On Tuesday local time Facebook said that it would stop allowing news publishers and individuals in Australia from sharing local and international news via Facebook and Instagram.
The announcement comes a month after Australia put forward its “Draft Mandatory Code of Conduct Governing Digital Platforms and Media Businesses,” and initiated a month of consultation.
The code, prepared by the Australian Competition and Consumer Commission, requires technology giants such as Google and Facebook to “negotiate in good faith” payments to digital media companies, Treasury Minister Josh Frydenberg said. The Australian companies can negotiate collectively or separately.
Facebook said: “the legislation is based on a false premise and creates a one-sided, binding commercial process.” In letters from Will Easton, Facebook’s MD in Australia and New Zealand, and Campbell Brown, its VP, Global News Partnerships, the company also said that the legislation “ignored important facts,” and is “counterproductive” to its own goal of shoring up local publishers.
The company offered to launch its own Facebook News service in the country and said it was prepared to invest more in the Facebook Journalism Project.
The argument between the company and Australia appears to center on different readings of which party benefits from having news stories published on the platform.
“It would force Facebook to pay news organizations for content that the publishers voluntarily place on our platforms and at a price that ignores the financial value we bring publishers. The ACCC presumes that Facebook benefits most in its relationship with publishers, when in fact the reverse is true. News represents a fraction of what people see in their News Feed and is not a significant source of revenue for us,” said Easton.
“News organizations… encourage readers to share news across social platforms to increase readership of their stories. This in turn allows them to sell more subscriptions and advertising. Over the first five months of 2020 we sent 2.3 billion clicks from Facebook’s News Feed back to Australian news websites at no charge – additional traffic worth an estimated $200 million to Australian publishers.”
The company claimed that the impact of Facebook News in the U.S. has been beneficial to news publishers. “Over 95% of the traffic Facebook News delivers to publishers is incremental to the traffic they already get from news feed,” said Brown. He also said that Facebook is developing an “account linking tool” to help publishers generate subscription revenue.
The Australian legislation is part of a global pushback against the power of the multinational tech companies and their ability to challenge governments on sovereignty matters, such as censorship, and taxation.
Several European countries are seeking to place revenue taxes on the global tech giants, whose businesses are dematerialized and which are able to choose in which jurisdiction they wish to book their profits.
Australia is unapologetic in seeking to legislate how the (mostly American) giants operate withing its borders. “In its final report the ACCC identified that Facebook and Google have each become unavoidable trading partners for Australian news media businesses in reaching audiences online, resulting in an imbalance in bargaining power.”