccurate, or misleading information deliberately created, presented and disseminated to
deceive the public). In addition, concerns have been raised on the indirect impact on pluralism
and increasing concentration in news media."51
"While Facebook and Google need journalism, they don’t need any particular media
company... All the media companies need Facebook and Google. What they’ve done is
intermediate themselves between journalists and people who want to view the content, for their
own financial advantage, obviously... Many market failures you don’t have to address. But this

46 (12 February 2019). The Cairncross Review. A Sustainable Future for Journalism, page 57.
47 (1 July 2020). CMA. Online platforms and digital advertising: Market study final report at [5.358].
48 (1 July 2020). CMA. Online platforms and digital advertising: Market study final report at [5.364].
49 (1 July 2020). CMA. Online platforms and digital advertising: Market study final report at [5.366].
50 (1 July 2020). CMA. Online platforms and digital advertising: Market study final report at [6.37].
51 (3 December 2021). OECD. Competition issues concerning news media and digital platforms. Background note by the
Secretariat at [2].

20

Australian Competition &
Consumer Commission
Digital Platforms Inquiry
(2019)
one is really important because it affects journalism, and therefore it affects society. Journalism
is the classic public good: We all benefit from it."52
The ACCC's key finding in the ACCC Report was that there is an "imbalance of bargaining
power between Google and media businesses, and between Facebook and media
businesses, in relation to news referral services" because:
- "Google and Facebook are ‘must have’ platforms", which mean that "media businesses
cannot afford not to be on the Google and Facebook platforms and therefore,
Google and Facebook have become unavoidable trading partners for many
media businesses";53

- "Google and Facebook are the gateways to online news media for many consumers.
The amount of referral traffic that a news media website receives is influenced by
the way in which Google and Facebook rank and display news content";54

- "Google and Facebook each appear to be more important to the major news media
businesses than any one news media business is to Google or Facebook";55
and

- "Individual news media businesses require Google and Facebook referrals more than
each platform requires an individual media business’s content."56

The Government of
Australia explanatory
memorandum to the "News
Media and Digital Platforms
Bargaining Code" (2021)
The Government of Canada
in its "engagement of fair
revenue sharing between
digital platforms and news
media" (2022)
The ACCC found in its Digital Platform Inquiry (July 2019) that there is a bargaining power
imbalance between digital platforms and news media businesses so that news media
businesses are not able to negotiate for a share of the revenue generated by the digital
platforms and to which the news content created by the news media businesses contributes.
Government intervention is necessary because of the public benefit provided by the production
and dissemination of news, and the importance of a strong independent media in a well-
functioning democracy.57
"Canadians are increasingly accessing news online via digital platforms. Platforms act as
intermediaries and gatekeepers to the information available to Canadians. They aggregate,
package and offer news to Canadians in ways that are efficient and innovative, and derive
significant financial benefit from their operations in Canada. Some also operate other critical
digital business segments, such as the ad tech that supports the digital advertising market. The
concentration of online advertising has resulted in 80% of advertising revenues going to a
small number of platforms.58

"Overall, a large majority of submissions stressed the importance for action regarding declining
revenues in the news sector and advanced that a significant imbalance in bargaining power
exists in the market."59

52 (10 March 2022). Millions of dollars for news, shrouded in mysterious deals. Judith Neilson Institute. Retrieved from:
https://jninstitute.org/news/millions-of-dollars-for-news-shrouded-in-mysterious-deals/
53 (June 2019). ACCC. Digital Platforms Inquiry. Final Report, page 253.
54 (June 2019). ACCC. Digital Platforms Inquiry. Final Report, page 206.
55 (June 2019). ACCC. Digital Platforms Inquiry. Final Report, page 16.
56 (June 2019). ACCC. Digital Platforms Inquiry. Final Report, page 16.
57 The Parliament of the Commonwealth of Australia. Treasury Laws Amendment (News Media and Digital Platforms
Mandatory Bargaining Code) Bill 2021. Revised Explanatory Memorandum. Retrieved from:
https://www.accc.gov.au/system/files/Revised%20explanatory%20memorandum.pdf
58 Government of Canada. Stakeholder engagement on fair revenue sharing between digital platforms and news media.
Retrieved from: https://www.canada.ca/en/canadian-heritage/campaigns/fair-revenue-sharing/stakeholder-engagement.html
59 Government of Canada. Stakeholder engagement on fair revenue sharing between digital platforms and news media.
Retrieved from: https://www.canada.ca/en/canadian-heritage/campaigns/fair-revenue-sharing/stakeholder-engagement.html

21
The US House Committee
on the Judiciary and led by
the Subcommittee on
Antitrust, Commercial and
Administrative Law (2020)
"The Subcommittee has also received evidence that the dominance of several online
platforms has created a significant imbalance of bargaining power. In several
submissions, news publishers note that dominant firms can impose unilateral terms on
publishers, such as take-it-or-leave-it revenue sharing agreements. A prominent publisher
described this relationship as platforms having a “finger on the scales” with the ability to
suppress publishers that do not “appease platforms’ business terms.”

The US Antitrust Division of
the Department of Justice
(DOJ) and the U.S. Federal
Trade Commission (FTC),
submission to the OECD's
News Media and Digital
Platforms committee
During the Subcommittee’s hearing on the effects of market power on journalism, several
witnesses also testified about the lack of equal bargaining power between news
publishers and dominant platforms. At the Subcommittee’s hearing on market power and
the free and diverse press, Sally Hubbard, Director of Enforcement Strategy at the Open
Markets Institute, testified that the lack of competition online has led to diminished bargaining
power among news publishers. Consequently, in response to changing terms and algorithmic
treatment by platforms, “publishers have little choice but to adapt and accommodate
regardless of how the changes may negatively affect their own profitability.” David Chavern,
President of the News Media Alliance, similarly testified that publishers have a “collective
action problem,” stating that “no news organization on its own can stand up to the platforms.
The risk of demotion or exclusion from the platforms is simply too great.”"60
"The U.S., like other jurisdictions, is considering whether and how the competition laws may be
useful in protecting the press from the challenges posed by the rise of the digital platforms. A
recent Congressional report highlighted a number of concerns regarding the imbalance
of power between the dominant digital platforms and the press. This has prompted some
to call for consideration of a new antitrust exemption for the news media to allow for collective
negotiation."61

60 Subcommittee on Antitrust, Commercial and Administrative Law of the Committee on the Judiciary of the House of
Representatives. Investigation of Competition in Digital Markets: Majority Staff Report and Recommendations. Retrieved from:
https://judiciary.house.gov/uploadedfiles/competition_in_digital_markets.pdf
61 (3 December 2021). OECD. News Media and Digital Platforms – Note by the United States. Retrieved from:
https://one.oecd.org/document/DAF/COMP/WD(2021)72/en/pdf

22