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Facebook reverses shutdown in Australia as national legislation is tweaked

By Robert Whitehead

McPherson Media Group

Sydney, Australia

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Facebook has reversed its decision to block news from its main social media platform in Australia after its talks with the government helped confirm the final shape of the news media bargaining code.

After a five-day blockade, Facebook won no major concessions. 

Yet the dispute helped clarify this: The big platforms can avoid all adverse points of the code if they satisfy for the government that they reached deals outside the code, which nevertheless met the code’s overall standards.

The code will only be formally applied to a platform if it does not reach deals. Google had already interpreted the legislation this way when it signed its raft of earlier historic agreements last week. Facebook only realised later that it could do this.

News of the Facebook decision in The Sydney Morning Herald, owned by Nine, which made a content payment deal with Google last week.
News of the Facebook decision in The Sydney Morning Herald, owned by Nine, which made a content payment deal with Google last week.

“Facebook has re-friended Australia,” said Australia’s Treasurer, Josh Frydenberg, who is in charge of the competition law.  “Australian news will be restored to the Facebook platform, and Facebook has committed to entering into good-faith negotiations with Australian news media businesses and seeking to reach agreements to pay for content.”

Within an hour of the announcement, the Seven West Media group signed a deal with Facebook. Seven West, which owns the country’s second largest TV network and The West Australian news brand, was also the first major company to sign with Google last week. 

Facebook has remained in active talks with the other big players during its news ban, including News Corp Australia and Nine Entertainment Co., which owns The Age and The Sydney Morning Herald news brands. Facebook is expected to secure sizable deals with them shortly.

Historically, threats by the Big Tech players to withdraw products from a country if local law impinges on them have been reasonably regular and resoundingly successful. Facebook’s five-day news blackout in Australia, however, didn’t manage to achieve that playbook’s usual success. 

Yet Facebook did make one point loudly: Traffic to Australian news sites took a substantial hit in the day after last week’s decision to discontinue distributing news. Chartbeat data recorded traffic drops of 13% domestically and 30% from overseas readers in the first 24 hours. 

In response to Facebook’s action, Australian publishers and broadcasters in the past five days ramped up extensive marketing campaigns to tell readers to visit their sites directly or download their apps so the Facebook news ban didn’t hurt them.

Both Google and Facebook had threatened to close their respective key services in Australia if the media code’s forced arbitration remained. Yet Google was able to find a legal interpretation to help it close a range of large deals — which were compliant with the code and avoided its penalties — at the very moment Facebook said it had no choice but to pull the plug on news. 

It also shut down news so quickly and broadly that it inadvertently affected hundreds of Web sites that belonged to emergency services and community organisations, which had nothing to do with news content. Some took days to restore. Its accidental shutdown of content on COVID-19 community information sites about the vaccine rollout in Australia was seen as a public relations disaster.

Ultimately, Facebook managed to reverse its news ban quickly enough to avoid any long lasting P.R. damage. And it emerged with wording changes to the legislation that it can point to as proof that it achieved a successful compromise.

The Australian government wants its ground-breaking code to force fairer commercial negotiations between media and platforms, to redress what the market regulator says is a major power imbalance between the parties.  

Four minor technical changes will be included in the final legislation that were hammered out by Facebook lawyers after talks led Facebook’s Mark Zuckerberg and Australia’s Frydenberg. Such was the importance of the code that the pair spoke six times in the final two days.

Australia Treasurer Josh Frydenberg has been in conversation with Facebook CEO Mark Zuckerberg in the past week.
Australia Treasurer Josh Frydenberg has been in conversation with Facebook CEO Mark Zuckerberg in the past week.

The final Australian News media bargaining code will see the following points added before a vote in the Senate, the upper house of parliament: 

  • A one-month notice period, which the government has agreed to give a digital platform if it is to be formally named as being subject to the code. 

  • A two-month cooling off period between commercial negotiations failing after 90 days of talks and forced arbitration starting. 

  • Clarity that platforms may conclude commercial deals that differ in size and nature across different media companies. 

  • The government will take into account the number of commercial deals concluded in good faith by the platform as well as its commitment to support journalism before considering any designation if talks are faltering.

INMA has updated all key components of the Australian Bargaining Code here at a glance.

Frydenberg told the media the code’s key purpose remained in place. “Namely it is a mandatory code, a world-leading code. Secondly, it is based on two-way value exchange, and third, it involves a final offer arbitration mechanism.”

The bill has unanimous cross-party political support. After the Senate vote, the amended bill returns to the lower house for a final vote on the wording changes.

Facebook’s managing director in Australia, Will Easton, said the company was “satisfied that the Australian government has agreed to a number of changes and guarantees that address our core concerns about allowing commercial deals that recognise the value our platform provides to publishers relative to the value we receive from them”.

The Australian news media code has prompted calls in Europe this week by an alliance of media publishing groups for similar anti-trust laws to be introduced to bolster the European Union’s recent expansion of copyright.

The deals Google has struck with major Australian news media companies are on track to be at least five times the value of deals that Google recently concluded with a group of most French publishers.

About Robert Whitehead

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