New Zealand moves inexorably from the ‘faff around’ to the ‘find out’ phase of the Fair Digital News Bargaining Bill process.

On Friday, Google’s New Zealand blog noted that if the bill becomes law, Google would be “forced to stop linking to news content on Google Search, Google News, or Discover surfaces in New Zealand and discontinue our current commercial agreements and ecosystem support with New Zealand news publishers.”

Google described the Bill as setting a ‘link tax’.

News Publishers Association’s Andrew Holden responded that it was ‘no such thing’; Stuff’s Sinead Boucher said, “[t]o make it clear, no one is asking Google, or anyone else, to pay for linking to news.”

Holden also described the legislation as simply enabling media companies to “sit down and have a proper commercial negotiation with ‘big tech’ companies about their use of our journalism”.

I expect that Holden and Boucher have read the legislation. Their conclusions about what it implies differ markedly from mine. We may also have rather different views about what constitutes proper commercial negotiations.

Let’s look at what the Bill says.

The Bill establishes an Authority that can designate platforms, like Google, Facebook, and potentially others, as being required to enter into negotiations with media companies.

What does it take to be designated?

Section 22 of the Bill explains it. Part 1(a) of the Bill says that a platform can be designated if it ‘makes news content produced by the news media entity available to people in New Zealand’, and if there is more than a minor bargaining power imbalance favouring the platform over the news media company.

Search engines generally serve up links along with short snippets describing the search result. If that link and snippet are considered as making news content available, then the search engine or platform can be designated simply for linking to news – if they are considered as having bargaining power over news sites.

If the Bill had not intended to cover links to news along with the usual short snippet, it would have been simple for the legislation to exclude links.

For example, a section 22(1)(a)(i) could have been included, reading something like the following:

“for clarity, linking to a news site by a search engine, or by users of a platform, with or without a short snippet describing the linked story, cannot on its own be sufficient basis for designation as an Operator.”

If the Bill had such a section, which it does not, then worries about the Bill applying simply for linking would be obviously wrong. But the Bill includes no such limitation.

As people often only find news stories and click through to the news site because of links from platforms, it would seem reasonable to expect that an Authority looking at 22(1)(a) would consider linking as sufficient.

Whether the Bill sets a link tax then depends on how you view what happens after the Authority designates a platform.

Again, let’s look at the legislation.

After a platform is designated, a news media company can initiate bargaining with the designated platform about that platform’s making news content available. That’s sections 28 and 33.

If, after a maximum of 120 days, no agreement has been reached, negotiations end and mediation begins. If the platform and the news company cannot agree on a mediator, the Authority designates one. That’s sections 34 through 39.

If mediation is unsuccessful, final offer arbitration follows. Each party nominates an arbitrator and jointly nominate a third arbitrator; the Authority chooses arbitrators if it doesn’t consider the nominated ones to be appointable.

Under final offer arbitration, both sides put up their final offers. The arbitration panel selects the offer that it views as fairly compensating the news company for its content being made available. That’s section 49(2).

In deciding between the two offers, the Authority must not select an offer that it views as being highly likely to have a serious adverse effect on access to news content or the production of news content. Otherwise, it must select the offer that “better supports sustainable production of New Zealand news content.”

For a start, none of this is a ‘proper commercial negotiation’.

Proper commercial negotiations are on a willing-buyer, willing-seller arrangement. If negotiations fail, there simply is no deal. If I wanted to buy one of New Zealand’s newspapers, I’d have to present an offer that the owners found acceptable. If they did not find my offer acceptable, I would not (and should not!) have any opportunity to haul them into a process that culminates in an arbitration panel deciding on the merits of my offer.

Looking at it from the other direction, every news company has ample ability to block search engines and to set a paywall on their sites so they cannot be read by those without subscriptions. News companies cannot pretend that search links are forced onto them when the protocol for blocking search engines has been in place since 1994. They are willing-accepters of search links.

If the arbitration panel is likely to decide that an offer requiring payment for links is the one that better supports sustainable production of New Zealand news content, it seems very fair to describe the legislation as setting a link tax. A tax is the most likely outcome of compulsory arbitration.

And remember that all of the earlier negotiation and mediation is in the shadow of that final arbitration. If either side expects the arbitrator to provide a friendlier judgment than the offer on the table during negotiation or mediation, arbitration is likely.

Final offer selection is rather risky from the platforms’ perspective. The amount that the arbitrators might consider fair is impossible to guess ahead of time. That riskiness is what led to Facebook blocking all news links in Canada rather than risking having to deal with its arbitration process.

Oddly enough, the Herald’s summary of the consequences of Canada’s version of the Bill missed Facebook’s exit, focusing instead on Google’s payments into a new fund to avoid arbitration.

Canada Research Chair in Internet and E-commerce Law at the University of Ottawa, Professor Michael Geist, is the go-to authority on the effects of Canada’s legislation. He summarised things a bit differently in late September, saying:

The disaster that is Bill C-18 [Canada’s version of the Fair Digital News Bargaining Bill] is by now well known. Blocked news links on Meta platforms have had no discernible impact on Facebook traffic, but it has sharply reduced referral traffic to Canadian news sites and led to the cancellation of millions of dollars in previous agreements with publishers. Meanwhile, the Google money remains in limbo as the sector awaits CRTC approval over the governance of its distribution. With prior Google agreements folded into the new $100 million contribution, some organizations will garner less than they did prior to the legislation. Moreover, as demonstrated by the recent response to a controversial tweet from Heritage Parliamentary Secretary Taleeb Noormohamed or the backlash against a CTV report that stitched together comments from Conservative leader Pierre Poilievre to create a fake clip, the government’s policies have only exacerbated public mistrust of the media with every error viewed through the lens of government funding for the media. Far from preserving an independent press, the policies have actually placed them at greater risk.

Canada did us the favour of providing the cautionary tale.

Rather than learning from Canada’s experience, New Zealand’s Parliamentarians seem determined to have us find out for ourselves.

If New Zealand’s news companies think platforms have been stealing from them by linking to them, I wonder how much they’ll like it when those links and their traffic disappear.

To read the full article on the Newsroom website, click here.