Facebook says many don't visit its platform with the intention of viewing news
The federal government is hoping to make tech giants such as Facebook and Google pay for Australian content if it is a source of profit, and the country's consumer watchdog is leading the charge on a mandatory code of conduct to address "bargaining power imbalances" between news media businesses and digital platforms.
While Facebook doesn't agree that it possesses unequal bargaining power compared to some of the largest media companies in Australia, it said there is a level of merit in setting regulatory frameworks to provide confidence that it is contributing "appropriately" in the Australian news ecosystem.
The social media giant used its submission to the Australian Competition and Consumer Commission's (ACCC) Mandatory news media bargaining code Concepts paper to say it is hopeful the process will yield a "balanced, pragmatic, realistic code that does not encourage media concentration or reduce diversity and plurality in the Australian media sector".
"If the ACCC can act in an evidence-based way, this code could give Australian news publishers, digital platforms and, ultimately, Australian consumers, confidence in the way ahead," Facebook said.
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However, Facebook said its users barely use its platform for news.
It said news content represents only a very small fraction of the content in the average Facebook users' News Feed because Facebook is "primarily a service used to connect with family and friends".
"Even if there is indirect value to digital platforms from news content, it is not healthy nor sustainable to expect that two private companies, Facebook and Google, are solely responsible for supporting a public good and solving the challenges faced by the Australian media industry," Facebook said.
"If there were no news content available on Facebook in Australia, we are confident the impact on Facebook's community metrics and revenues in Australia would not be significant, because news content is highly substitutable and most users do not come to Facebook with the intention of viewing news."
Facebook's News Feed generated approximately 2.3 billion "organic referrals" to Australian news publisher domains from January through May 2020, estimated by the social media giant to be worth around AU$195.8 million to Australian publishers.
Australia-based news publishers also generated approximately 27 million "organic views" in News Feed on tagged branded content posts during the same period.
In addition, Facebook said Australia-based news publishers also participated in revenue share programs, such as its In-Stream Video advertising program, earning approximately AU$2.1 million over the five months.
"These are just some aspects of the value that flows to Australian news businesses from Facebook that we have been able to quantify to date," Facebook said.
"In addition to this, we continue to ramp up our direct financial contributions to the news industry -- not to make a profit -- rather because we believe news is a public good and it plays an important social function," it added.
Similarly, Google wants to have a discussion "based on facts" with government and regulators when it comes to the profitability of online news in Australia, saying the value of news isn't about economics.
Like Facebook, Google said it barely makes any money from news content -- a mere AU$10 million in revenue last year.
For 2019, Facebook Australia reported AU$23.3 million in after-tax profit, on revenue of AU$125.5 million.
Of the company's total revenue, the social network took in AU$125 million for its online advertising sales, which is a significant increase from the AU$94 million it made from advertisements in FY17. The remaining revenue came from services, which amounted to almost AU$700,000.
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