Griffin on Tech: Making Big Tech pay for news, Aussie open banking fizzles

The coalition Government’s decision this week to proceed with an amended version of the Fair Digital News Bargaining Bill is good news for a crumbling media.

It came as Newshub prepared to air its last 6pm news bulletin tonight, and shut down the Newshub website which was attracting over one million visitors a month but still wasn’t commercially viable because nearly 90% of digital advertising in this country is run by Google and Meta..

After fumbling around on media policy for months, the Government had to do something to address the media industry crisis. It ended up taking the easy, least expensive option, which involves requiring tech giants like Meta, Google, and Microsoft to strike commercial deals with media publishers for the rights to run snippets of their content on social media platforms and search engines.

It’s hardly an inspired move, warming up legislation that was drafted by Labour. As Greg Dixon wrote in the Listener this week, it reeks of expediency.

“It’s a fair guess National is now supporting the bill because, even if it doesn’t give the media industry the fillip its cock-eyed optimists think it will, it does make it appear as if the government gives a toss about the media’s problems, even if it doesn’t.”

News now, AI content harvesting later

Meta won’t have a bar of this, based on its reaction to similar legislative moves in Australia and Canada where it has pulled news content from its platforms rather than pay. Google and Microsoft are more willing to enter commercial negotiations because news stories are a rich source of content for their search engines.

Google has already been paying some media outlets as a result of partnerships it has struck with them here so there’s a precedent for such deal-making. But we haven’t seen the shape of the legislation or been given an estimate of how much it might generate in payments for media outlets. It’s not an ideal solution to a market failure, but it is positive news for one reason - it’s the first time the New Zealand Government has stood up to Big Tech companies on anything.

In every other aspect of digital policy - market power, online content, misinformation, hate speech etc, it has basically given the most powerful companies in the world a free pass while Australia, the European Union and many other countries have reformed their laws and regulations to address the dominance of these companies. 

So Christopher Luxon’s unexpected move to double down on a Labour policy sets a useful precedent as those same companies vacuum up content to inform their large language models. The Fair News Bargaining Bill could pre-empt similar efforts to require digital platforms to seek commercial terms with the creative sector which is currently being exploited as its content is scraped en masse by the likes of OpenAI and used in generative AI systems.

Open banking a costly failure in Australia

We have lessons to learn from Australia also when it comes to another area dominated by an oligarchy - the banking sector. The Consumer Data Right introduced in Australia has required banks to put the systems in place to allow their customers to easily shift their financial data to third party providers.

The banknig sector this week claimed it had collectively spent A$1.5 billion since 2018 to made customer data accessible. The problem is, only 0.3% of bank customers across the Tasman are actively using data-sharing arrangements. 

As AAP reported: “A much-ballyhooed ‘open banking’ regime has been a costly, little-used flop that has hindered competition rather than helping it, according to an industry association-funded strategic review.”

The industry would say that, but the usage figures speak for themselves - there’s something more fundamentally broken with the banking system that simply enabling the sharing of customer data isn’t going to address. It’s sobering news for us as we prepare to roll out our own consumer data right regime, and pursue open banking in our even more concentrated banking market. If we are not careful, it could turn out to be a costly deadend.