They also prevent users in Australia from sharing or seeing content from any news site, including from Australia and internationally.
The world’s largest social network said it decided in response to the News Communications Negotiation Rules recently introduced in the Australian parliament, which would prompt Facebook and Google to negotiate with news companies to pay for this content.
However, Google opted to negotiate with publishers, including Rupert Murdoch’s News Corp and major Australian media groups Nine Entertainment and Seven West Media.
According to Australian lawmakers, the law was proposed to limit the tech giants’ power over digital advertising (a major cause of declines in publisher revenues for two decades. period). Facebook argues that the law misjudged its relationship with publishers.
But in reality, the situation is much more complicated. And the consequences of this can affect the whole world.
Here’s what you need to know about the information war between Australia, Facebook and Google about paying for news online.
How did it happen?
The news agencies have long had relationships with companies like Facebook and Google. However, these firms blame Facebook and Google for eating down advertising revenue, controlling news agencies through algorithms, and benefiting from displaying news content to people who use them without paying the copyrights.
In recent years, these companies have sponsored press and promoted news content on their platforms, such as Facebook’s Journalism Project and News tab, and Google’s News Initiative and News Showcase, however, The impact is still very modest, and the publishing industry continues to struggle.
However, regulators are looking to force Facebook and Google to pay publishers to use their content, like Australia, France, Germany, and Spain.
The Australian Competition and Consumer Commission, the country’s top antitrust regulator, has been working toward the law at the center of this week’s controversy for around three years amid Australia’s broader push to crackdown on big tech.
What would Australia’s proposed law do?
In April 2020, the Australian Treasury Secretary announced plans to issue a set of mandatory rules applicable to technology platforms.
The first draft of the code, published by the ACCC in July 2020, gives Google and Facebook three months to negotiate revenue-sharing agreements with local media companies.
If an agreement is not reached, the two sides will have to go through an independent arbitrator to make a final decision on the revenue to be shared between the two parties.
The Code also requires Google and Facebook to give advance notice of changes in the algorithm and information about how and when data will be made available to media companies.
The House of Representatives of the Australian Parliament passed the law this week and it is currently being moved to the Senate, where the law is expected to pass, although discussions between companies and the government are still ongoing out.
As reported by the Sydney Morning Herald, smaller publishers are ineligible to receive payments under the law, and as a result, large publishers like News Corp are likely to benefit more.
Reporter Casey Newton also pointed out that the law does not require publishers to share revenue with reporters, and as such, the money will probably go to the executives or investors.
At the same time, competitors of Facebook and Google can gain an advantage if their market share falls. Earlier, Microsoft President Brad Smith passed this law.
As a result, the law could inadvertently further entrench Facebook’s and Google’s dominance, though it’s unclear what the ultimate impact would be on news publishers or the broader media ecosystem.
What did Facebook do?
In a blog post, William Easton – manager of Facebook in Australia and New Zealand – said “would restrict news publishers and Australians from sharing or viewing Australian and international news content. “because the proposed law” fundamentally misinterprets the relationship between our platform and the news publishing agency.”
Facebook also reaffirmed that the benefits the company reaped from the sharing of news were very few, only about 4% of what people see in the Newsfeed.
On February 17, Facebook blocked all Australian news agencies from sharing or posting content from their sites, blocking Australian users from viewing any news content (even from national publishers). and block all users around the world from viewing content from Australian publishers.
Even some non-news sites were involved because of the misjudged rating.
On February 18, some Australian emergency services were severely affected after Facebook’s ban on sharing news content, especially pages covering the epidemic of acute respiratory infections, COVID. -19, forest fire or tornado.
Besides, the sites sharing content about Australian fire, medical and meteorological services on the Facebook platform are also difficult to access. In the announcement, Environment Minister Sussan Ley confirmed that the Hydrometeorological Agency’s website was affected by this regulation. However, instead of going to Facebook, Mr. Ley urged people to visit the homepage.
Meanwhile, the Australian Government stated that Facebook had dealt with “too hard” and “unnecessary”. Finance Minister Josh Frydenberg criticized Facebook for “making a mistake” to prevent sharing of news on news sites.
Australian Prime Minister Scott Morrison on February 18 announced the ban on sharing of Facebook news expressed “arrogance” and he would not be intimidated by the “bullying” of the social media platform.
He emphasized that Australia will not be threatened by the media giant’s bullying and this is an act of pressure on Congress when MPs vote on the Important Communications Code.
What is Google’s response?
The latest move by Facebook contrasts with Google, which has previously announced that it has settled deals with Australian media groups Seven West, Nine Entertainment and even News Corp.
Imposing a mandatory set of rules as “impossible” to Google because the principle of unrestricted linking between websites is a fundamental element of the search process on Google Search. Imposing this code comes with an inability to control finance and operational risk.
According to a Google spokesperson, the company brought an estimated AUD218 million ($ 169 million) worth to publishers in 2018 for the introduction of content that boosts traffic to news sites.
Previously, Google proposed to negotiate agreements with Australian news organizers based on the content of similar deals in the world through the form of payment based on news value, in which the media will be responsible for creating and managing the content and status line appearing on the search table available at some Google service pages.
Since mid-January, Google has started experimenting with restricting users from accessing Australian news sites, including the newspapers of the two largest media outlets, News Corp and the Guardian.
Lose a battle to win the war?
At the core of the matter, perhaps the Australian antitrust regulator wants an equal playing field. Google and Facebook are not only competitors to the news business in the online advertising market, but they must also be important distributors, sharing revenue with publishers.
Google and Facebook are swallowing up the majority of the global online advertising budget. They collect between users to deliver these ads to the right audience. These metrics are what advertising buying companies and news publishers want to have. The upcoming law in Australia sets a precedent for this wish to come true.
Besides, under the new law, publishers will be allowed to negotiate as a group with digital platforms like Facebook or Gooogle instead of negotiating individually. If a mutual agreement is not reached, they will send their plans to an independent committee so that a final decision will be made.
The final scenario is too risky for either side to choose from. The way to win negotiations is to be open and honest about how much that business model is worth. However, this poses such a threat to Google and Facebook that the social media giant has withdrawn entirely from the news in Australia. Google, after threatening to take a similar move and shutting down its search engine in Australia, a better solution was chosen.
When the law has not yet been passed, Google has sought to make agreements with each publisher, with News Corp being the first name. In return, the search giant paid only a small amount. Agreements like these ensure that Google never has to enter into serious negotiations with an equal competitor or abide by a deal that doesn’t come cheap.
So far, it looks like the search giant is winning. Facebook’s move has been met with contempt in Australia, while Google’s move is backed by media organizations and politicians.
At first glance, it looks like Facebook and Google are losing out. But what is their real purpose? Accepting the battle in Australia, Facebook and Google seem to be taking other steps to protect their position elsewhere around the world. By abandoning the news war in Australia, Google and Facebook can focus their efforts on maintaining their monopoly positions in much larger markets for online information and data.
However, the success of this effort remains unknown.