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Microsoft President Slams Google, Facebook for Stifling Competition, News and Democracy

Microsoft president Brad Smith, during a company keynote. (File photo)

Microsoft president Brad Smith, during a company keynote. (File photo)

Microsoft president Brad Smith, in a letter, described how Microsoft approaching Australia to replace Google resulted in the company softening its stance in the country, and more.

Microsoft president Brad Smith has become the latest individual to speak out sharply against the practices put forth by Google and Facebook against the Australian government, in a stand-off concerning news publications. The top Microsoft executive issued a statement that not only underlines support for the Australian government’s stance on how news publications must be compensated by big technology giants, but also describes how a lack of proper competitive market has led to these technology companies, not unlike Microsoft itself, abusing their power and stronghold in everyday life.

Highlighting the role of journalism as the fourth estate of democracy, Smith describes how independent news publications, including many small and local ones, have been key sources of raising common narratives in society. This is the unbridled proof of how important news and independent publications have been over time, something that has been at the centre of democratic establishments around the world. Given that the likes of Google and Facebook rose from the very liberties that are afforded by democracy and independent media itself, Smith raises a question on the actions that these tech giants have undertaken of late.

The need to share revenue

Smith describes how publications that push their content on Google generate as much as $4.7 billion in revenue each year, but for Google. “This means that news organisations go uncompensated even while all this traffic fuels platforms that have become profitable tech gatekeepers on which businesses must advertise to reach consumers,” he says. It is on this note, Smith believes, that the Australian government’s actions have a profoundly positive impact.

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“The ideas are straightforward. Dominant tech properties like Facebook and Google will need to invest in transparency, including by explaining how they display news content. Even more important, the legislation will redress the economic imbalance between technology and journalism by mandating negotiations between these tech gatekeepers and independent news organisations. The goal is to provide the news organisations with compensation for the benefit derived by tech gatekeepers from the inclusion of news content on their platforms,” Smith says.

The impact of competition

He then goes on to explain how both Google and Facebook went on the offensive as soon as such a suggestion was put forth. As reports have already revealed before, Google threatened to pull Google Search away from Australia, and Facebook banned news from the country, after the government stuck by their statement. Smith believes that such abusive market practices are a result of lack of competition, and claims proof of this as he and Nadella subsequently approached the Australian central government to look to fill in the void that may be left behind by Google and Facebook withdrawing from the country.

Reinstating his support, Smith says, “It was an opportunity to combine good business with a good cause and, as we explained, even if Google wanted to leave Australia, we would stay. Microsoft’s Bing search service has less than 5 percent market share in Australia, substantially smaller than the 15-20 percent market share that we have across PC and mobile searches in the United States and the 10-15 percent share we have in Canada and the United Kingdom. But, with a realistic prospect of gaining usage share, we are confident we can build the service Australians want and need. And, unlike Google, if we can grow, we are prepared to sign up for the new law’s obligations, including sharing revenue as proposed with news organisations.”

Basis this action from Microsoft, Google came back to negotiate with the Australian government, after not having received support from the US government this time around for their push against Australia. The Search giant even reportedly removed a warning video that apparently told Australians to petition their own government against imposing their new media law for revenue sharing, if they wanted to continue using the service. Facebook, too, made a public comeback by stating that they are willing to negotiate and strike partnerships with select media houses in terms of sharing revenue.

Far from enough

However, Smith believes that the response is far from adequate. As Smith describes, “Immediately after its about-face with the Prime Minister, Google sent a new batch of private proposals to news publishers that conditioned an offer to pay more money on ‘explicit provisions allowing Google to terminate any deals it strikes if the government’s proposed digital media regulation is not revised.’” This, yet again, underlines the sheer amount of power that Google holds over the publications that generate all the revenue, while losing out on ad revenue themselves.

“The ultimate question is what values we want the tech sector and independent journalism to serve. Yes, Australia’s proposal will reduce the bargaining imbalance that currently favours tech gatekeepers and will help increase opportunities for independent journalism. But this a defining issue of our time that goes to the heart of our democratic freedoms,” Smith concludes, stating that even though the revenue share for tech giants may reduce by giving a larger share to publications, it should be done for the sake of protecting the very fabric of society that has helped us build this world.

As Smith highlighted in his letter, over the past two decades, in USA alone, news revenue has declined by 70 percent, employment has reduced by 50 percent, and over 2,000 independent publications have shut down – actions that may have been less brutal had the revenue sharing model not entirely transgressed to the technology giants. It is this that underlines how the debacle with independent news media in Australia is a critical one, and the presence of competition is very important even in cross-industry points. Microsoft, on this note, says that it is ready to grow its Bing Search in effectivity and comply with laws of the land to acquire 20 percent of the Australian search market share, up from 5 percent right now.

Whether it would go that way, or see Google and Facebook find a way out to continue business as usual, remain to be seen.