Business

Facebook vows no more news if Australia's media bargaining code becomes law

Company says the legislation ignored important facts, specifically the relationship between the news media and social media, and which one benefits most from the other.

Written by Asha Barbaschow, Contributor Aug. 31, 2020 at 5:55 p.m. PT

Facebook has said if Australia's new media bargaining code becomes law, it will have to stop allowing news to be shared on its platforms.

"Assuming this draft code becomes law, we will reluctantly stop allowing publishers and people in Australia from sharing local and international news on Facebook and Instagram," the social media giant said in a blog post.

"This is not our first choice -- it is our last. But it is the only way to protect against an outcome that defies logic and will hurt, not help, the long-term vibrancy of Australia's news and media sector."

The News Media Bargaining Code adopts a model based on negotiation, mediation, and arbitration to "best facilitate genuine commercial bargaining between parties, allowing commercially negotiated outcomes suited to different business models used by Australian news media businesses".

The Australian Competition and Consumer Commission (ACCC) believes the code is necessary to address the fundamental bargaining power imbalances between Australian news media businesses and major digital platforms, such as Facebook and Google.

Facebook, however, called the law a one-sided, binding arbitration process that forces it to pay for news at a level far beyond its value to Facebook.

"The ACCC presumes that Facebook benefits most in its relationship with publishers, when in fact the reverse is true," Facebook said.

"News represents a fraction of what people see in their News Feed and is not a significant source of revenue for us."

From January through May this year, Facebook said it sent 2.3 billion clicks from its news feed to Australian news websites at no charge. The social media giant quantified such traffic to be worth around AU$200 million to Australian publishers.

Facebook News, which is yet to launch Down Under, is a platform exclusively for news, where the company pays publishers for content. It said since launching in the US, publishers have seen additional traffic and new audiences.

"But these proposals were overlooked," Facebook said. "Instead, we are left with a choice of either removing news entirely or accepting a system that lets publishers charge us for as much content as they want at a price with no clear limits.

"Unfortunately, no business can operate that way."

Facebook said it shares the goal of supporting struggling news organisations, but said the solution proposed by the watchdog is counterproductive to that goal. It said the proposed law is unprecedented in its reach and seeks to regulate every aspect of how tech companies do business with news publishers.

"Most perplexing, it would force Facebook to pay news organisations for content that the publishers voluntarily place on our platforms and at a price that ignores the financial value we bring publishers," it said.

Google shares a similar view to Facebook, last month saying the new code would dramatically worsen how users experience Google Search and YouTube, giving news businesses the ability to "game" the system.

Labelling it "extremely one-sided and unfair", Google said the code contains provisions that are difficult to comply with while providing a useful service.

"So unfair that no company should be asked to accept it," it said. "We're happy to pay more to license content, and want to support journalism as it transitions to a digital future, but a fair negotiation or arbitration should factor in the value both parties provide."

If the search giant, or Facebook, don't comply with the provisions, the law imposes fines of up to 10% of turnover for each breach of the law.

The code, as is currently drafted, also requires digital platforms to give news media businesses 28 days' notice of algorithm changes that are likely to materially affect referral traffic to news, algorithm changes designed to affect ranking of news behind paywalls, and any substantial changes to the display and presentation of news and advertising directly associated with news.

"28-day advance notice is really a 28-day waiting period before we can make important changes to our systems," Google said.

"It gives news organisations an unfair advantage on notifications about product changes, service updates, and changes to how news feed works," Facebook added. "We don't believe any business should have this advantage and it won't be available to any other content creator or business who use our platforms.

"We think that's unfair."

The ACCC considers Facebook's comments as ill-timed and misconceived.

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.

Facebook from 1 October 2020 will be updating a part of its terms of service, under the header of "Your commitments to Facebook and our community", which will affect what users can share and do on Facebook, globally.

"We want people to use Facebook to express themselves and to share content that is important to them, but not at the expense of the safety and well-being of others or the integrity of our community," its new terms state.

It defaults the user into agreeing to not to engage in conduct, such as doing or sharing anything that violates its terms, its community standards, and other terms and policies that apply to the use of Facebook; doing or sharing anything that is unlawful, misleading, discriminatory, or fraudulent; or doing or sharing anything that infringes or violates someone else's rights, including their intellectual property rights.

"You may not upload viruses or malicious code or do anything that could disable, overburden, or impair the proper working or appearance of our products," it adds.

"You may not access or collect data from our products using automated means (without our prior permission) or attempt to access data you do not have permission to access."

The platform said it can remove or restrict access to content that is in violation of these provisions.

"We also can remove or restrict access to your content, services or information if we determine that doing so is reasonably necessary to avoid or mitigate adverse legal or regulatory impacts to Facebook," it added.