The context

The broad issue is very simple. News and other content are shared on digital platforms. Some of that is by the content providers themselves posting links on social media. Some of that is by the digital platforms who look for links and post them on their platforms. Some of that is by users who post links to share with others. When that happens there are two beneficiaries. First, the digital platforms themselves who are permitting such links. Second, the content providers who are themselves permitting such links because they want people to click on them. (On the latter point, Google have long given content providers the ability to block their links appearing on that digital platform). What this means is that both beneficiaries are receiving benefits as they both have the ability to veto this practice.

The new oligarchy

As an economist, making predictions regarding what happens from these sort of policies is my bread and butter. Given the earlier content, a policy is a good one if (a) it will promote entry by more digital platforms and better products from existing ones and/or (b) it will promote entry by more news content providers and better products from existing ones. This policy looks like it will do neither.

It’s worse

The Australian code is being touted as “world-beating.” And the rest of the world is taking notice. I see many folks in Europe, for example, giddy with excitement that someone is seemingly harming Google and Facebook. But these companies face billions of dollars of antitrust fines and costs should antitrust actions around the world be successful. By contrast, that won’t happen in Australia. And you know what is cooler than facing a billion dollar antitrust fine? A million dollar side-payment to silence news opponents.

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Joshua Gans

Joshua Gans

1.7K Followers

Skoll Chair in Innovation & Entrepreneurship at the Rotman School of Management, University of Toronto and Chief Economist, Creative Destruction Lab.