Facebook has blocked sharing of Australian and international news content by publishers and users in Australia. The move comes following Facebook's dispute with the Australian government over legislation that would require the social media platform to pay news agencies for use of their content.
How did this start?
- The issue started on the back of years of media publishers' complaints that they are not compensated for the content that companies like Facebook and Google use to generate ad revenue.
- The media bargaining law, which was passed in the Australian House and was moved on to the Senate this week, requires big tech companies to negotiate a deal with news agencies for sharing their content. If they're unable to reach an agreement, an arbitration panel set by the government will finalize the deal's terms, and the companies should comply.
- Australia's advertising market was estimated to be worth only about $7B in 2019. However, big techs are concerned that the bill would trigger similar legislation across the world.
- Australia's Treasurer Josh Frydenberg said that Google accounts for 53% of Australian online advertising revenue while Facebook accounts for 23%. Another report indicated that 81% of online ad spending money in Australian media goes to Facebook and Google.
- Last year September, Facebook said that it would block news sharing if the law is passed.
- Facebook argues that various platforms will react differently to the legislation based on their relationship with its News feature. It said, "Google Search is inextricably intertwined with News and publishers do not voluntarily provide their content. On the other hand, publishers willingly choose to post News on Facebook."
- Facebook said that it generated 5.1 billion referrals last year for news publishers, worth $300M. However, as only 4% of the content people see in their feed is News, the business gain is minimal for the company, according to Facebook's statement.
- A few of the major news corporations in Australia, including the Sydney Morning Herald, get 7-9% of their web traffic through social media, primarily from Facebook. Reuters reported that between 2018-2020, around 40% of Australians got their News from Facebook.
- As a result of the blackout, content from the pages of Australia's state health departments, emergency services, and the Bureau of Meteorology was also removed.
- In 2019, Facebook announced that it was willing to license summaries and headlines from publishers for its Facebook News product. The product was launched in the U.K. last year and its partners include Condé Nast and The Economist.
- Facebook previously said that it would pay publishers in the U.S. for better quality content.
- Australian Prime Minister Scott Morrison posted on Facebook that the company's actions are as "arrogant as they were disappointing" and added, "We will not be intimidated by BigTech."
- Australia’s Treasurer Josh Frydenberg said that he will hold talks with Mark Zuckerberg regarding Facebook's news block. He added that the government will proceed with the legislation anyway.
Google's response to the law:
- Google has signed deals with more than 50 publications in Australia, including News Corp on Wednesday, to feature news on its "Google News Showcase" product. Though the deal's exact value is not disclosed, it is expected to be in tens of millions of dollars. The company hopes that signing deals for the News Showcase feature will help in avoiding the government's binding arbitration.
- Treasurer Josh Frydenberg said that the recent deals Google signed are only happening due to the legislation.
- Google announced in October that it would spend $1B over the next few years for its News Showcase product across various countries, including Germany, U.K., Brazil, and Australia.
- However, Google also threatened to block search services in Australia if the government passes the law.
Is Facebook really wrong?
Tech reporter Steven Levy pointed out that the actual problem lies in the ad model itself, rather than the usage of news content by media platforms. He argues that the major impact of social media platforms on publications is their ability to provide targeted ads. Since companies like Facebook and Google have more data about their consumers, they have gained a huge share of ads that were previously published in traditional media such as newspapers. According to Levy, users should be allowed to choose whether to provide their data for personalized ads, which could enable news organizations to regain some of the ad market share.
In Australia, the share of ads for printed media fell from about 60% in 1996 to 11% in 2018, while the share of online ads rose from about 1% in 2003 to more than 50% in 2018.
Also, the cost for advertising in print media rose by 5% between 2010-19, while it decreased by 42% in online ads.
Facebook has also been opposing Apple's upcoming privacy change, which would require users to opt-in for app tracking data. A new report by Apple said that every app has around six third-party data trackers. In December, Facebook alleged through both a newspaper ad and a blog post that Apple's requirement to get opt-in permission from users to track them across websites and apps would primarily affect small businesses. It mentioned that small businesses could face a loss of up to 60% reduction in sales for every dollar ad spend without personalized ads.
Mike Masnick, editor of tech blog Techdirt, noted that asking companies to pay for including links that drive web traffic is like asking for product advertising and also seeking to get paid for it. He added that news companies have failed to adapt to new business models based on the internet and are now complaining now about social media platforms that have been successful at it.