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BOTW: How the ACCC may fight Meta; the boss of OpenAI gets fired; why The Cat lost out
Welcome to Best of the Week, kicked off on Friday afternoon in the Melbourne departure lounge during a 13 hour trip to Victoria, and mostly written on Saturday morning back home in Tasmania.
Today: Why SCA rejected Catalano; The architect of the AI revolution is dramatically fired; and the ACCC steels for another battle with Meta.
Unmade’s end-of-year event Compass come to Melbourne on Tuesday. Hear from 3AW’s Russel Howcroft; Bank of Queensland marketer melody Townsend; Dentsu moneyman Ben Shepherd; Thinkerbell strategist Hannah Nickels and Zenith boss Jason Tonelli. Join us over a drink for a relaxed chat about the year just gone and the one to come.
Unmade’s paying members can come to Compass for free. Upgrade today.
How the ACCC is gearing up for AI and Meta battles
Tim Burrowes writes:
Yesterday found me in Melbourne giving a presentation to the Victorian Country Press Association’s annual conference, on the impact of AI on the publishing world.
It was useful being in the room, as I wasn’t the only speaker who addressed the topic. I learned a couple of things about how the Australian Competition and Consumer Commission is thinking about not just AI, but what happens next if Meta drops out of the Australian news landscape.
The next speaker was Gina Cass-Gottlieb, chair of the ACCC. The world has already changed since the News Media Bargaining Code became law at the start of 2021. While the economic power of Google and Facebook is undiminished, the voracious fact scrapers of the AI large language models are the new distortion fields.
Cass-Gottlieb went a little further than I’ve previously heard, arguing that assistant treasurer Stephen Jones could use the code to address the new AI giants too.
“Actually, the News Media Bargaining Code can apply. Under the current legislation it could apply”, she told the audience. “The relevant minister, likely to be the assistant treasurer could seek to designate a generative AI service to be subject to the code.
“In doing so the minister would need to consider whether there’s a significant bargaining power imbalance between news businesses and the platform, and whether the platform has made a significant or service contribution to the Australian news industry, for instance through agreements to remunerate those businesses for the search through their news content over the years.
“There is a capacity for a designation to occur in relation to such platforms.”
Back in 2021, the threat of being designated under the code - which would have forced big platforms into binding negotiations with news suppliers - was enough to push Google and Facebook to signing deals with publishers. Publishers would seek to repeat that feat with the likes of OpenAI, creator of ChatGPT.
Meanwhile Google deals still have a little more than a year to run, while the Facebook deals expire sooner.
All of the signals from Facebook’s parent company Meta are that it won’t go again. Effectively it has disbanded its news partnerships team. Capital Brief reported yesterday that the face of Meta’s news relationships, Andrew Hunter, has been redeployed to music partnerships while colleague Nicola Wood left last week.
In August, after similar legislation passed in Canada, Meta started blocking local news content from appearing on its platforms. Doing the same in Australia might allow Meta to avoid being designated because it would not be using the news content. However, that may not be the end of the story.
During audience questions, I asked Cass-Gottlieb what might happen if Meta took that path. She dropped a strong hint that while Meta cutting off news outlets from its platforms might be enough to get around the News Media Bargaining Code, it could still be viewed by the ACCC as anti-competitive behaviour, subject to other laws.
“The first question is: The minister has the capacity to ask for ACCC advice on current use and representation of Australian news media content and services and what is the position of bargaining power. The minister with that advice could then indicate he was considering whether to designate or not.
“The very big question as that process stepped through would be whether there would be a set of further agreements entered into. Or whether - possibly, as has been the Meta reaction in Canada - to remove news content from Meta services.
“What that would reflect would be quite a significant step in exercising market power which would raise other questions for the ACCC under other parts of our powers.
“There are a set of steps that could be taken.”
That suggests the ACCC still has the appetite for another battle. I wonder whether the government does too.
Last time round, Coalition Treasurer Josh Frydenberg charged in on behalf of his friends in the media including negotiating directly with Facebook boss Mark Zuckerberg.
This time, Labor Treasurer Jim Chalmers has already tapped out, citing conflict of interest, handballing it to his number two Stephen Jones. We’re yet to find out whether Jones has a similar interest in the fight.
Sam out, man
One person Jones will not be talking to is OpenAI CEO Sam Altman.
In very surprising news out of the US this morning, Altman is out, sacked by his board. They announced it in a blog post.
The language of the announcement is brutal:
“Mr. Altman’s departure follows a deliberative review process by the board, which concluded that he was not consistently candid in his communications with the board, hindering its ability to exercise its responsibilities. The board no longer has confidence in his ability to continue leading OpenAI.”
In other words, he lied to them. A lot.
If any single person could be credited with kicking off the generative AI revolution, it is Altman.
OpenAI had an unusual ownership structure. It’s kind of not-for-profit, although it can make a lot of profit before that kicks in, and Microsoft is a major investor.
I wonder whether Altman’s exit could prove to be because of the machinations of business rather than the day job of changing the world.
There’s a hint in the final paragraph of the announcement from the board:
“OpenAI was founded as a non-profit in 2015 with the core mission of ensuring that artificial general intelligence benefits all of humanity. In 2019, OpenAI restructured to ensure that the company could raise capital in pursuit of this mission, while preserving the nonprofit's mission, governance, and oversight. The majority of the board is independent, and the independent directors do not hold equity in OpenAI. While the company has experienced dramatic growth, it remains the fundamental governance responsibility of the board to advance OpenAI’s mission and preserve the principles of its Charter.”
It seems an odd thing to put in the short announcement, unless it’s relevant to Altman’s departure.
Catalano misses out
That didn’t last long.
It took Southern Cross Austereo just five days to reject a proposal from Antony Catalano to take on most of the Australian Community Media news stable in exchange for a 14.5% slice of the company.
By contrast, it’s been exactly a month since the SCA board began to look at the takoever proposal from ARN Media and Anchorage Capital Partners.
So why did SCA turn down the Cat so quickly?
Catalano’s case for the deal was that the move would quickly improve SCA’s profitability, which has been in decline for more than a decade.
But where Catalano had failed to prepare the ground was to change perceptions around his business.
Newspapers get a low multiple from investors when it comes to valuations. Catalano’s argument was that he had transformed the company into a “capital light” business thanks to closing or selling most of the company’s printing presses and outsourcing printing instead.
And if there is a story about a growing consumer appetite to subscribe for local, digital-first news, then it hasn’t yet been told.
If the SCA board had pursued a deal it would have looked reactive - an attempt to bulk up to stop an ARN takeover.
The swift rejection also reflects two entirely different strategies.
SCA wants to be an audio business. Its regional TV licences are merely an unloved asset within the company.
Catalano wants to build a regional multi-media powerhouse, as a base camp into creating a regional classifieds business.
Both are entirely rational strategies, but they conflict.
Campaign of the Week: Go Big on the Little Things
In each edition of BOTW, our friends at Little Black Book Online highlight their most interesting advertising campaign of the week.
LBB’s ANZ reporter Casey Martin writes:
Aldi's “Go Big on the Little Things” Christmas spot has taken ad and by storm with a parody of the Dirty Dancing classic, "(I've Had) The Time Of My Life" and a silliness that sets it apart from the rest of the Christmas spots we've seen so far.
While Christmas spots tend to be emotional and heartwarming, BMF has created a campaign that embraces the strange and wonderful tradition of the side-dish.
In case you missed it…
On Tuesday, we highlighted some of the advertising offenders of the last quarter:
On Wednesday, we examined the motivations of the multiple players involved in the battle for Australia’s audio industry:
On Thursday, we interviewed former adman Jonathan Pease on his new book, Winning the Room:
On Friday, we had the latest from the world of retail media:
Unmade Index tips downwards
The Unmade Index finished almost flat on Friday after racing upwards earlier in the week. It closed on 609 points, a drop of 0.21%
The biggest mover was Ooh Media, which lost 4.17%
The Market, newly rebranded from The Market Herald, finished flat on its first day under its new MKT ticker. (Google Finance is yet to catch up on the change, which is why some of the data is missing from the above table).
Time to leave you to your Saturday.
If you’re in Melbourne, please do grab a ticket for Compass on Tuesday. Not only is it a really great panel, but I’ll also be celebrating my birthday. What better way to contemplate my own mortality than sharing a stage with five people who are more impressive than me?
Have a great weekend.
Publisher - Unmade