The development of a mandatory code of conduct is part of the Government's response to the ACCC's Digital Platforms Inquiry final report to promote competition, enhance consumer protection and support a sustainable Australian media landscape in the digital age. "If they cannot reach an agreement on three months of negotiation, they can go to a binding arbitration".
"Under the proposed bargaining arrangements, commercial media organisations will be able to enter into negotiations with relevant digital platforms to determine an appropriate payment for news content", the Treasurer said in a media statement.
The draft code will require technology giants such as Google and Facebook to "negotiate in good faith" payments to digital media companies, Frydenberg said. "In developing our draft code, we observed and learned from the approaches of regulators and policymakers internationally that have sought to secure payment for news. Frydenberg said the draft will be open to consultation until August 28, with the legislation to be introduced to Parliament soon after".
Responding to the proposal, Google's local managing director, Mel Silva, said the company was "deeply disappointed" and the new move would hinder innovation in the field.
According to the proposed legislation, digital platforms will carry out negotiations with media companies for extracting content from them.
For now, Google and Facebook are the only tech companies that would be subject to the new regulation.
Digital platforms would be required to give news media businesses 28 days' notice of algorithm changes likely to materially affect referral traffic to news, algorithm changes created to affect ranking of news behind paywalls, and substantial changes to the display and presentation of news, and advertising directly associated with news.
James Murdoch resigns from News Corp, citing "disagreements" over editorial content
James, who has publicly said there are " views I really disagree with on Fox ", abandoned the company previous year . News Corp also owns a large chunk of Australia's media, including Foxtel, the Daily Telegraph and the Herald Sun .
"The government's heavy-handed intervention threatens to impede Australia's digital economy and impacts the services we can deliver to Australians", she said. He further said, "Nothing less than the future of the Australian media landscape is at stake". The code also covers issues like access to user data, transparency of algorithms and ranking of content in the platforms' news feeds and search results.
The Australian government, led by conservative Prime Minister Scott Morrison, a year ago asked the regulator to develop a voluntary code that would govern the relationship between news businesses and digital platforms.
News Corp Australasia executive chairman Michael Miller called Friday's announcement a "watershed moment" and declared the "platforms' days of free-riding are ending". Penalties up to ten million dollars will be included if the companies are found with any form of breaches in code.
However, it is important to note that this code is still in the drafting stage and has not been passed by the Australian parliament as of now.
It said the imbalance has forced "news media businesses to accept less favorable terms for the inclusion of news on digital platform services than they would otherwise agree to".
Frydenberg said the motive was not to protect Australian businesses from competition or disruption but to ensure they are paid fairly for original content.
"We are confident that following this important step in the process we are positioned to achieve an outcome which will ensure significant long-term benefits to our news organisation".