Technology routinely outstrips society’s ability to deal with it. That’s partly because tech entrepreneurs are often casual  about the legal and social issues their innovations birth. 

A case in point is that of Drones.  These unmanned flying objects were originally developed for military purposes and it wasn’t until 2013 that they were approved for commercial use in the US. When that happened, it was immediately clear that they could be hugely useful to a whole host of industries, and almost as quickly, it became clear that regulation would be a problem. The new technology raised multiple safety and security issues, there was no consensus on who should write rules to mitigate those concerns, and the knowledge needed to develop the rules didn’t yet exist in many cases. In addition, the little flying robots made a lot of people nervous.

Such regulatory, logistical, and social barriers to adopting novel products and services are very common.  It’s clear that even as innovations bring unprecedented comfort and convenience, they also threaten old ways of regulating industries, running a business, and making a living. This has always been true. Thus, early cars weren’t allowed to go faster than horses, and some 19th-century textile workers used sledgehammers to attack the industrial machinery they feared would displace them. New technology can even upend social norms: Consider how dating apps have transformed the way people meet.

One view is that some entrepreneurs and their backers don’t really care that the problems they are running into are part of a historical pattern. They want to know how they can manage and shorten the period between the advent of a technology and the emergence of the rules and new behaviours that allow society to embrace its possibilities.

Hindsight is twenty-twenty 

The challenge for regulators and governments is that hindsight is twenty-twenty, it is not possible to perfectly predict and game out how wider society engages with an innovation and technology change.  The counter is that this problem isn’t new and has been happening for arguably thousands of years and  not tackling the issues and letting them linger only makes matters worse.  This obviously massively oversimplifies the real world with its competing interests and stakeholders.  An excellent case study of this challenge is the story of the Internet and how this technology has disrupted society.

At the beginning of the internet, governments put in place policies and interventions to stimulate economic activity and opportunities. Now, over 30 years later having been through various bubbles and crashes the world looks very different. The most powerful companies in the world constitute digital platforms and governments are now looking to understand how best to curb the market consolidation of power and to stimulate further digital competition and innovation. Digital success in a world of innovation and increasing regulation requires a different approach.

When the commercial internet was born in the 1990s, governments made many allowances for young companies navigating this new space. They were given carve-outs and exemptions, either explicitly or implicitly, from laws and regulations that older legacy businesses faced in areas ranging from tax, to liability for user misconduct on their sites, to copyright infringement.

Not a case of putting the genie back in the bottle

Spin forward to now and after  years of excesses, Big Tech companies now face a flurry of efforts to curb their dominance through regulation, from Europe to the US.  The landscape is highly fragmented with some countries taking an overarching digital competition approach, some taking more of a sector specific approach and others more of a hybrid.  A good example of the latter is in Australia where the parliament has passed a law called the News Media and Digital Platforms Mandatory Bargaining Code. The code aims to help news providers earn by directing services like Google and Facebook to pay for using their content on their websites.

It provides for a negotiation between the news organisations and the tech giants regarding payment deals. The code ultimately aims to make the tech giants remunerate and consequently encourage local news organisations, by balancing out the power between the two sides, because news organisations for long have been in a disadvantageous position due to their high dependence on such platforms for traction, according to market regulator Australian Competition and Consumer Commission (ACCC).

In cases where bilateral negotiations fail, the code also states that an independent arbitrator can  set the price that the tech giants would be required to pay to the media organisations. As per the code, the tech giants would also be required to inform news organisations of any changes in their algorithms that would impact the stories that were being displayed.

The code was also amended, before being passed, to include the clause that the government would take into consideration the existing contributions of these platforms to journalism, including commercial partnerships, before it decided to apply the code to them. Moreover, the government would also give the platforms a month-long notice if it considered applying the code to them.

Facebook and Google’s stance on the code

Both Facebook and Google have been vocally critical of the code, asserting that their platforms helped news organisations get traffic, thus eliminating the need for them to pay the organisations. For months, both the platforms sought to get the Australian government to not pass the code, before Google said that it would shut down the services of its search engine in the country, while Facebook banned the news content in the country, making Australian news pages unavailable.

In a statement issued recently, Facebook stated that as an alternative, it was willing to invest at least $1 billion in partnerships with news organisations over the next three years, in addition to the $600 million it had already invested in the industry since 2018 . It cited examples of the partnerships it had forged with several prominent news organisations in the UK to pay them for the content they feature in the Facebook News tab in the European country, indicating that it could bring something similar to the publishers in Australia, if not for anything else then to bypass the application of the Code to them.

On the other hand, Google said that it did not want legislative interference because it would “break the fundamental principle of the web”. It also asserted that it had been carrying out several programmes to invest in journalism, and also announced a new “constructive path” that would support journalism.

The Google News Showcase programme has been announced by the search engine giant which would enable regular payments to the news publishers from the tech giant, thus absolving Google from the need to pay for the links it features. Google News Showcase lets publishers curate their stories across the services offered by Google, like News and Discover, with users being able to see panels that the publishers would create themselves. These panels, Google said, would also contain some news content that is kept behind the paywall by the publishers, so that the users would be more informed. Google added that within less than a month, over 70 Australian publications had signed up to the platform.

Support for Australia’s Code

While Google and Facebook actively criticised the Code, tech giant Microsoft came out in support of the law When Google threatened to revoke the search engine services, Microsoft had stepped in to volunteer its services instead, hoping that that would spur the government in Australia to go ahead with the code, which Microsoft believes “reasonably attempted” to address the imbalance of bargaining power that existed between Australian news businesses and digital platforms.

Soon after, Microsoft pushed  for other countries across the world to bring into force a similar law, especially urging the newly elected US President Joe Biden to bring in legislation, rather than following in the footsteps of predecessor Donald Trump and opposing the code.

Moreover, countries like the UK and Canada, and the European Union, have also expressed their support for the law that Australia has enacted. Facebook’s move to block news content has been seen as a warning sign for these countries of the tech giant’s retaliation against any such law that they were to bring in.

Facebook has already announced that it has signed agreements with news publishers. Google has signed over 50 commercial payment for content deals with media companies.  The idea being that if you must pay for content, better do it on terms you set and control rather than a per-link-click basis.  

A fresher perspective

This whole subject of payment for news on the internet is a difficult nut to crack as many are still attracted to some of the original fundamental principles such as the ability to link freely on the web.  The answer to these challenges is usually somewhere in the middle and in  an attempt to get under the bonnet on some of the issues facing online publications and to unpack the underlying issues, The Future Shapers’ technology team from FourZeroTwo carried out a research survey on this whole issue. 

Given our innovation and start-up background, the approach was try and come at this topic with a fresh perspective by applying insight from Steve Jobs and parts of Eric’s Ries Lean Start-up methodology. The FourZeroTwo team was looking to learn if and how news publications are testing fundamental business hypotheses to inform their business strategies for financial sustainability. 

At what cost 

The sad tragedy of the new Code is that it may actually come at too high a price. One of the principles of warfare 101 is never to fight on territory chosen by your opponent. Democratic governments have been ignoring this, allowing a “disruptive innovation” discourse about technology and society to be captured by a deterministic narrative which says that tech drives history and society’s only role is to deal with the change after its  “creative destruction” (to use Joseph Schumpeter’s famous phrase). It could be said as this process of disruptive innovation played out, governments everywhere bought into the myth that to challenge the tech companies carried with it the risk of being portrayed as opposed to “progress”.

Please download a copy of the FourZeroTwo Report here.