Big companies are always threatening to take their bat and ball and leave our shores, and Australian politicians usually beg them to stay. Whether it’s cutting company taxes or promising weak IR and environmental laws, for decades the Australian government has behaved like a lonely kid who worries the cool kids won’t talk to them unless they buy the cool kids lunch.

But last week, something interesting happened. For months Google and Facebook had been threatening to leave Australia if our parliament passed legislation to force the tech giants to pay Australian media outlets for their content. But they didn’t leave, they signed commercial deals with our biggest media companies and are still signing more. If the tech giants refuse to sign deals with publishers, they can be forced into compulsory arbitration.

It’s true that Facebook’s last-minute tantrum solicited them some minor amendments, but the underlying architecture of the news media bargaining code designed by the ACCC is not just intact – it is now in force.

Differences in bargaining power matter and, as anyone who’s ever tried to negotiate any sort of deal knows, division is death when it comes to negotiation. Usually, big global companies play to the political divisions in small countries like Australia – it is not hard for a global company to play a government and opposition off against each other in a race to demonstrate who is the most enthusiastic about creating “jobs” or “investment”. But not this time. For once our parliament worked together to support the Australian media, rather than divide it in the hope of praise from a foreign company.

The code that the tech giants hate so much would never have been passed, nor likely ever put to a vote in parliament, without the unity displayed by the government, opposition, the Greens and the crossbench. It is true that, as the biggest media company in Australia, News Corp has more to gain from the code than any other company. But it is also true that Labor, the Greens and most of the crossbench thought that a code that transferred money from foreign tech companies to Australian media companies was better than not.

Personally, I would have loved to have seen a new tax imposed on the tech giants – which are so good at making profits in Australia yet so bad at paying tax here. And while we are at it, I wish we had a carbon tax and a wealth tax. But legislation for those things is not before the parliament and, were they placed there, would be unlikely to pass.

But the news media bargaining code was on the table and it did pass. Most importantly, Facebook and Google are still in Australia, and still providing their (very profitable) services, while providing hundreds of millions of dollars in additional funding to Australian media companies too. The Australian parliament called their bluff and the tech giants, Google and Facebook, blinked.

So much nonsense is spoken about the size and power of big companies that it’s understandable why the public would take their threats seriously. But as we have just seen, nations – even medium-sized ones like Australia – have far more bargaining power than we give ourselves credit for.

Claims that big companies’ revenues dwarf the GDP of countless nations are completely wrong and deliberately misleading. Like a gorilla beating its chest, or the Australian mining industry exaggerating the size of its workforce, claims that the wealth and power of a company like Google are significant when compared to Australia are just silly.

In 2020, Alphabet (the owner of Google) made a profit of $51.9bn and Facebook made a profit of $37.6bn, while the total income in Australia measured by GDP was $1,929bn. In short, the income of Australia is 37 times bigger than that of Google, and 51 times that of Facebook – plus we have an army, spy services, a continent, and the ability to print our own currency. If Google is “powerful”, then what adjective should we use to describe Australia? (FYI we are the 13th biggest economy in the world, just behind Brazil and Russia).

The Australian parliament just passed legislation to force some of the biggest companies in the world to contribute more to our society and, despite their threats, both Google and Facebook aren’t going anywhere.

While the news media bargaining code isn’t perfect, and was never intended to be a silver bullet, it has shown us it’s possible for the Australian government to put Australia first. Imagine if we adopted that approach when it came to the amount that foreign mining companies paid for Australian coal, or the amount of tax that the big oil, banking and online retail companies paid here.

Originally published by The Guardian on March 4, 2021

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Anna Chang Communications Director

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anna@australiainstitute.org.au