The New Zealand Parliament is currently grappling with a controversial legislative proposal that has placed the country in the crosshairs of global tech regulation debates. The Fair Digital News Bargaining Bill (“Bill”) provides that digital platforms, such as Google and Meta, must negotiate with and compensate New Zealand media organisations for hosting or linking to news content. While targeting imbalances in the digital media ecosystem and supporting journalism, this Bill has sparked widespread concerns and backlash, including a threat from Google to delist New Zealand news entirely.

Let’s look into the Bill critically from legal and policy perspectives, contrasting it with comparable regimes in Australia and Canada, and whether the proposed approach is consistent with New Zealand’s constitutional, economic, and digital governance principles.

Bridging the Revenue Gap

Like any other country, traditional news organisations in New Zealand have suffered heavy financial losses as advertising dollars go online. Classified and display ads that once paid for journalism in newspapers now do so on Facebook, Instagram and Google Ads. The Fair Digital News Bargaining Bill has been proposed in response as a bill that will oblige some digital platforms to make agreeable payments to news publishers to make their content available either by a direct reproduction of content or ranking, indexing, or making such content available through aggregation.

In the proposed legislation, an independent regulator would lay out the platforms to be included in the framework. In case of failure of negotiations, the matter is then to be changed to compulsory arbitration with arbitrators prescribing a reasonable price for the news content provided by the news organisation on these platforms.

Economic and Legal Misfires

The “Bill” assumes that digital platforms are enjoying unfair gains on news content without paying back the news creators. This assumption, though, is not economically or legally safe. The likes of Google and Facebook do not republish complete articles; instead, they share snippets and links. Frankly speaking, according to Section 42(3) of the New Zealand Copyright Act 1994, it would be fair sharing of current event information. If news sites do not approve of this use, they can employ technical barriers (e.g. robots.txt exclusions or paywalls) to prevent access or visibility.

According to the Sapere Report, commissioned by the Ministry for Culture and Heritage, online distribution platforms generally promote news websites, unintentionally contributing to their growth through user habits, ad clicks, and subscriptions. If all the news content were being exploited on digital platforms, we would expect news organisations to willingly not have such visibility, but this is not the case.

In a broader sense, this legislation puts in place a regulatory transfer, forcing one industry (technology) to subsidise another (the media) without much beneficiary-pays or polluter-pays rationale. By so doing, it contravenes the core tenets of the New Zealand tax and public finance policy, which are characterised by a focus on neutrality, transparency, and efficiency. As economist Eric Crampton calls it, a “dumb idea”.

Constitutional Crossroads

The “Bill” not only disrupts economic policy but also infringes on the right to free expression and access to information. By mandating that platforms like Google pay for indexing news content, the Bill imposes financial burdens that could lead major platforms to reduce or abandon news aggregation, as Google threatened in response to similar legislation in Australia in 2021. This withdrawal would disproportionately harm smaller news outlets reliant on aggregators for visibility, effectively limiting the diversity of voices and perspectives available to users. Consequently, individuals, especially those dependent on online platforms for local journalism, would face restricted access to information, undermining their ability to engage with and share a broad range of viewpoints, a core component of free expression.

Curating or delisting content and material is a right built into the system of privately operated platforms, as long as they do not engage in anti-competitive behaviours. Then the question is whether the threat by Google to delist news can be seen as a market abuse, as defined by the Commerce Act 1986 itself, particularly when it affects smaller or independent publishers with no other avenues to get noticed?

What Australia and Canada teach us

The New Zealand legislative framework is based on Australia’s News Media Bargaining Code (2021). Preliminary platform opposition was later turned into secret dealings between Google and global media houses. There has, however, been criticism over the absence of transparency and concentration of benefits in big established media corporations. The smaller outlets (with less bargaining power) were said to have achieved fewer gains.

Even worse has been the case in Canada. In response to the Online News Act, Meta blocked all news, which hurt the small and independent news sources immensely. The revelation of such a development arrived when the Canadian government was compelled to suggest a $190 million civil bailout as compensation for the unwanted destruction caused by its legislation.

New Zealand is at risk of committing such failures. It is an additional situation in which the cost-benefit analysis of the platforms is even more tilted against engagement because of the smaller size of the country’s market. Google and Meta may follow a similar path and quit the local news business instead of spending a lot of money on lengthy litigation that can bring in minuscule profit.

When Regulation Becomes Restraint

Any proposed amendment by the National-led government to change the platform designation from an independent regulator to ministerial discretion only exacerbates the problem of political interference. These discretionary powers may form lobbies on the media, regulatory capture and even favour the government.

Another grave issue is the chilling effect on innovation. Making the Bill a law could unintentionally lock in incumbents, scaring off smaller or more digitally-native shops that need to use algorithms to drive spinners. Journalistic innovation that is already under pressure may be affected even more negatively should there be a delay or cut-off of social or search reference traffic.

A Better Path Forward

Suppose the problem is the insufficient funding for public interest journalism. In that case, the easiest way out should be the subsidies via open budget functions, rather than the regulatory system of cross-subsidisation. New Zealand already has systems like the Public Interest Journalism Fund or the Local Democracy Reporting Programme, which can be expanded responsibly. The money given to journalism should not be dumped on politically convenient entities like money given to education or public broadcasting.

Additionally, local journalism could be assisted by restructuring old laws relating to the media within countries. Let us consider instances, such as Sundays or other public holidays, which are accompanied by advertisement limits for local broadcasters, putting them behind international digital competitors. The new proposal announced by Minister Paul Goldsmith to abolish those confinements is a positive move since it demolishes structural drawbacks without pressuring unrelated sectors.

Sound Goals, Unsound Mechanism

Economically, legally, and practically, the attitudes underlying the Fair Digital News Bargaining Bill are well-meant, but it isn’t very accurate in its structure. It is based on a dubious interpretation of the dynamics of digital markets, incorrectly applies the model of the transfer of value between platforms and publishers and threatens to make the media partisan on funding.

New Zealand cannot afford to take the steps made by Canada or copy Australia unthinkingly. Rather than trying to implement hard-handed regulation imperatives, which may be counter-productive, policymakers ought to work towards establishing a media environment that can incentivise quality, independence and innovation.

Such an argument to subsidise journalism should be argued out in the open in Parliament, not forced down our throats in negotiations with global platforms. Less than that runs the risk of undermining not just the freedom but the digital innovation of the press in pursuing such protection.