He said the imbalance of market power was reflected in Google and Facebook’s dominance over online advertising revenue, while the media “actually producing the news we all depend on are getting a fraction”.
“The impact of having all this ad revenue go to social media is absolutely devastating. That’s one of the reasons why this [regulation] is so important,” Professor Stiglitz said.
His comments come as the federal government prepares to unveil its news media bargaining code, which will force the tech giants to compensate media companies for the benefit they get from having news content on their platforms.
Treasurer Josh Frydenberg is expected to using the final sitting days of the year next week to introduce legislation to give effect to the code.
Mr Frydenberg has described the intention of the code as addressing “bargaining power imbalances between digital platforms and media companies”.
Google and Facebook have fiercely resisted the draft version of the code, prepared by the Australian Competition and Consumer Commission at the request of Treasury following a year-long inquiry. It centres on a “final offer” arbitration mechanism that gives an arbitrator the ability to decide the compensation owed if the parties can’t agree on price.
It also includes provisions forcing the tech giants to give media companies advance notice of algorithm changes.
Google has warned Australians its free service is “at risk” and search results and YouTube “will be worse for you” if the laws proceed, while Facebook has threatened to block local news content on its platforms.
Media companies have been pushing the government to urgently legislate the code amid concerns it is being delayed to accommodate their demands.
In a briefing note used to lobby MPs and Senators, Google objected to the final offer process as “completely unreasonable and unprecedented”, and argued the code was “silent” on the value the tech giant provides to news organisations.
Google claims it directed more than 3 billion visits to Australian news publishers in 2018, worth about $218 million.
Lisa Visentin is a federal political reporter at The Sydney Morning Herald and The Age, covering education and communications.