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Environment and Communications Legislation Committee

BUSKIEWICZ, Ms Nicole, Managing Director, Digital Industry Group Inc

COOLEY, Mr Michael, Public Policy and Government Relations Counsel, Google Australia


CHAIR: Welcome to you both. I understand you have the information on parliamentary privilege and the protection of witnesses. Would either or both of you like to make a short opening statement before we go to questions?

Ms Buskiewicz : Yes. Thank you for the opportunity to appear today. The Digital Industry Group Inc, also known as DIGI, is a non-profit advocacy body representing the digital industry in Australia. Our members include eBay, Facebook, Google, YouTube, Instagram, Microsoft, Oath, Redbubble and Twitter. Collectively, the industry provides various digital services that facilitate the many aspects of Australian daily life that are now being conducted online. Our services not only provide ways for Australians to meaningfully connect with family and friends, but they facilitate new distribution, marketing and revenue-generating channels for Australian businesses and content creators.

Australian small to medium sized businesses contribute $90 billion worth of income to the internet, and thanks to the internet every one of them can reach global markets and take advantage of the three billion consumers online. DIGI members take online piracy and copyright infringement very seriously. All members invest heavily in a report-and-takedown scheme, removing content on their platforms and have teams working 24-7 to review and remove content where appropriate.

The Copyright Amendment (Service Providers) Bill that has been introduced into parliament amends the Copyright Act to extend the operation of the safe harbour scheme to a broader range of service providers, including educational institutions, libraries, archives, key cultural institutions and organisations assisting persons with disabilities. However, despite numerous consultation processes that recommended full expansion of safe harbours, the bill specifically excludes the Australian technology industry. Unamended, it will chill innovation and financial investment in the start-up economy. It will deter voluntary anti-piracy work and it will put Australian start-ups in a high-risk legal position.

A comprehensive safe harbour scheme, as proposed in the exposure draft bill that was released in 2016, will benefit Australian businesses, content creators and consumers. A comprehensive safe harbour scheme will place local innovators on equal footing with their overseas counterparts. It will give Australian rights holders a simple and efficient way to have infringing content removed from the internet and it will protect the legitimate claims of consumers by providing a process through which to challenge incorrect claims of copyright infringement.

DIGI strongly recommends amending the bill by reverting to the language used in the exposure draft, finally putting Australia's digital economy on a level playing field with the rest of the world. Alternatively, we suggest allowing further opportunity to consider the legislation so that a solution that better protects Australian start-ups, innovation and commercial services can be considered. Thank you.

CHAIR: Thank you. Mr Cooley.

Mr Cooley : Thank you for inviting me here today. It is an exciting time for creativity on the internet. Using the internet as a global distribution platform, more Australian musicians, filmmakers and artists are creating more content than ever before. As we see on YouTube every day, the demand for Australian content is booming, with more than 90 per cent of views coming from overseas. Not only are Australian content creators exporting Australian culture to the world; they are also earning export dollars. Australian creators are earning significant income from advertising on YouTube. In 2016 alone, more than 100 Australian channels earnt more than $100,000 each, and more than 2,000 Australian channels earnt between $1,000 and $100,000 from their videos. Today Australian companies like Redbubble, Canva, 99designs and Envarto transform the ability of creators to grow new audiences and reach customers around the world. This is just the beginning. With more than five billion users expected to come online in the next decade, the market for Australian digital services and entertainment is expanding rapidly.

With that in mind, I want to emphasise three points today. Firstly, the digital economy is poised to be one of the key engines of Australian economic growth and job creation. Online services have created new markets and the internet now enables trillions of dollars in global e-commerce every year. Secondly, safe harbours are one of the legal pillars of the digital economy. Australia's online industry will not reach its full potential if online businesses are going to be held responsible for the acts of a small minority of their users and customers.

A proper safe harbour scheme provides an essential balance between the needs of rights holders to properly enforce their rights and online businesses. By excluding the commercial sector from our safe harbour scheme as currently proposed in this bill, Australia is looking to adopt a model that exists nowhere else in the world. This will place Australian start-ups and online businesses at a big disadvantage to their competitors in countries that have strong frameworks, such as the United States, Canada, the European Union, the UK, Singapore, South Korea and Japan.

Thirdly, Google's experience shows that safe harbours encourage a system of shared responsibilities that actually increases the ability of all actors to fight piracy. They strike the right balance in promoting innovation and protecting creators' rights online. We are deeply concerned that the scheme being proposed in this bill, which operates to exclude the commercial sector, leaves Australian businesses and start-ups in an uncertain and high-risk legal environment, discouraging not only local investment but also encouraging them to take their businesses and the people they employ overseas. In our view, it makes no sense to single out the private sector in this way.

In conclusion, Google urges the committee to recommend that the parliament bring Australia's safe harbour laws into line with equivalent laws of many of our most important trading partners around the world. Amending this bill so that it covers commercial online service providers in addition to the disability, education, library and cultural sectors will prevent the stalling of Australia's rapidly growing digital economy and will help ensure that Australia remains at the forefront of the global economy. Thank you.

CHAIR: Thank you very much, Mr Cooley. Senator Urquhart, did you want to start?

Senator URQUHART: Thanks very much. Welcome. The Australian Information Industry Association argued that limiting safe harbours does not provide additional protections for Australian content providers. They say Australian content is largely already subject to safe harbour regimes because the platforms that host the majority of the content, such as Google and YouTube, benefit from overseas safe harbour regimes. Is that evidence correct, and do you have any other comments on that observation?

Mr Cooley : It is absolutely true that we rely on safe harbour schemes around the world, particularly in the United States.    

We're clearly on the record as saying that YouTube literally would not exist today but for the US safe harbour scheme. YouTube was sued very early on in its existence by a business called Viacom, and YouTube successfully defended itself based on that safe harbour scheme. As you've heard from my opening remarks, YouTube's now a real engine room for economic growth and for Australian creators who are using the platform to distribute their content globally.

In terms of what we do in Australia, yes, it's true that today we provide Australian rights holders the ability to send us takedown requests using a simple web form, and the larger, more sophisticated rights holders have access to special systems which allow them to send vast numbers of takedown requests at scale which we then process quickly and efficiently for them. So we already provide those mechanisms that this law, if it's enacted, would require us to do. But I think it's also true to say that other companies like Redbubble, as I understand it, also provide a notice and takedown scheme even though there's no actual law that requires them to do so in Australia. But it's obviously in the interests of rights holders and in the interests of their own businesses to make sure that they're weeding out infringing content from their platforms.

Ms Buskiewicz : I just wanted to add to that. Despite these notice and takedown systems being reasonably common across the digital industry, it doesn't change the fact that those businesses who operate under Australian laws, of course, do not receive that legal protection. So, while those schemes that facilitate and incentivise businesses to expeditiously remove content from their platforms do exist, as we've seen with Redbubble, another one of DIGI members, that doesn't mean that they are protected, because there is this gap in Australian safe harbour law.

Senator STEELE-JOHN: Just to emphasise that point, though, in the Redbubble case, you have a company which is mirroring the regulatory requirements under the expanded safeguards in the US, and, still, it was not clear that there was anything they could do to protect themselves in terms of liability, as was resolved in the court case. That's the correct interpretation, isn't it?

Ms Buskiewicz : I don't have a full understanding of the court case, but I think that's right.

Senator STEELE-JOHN: Even taking those steps, you were not protected—

Ms Buskiewicz : That's right. There simply is no legal protection, because at the moment the coverage only expands to ISPs. As the new bill proposes, that goes a bit further to cultural and educational institutions, but there is a specific carve-out for the technology sector, so they would not be protected under the proposed scheme.

Senator URQUHART: I think you were in the room when Australian Digital Alliance was here, and they talked about full copyright safe harbour being very much the global norm. We got a table that basically pointed out most of that, and it's a requirement of modern buy-in multilateral treaties. You've talked about the models that exist in the US, Canada, EU, Singapore and Japan. Do you agree with the observation of the Australian Digital Alliance?

Mr Cooley : The observation that these are model laws around the globe?

Senator URQUHART: Yes.

Mr Cooley : Yes, there are model laws around the globe. There are some variations, but broadly they're very similar. The current laws in Australia basically mirror the US laws but for the fact that they only apply to a limited category of service providers, and they only apply to commercial ISPs. This bill, if it were further amended to cover all service providers, would be on all fours with the US.

Senator URQUHART: And from your point of view would that be a model scheme that you would—

Mr Cooley : That is clearly the model scheme, and that is the scheme, as we've heard from Senator Steele-John, that businesses like Redbubble effectively pretend exist in Australia. Redbubble is not alone in that regard, and that makes sense because rights holders globally send takedown notices to businesses everywhere in fact using the US forms under the Digital Millennium Copyright Act because that has become the international norm.

Senator URQUHART: Yes. Village Roadshow submitted that there be no further amendments to the safe harbour regimes currently in place and, in particular, that it should not be extended to Google, as you raise concerns about Google's actions to address piracy. Do you want to respond to those comments from Village Roadshow?

Mr Cooley : I can't speak for Village Roadshow, but I can tell you about what Google does. Google fights piracy every day. We spend hundreds of millions of dollars building systems to fight piracy. In the context of YouTube in particular, we've developed a system called Content ID which allows rights holders to proactively manage their rights for content on our platform. This is completely separate from the notice and takedown scheme—the safe harbour scheme. Ninety-eight per cent of rights on YouTube are managed through Content ID, which means that only two per cent of rights management on YouTube happens through the notice and takedown scheme under the safe harbour laws. And in fact it's higher for the music industry. For the music industry, they administer 99.5 per cent of their rights management on YouTube through Content ID, leaving only 0.5 per cent dealt with through the notice-and-takedown scheme.

So, we have a very sophisticated system to deal with rights management on YouTube. That system cost us more than US$100 million. While that works for Google—and we've been able to build that off the back of a very strong safe harbour framework—it doesn't work for a small Australian tech business. If someone wants to say, 'You need to have a very sophisticated system in place from day 1 that mirrors the Content ID system,' you're signing their death warrant, basically, or you're telling them that their business isn't welcome here and they should get on a plane to San Francisco.

We do an enormous amount to fight piracy. Also, in terms of Google Search, separate from YouTube, we've developed systems that allow rights holders—all the major music labels, all the major film studios and the big publishing houses—to send us bulk takedown requests. We process them in an average of six hours. In the last month alone, we received 80 million takedown requests—

Senator URQUHART: Eighty billion?

Mr Cooley : Eighty million takedown requests to URLs, and we process those in an average of six hours each. Most of it's automated. The system works really well. A website may have many thousands of links on it. Where we're getting lots and lots of takedown requests for particular URLs on a website, not only do we remove those particular URLs from our search index, but, if we get enough of them, we also demote that website down our search rankings. We effectively identify that as low-quality content, which our users typically aren't interested in in any event, and we push it down our search rankings. We've demoted more than 65,000 sites globally, not just in the US or the EU but globally, including to Australians, and we know that once a site's demoted it loses about 90 per cent of its Google Search traffic. These are significant steps that we've taken to fight piracy, and, to be frank, no-one is doing more to fight piracy than Google anywhere.

Senator STEELE-JOHN: I think you noted in your submission, Mr Cooley, that, without the expansion of safe harbour, service providers would be less likely to build and test new voluntary tools to combat piracy.

Mr Cooley : That's right. Interestingly, in the absence of a safe harbour framework, you're better off not knowing what's going on on your platform. It's the reverse of what some people may think would be the situation. Once you've got a safe harbour framework in place, you know that, if you become aware of infringing content on your platform, you've got a simple method to get rid of it quickly and that you'll be protected from being financially liable for the removal of that content, as long as you do it. If you don't do it—obviously there's a carrot-and-stick approach. To the extent that we receive a takedown notice and we choose not to remove it, we're fully liable. This isn't just a get-out-of-jail-free card. You only get the protection if you take that proactive step of removing the content once you've been notified. Once you have that framework in place, you can then go on with certainty and build much more sophisticated tools, in the way of that Google has, to fight piracy at scale, which we've done for instance with the Content ID system in the context of YouTube in particular.

That system, I should say, is now itself generating huge revenues for rights holders. As a result of user-generated content that's uploaded to YouTube, we've paid out to rights holders who have claimed the rights to that content—more than US$2 billion. In the last 12 months to December 2016, we paid out more than US$1 billion to the music industry from advertising running against content on YouTube. Almost 50 percent of that was user-generated content. This is an entirely new revenue scheme. This is like found money.

Senator STEELE-JOHN: If I might just play devil's advocate for a second with you both—

Mr Cooley : Certainly, Senator.

Senator STEELE-JOHN: Music Rights Australia, in their submission, pointed to the burden placed on rights holders to monitor content and issue takedown notices and that services that make available user-uploaded content have an act-first-negotiate-later approach. Could I get your response to that.

Mr Cooley : It is definitely not the case in the context of YouTube. As I mentioned, we have developed content ID, which allows rights holders to proactively administer their rights on the platform. What happens before the latest song is released is that the actual labels send YouTube that song. We then create a digital fingerprint of that song. We load it into YouTube, not visible to the public, of course. Then, as a user comes along and tries to upload new content of the platform, bearing in mind that more than 400 hours of new content is uploaded to YouTube every minute, we scan that content and we compare it against all the digital fingerprints we have, and we have more than 60 million. Where we identify that a portion of that work that has been uploaded contains a portion of that song, by way of example, we then do whatever the rights holder wants us to do. They might want to block it so that it never goes up. They might want it to go up and to track it—so, it goes up and they can get some analytics from it. Or, typically, especially in the case of music, they want it to go up and they want to monetise it. That is fantastic, because they are earning revenue from that and so are we. So, in the context of YouTube, it is definitely not a case of constantly chasing your tail, if you like.

In terms of searches, that is a different proposition. I think you heard from the previous witness that platforms, especially something like Google Search, cannot know who owns what copyright and where and when. It is just not possible. You would need to know who owned every bit of copyright in the entire universe, in terms of managing that on Google Search. No-one has built a system that is capable of doing that.

Senator STEELE-JOHN: If you don't know it I would imagine that nobody else has a chance in hell.

Mr Cooley : It's a real problem. We are dependent on them telling us in those circumstances. But we have taken steps. We realise it is a problem and we realise it is not an easy situation for rights holders, so what we have done to help is build these other systems I've described, which helps them to administer their rights at scale, in bulk lots, and then react through the demotion signal to push sites down.

Senator STEELE-JOHN: I have been pursuing a line of questioning with a couple of the people who have appeared that I think might be best for Ms Buskiewicz of DIGI. The questions were around the opportunity cost of the maintenance of the framework as it is currently and what we may have sacrificed in the last decade. Ms Coates was able to point us to the fact that there has been kind of one large-scale digital user-driven content platform in the last decade, when the US and the EU have seen a vast expansion. I think it would be useful to clarify our thinking, just to get that maintaining the current course is not free of icebergs, if you like. Would you be able to give us a picture of that?

Ms Buskiewicz : Absolutely. The start-up sector has been quite vocal on this issue. StartupAus put an ad in the AFR, on page 2, that was signed by a number of venture capital representatives—start-ups—and they said that Safe Harbour was really up there and reforming Safe Harbour was up there with things like R&D tax incentives and 457 visas, in terms of the importance to the industry thriving and surviving in Australia. To put some numbers around the potential lost opportunity if the status quo were maintained or if the bill proceeded with a carve-out for technology companies, I can give the example of 99designs, which in its 10 years of operating in Australia has shared more than $250 million with designers who use their platform to sell their content to the world. I am sure Redbubble would have given this stat. If they moved offshore, which the CEO has publicly said they would consider if Safe Harbour weren't reformed, that would mean the loss of a growing company worth $160 million, and nearly 200 jobs. So the impacts and the consequences of not reforming Safe Harbour, and not including all online service providers, including the tech sector, will have a devastating impact upon Australian innovation, for those reasons.

Senator STEELE-JOHN: Up there with R&D tax incentives?

Ms Buskiewicz : This right. It was on page 2 in the AFR. I believe their words were that we risk sending billions of dollars of investment offshore. To give another statistic, in a report, I believe back from 2011—and this may have also been quoted by the ADA—there was a survey of venture capital investors in which 81 per cent said that they would be more likely to invest in a digital content platform under a weak economy with Safe Harbour rules than in a strong economy with that lacked limitations on intermediary liability. So, this is a real problem with real consequences for Australian entrepreneurs and innovators and for investment in the sector.

Senator STEELE-JOHN: Is that figure contained within your submission?

Ms Buskiewicz : It's not, but I can provide the reference, if that would help.

Senator STEELE-JOHN: That would be really helpful—and also for the stats you quoted in relation to 99designs.

Ms Buskiewicz : Yes

Senator STEELE-JOHN: We have Redbubble's submission here. That would be great as well.

Ms Buskiewicz : Of course.

CHAIR: Mr Cooley, we heard earlier on today that in the US they are reviewing the laws as they relate to Safe Harbor DMCA. Is your counterpart in the US participating in that review? If so, is there anything you can tell us about what Google is saying about what changes should or should not occur over there?

Mr Cooley: There is a review underway in the US by the US Copyright Office. It has been underway for a couple of years as I understand it. There is, however, no indication of when any recommendation is likely to be made. No draft paper has been issued, and we are not aware of any intention by Congress, which is obviously the legislative arm, to pursue any copyright reform in this area.

CHAIR: Is Google submitting to this review—

Mr Cooley: Yes, we are participating in the review and we have filed submissions with the review, which are publicly available. Much of the information I am sharing with you here today, and I am happy to share—

CHAIR: Consistent with?

Mr Cooley: It is consistent with what we have said in the US. Our strong view is that the scheme in the US works very well. It works in the interests of platforms, online businesses and also rights holders. To be frank, there is no suggestion by anyone anywhere in the world, no matter what tinkering may be suggested at some future point in time, that they are going to carve out the commercial sector from their schemes. As I said previously, it will be a world first if this bill is introduced in its current form to carve out the commercial sector from Safe Harbour schemes anywhere in the world.

CHAIR: Thank you very much for your time today.

Mr Cooley: Thank you, Senators. We really appreciate your time.

Proceedings suspended from 11:47 to 13:04