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SUMMARY: In response to the Australian Competition and Consumer Commission (ACCC), Facebook issues a five-point argument that publishers worry could become a global regulatory playbook. Publishers make their counter-argument.

Publishers push back on Facebook threat to Australia regulation

Digital Platform Initiative Blog   |   01 September 2020

By Dawn McMullan

Senior Editor

INMA

Dallas, Texas, United States

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Facebook’s threat to stop allowing the sharing of news on its platform in Australia when national regulators implement tough new media laws generated ferocious pushback Tuesday by media executives worldwide who believe this is the opening salvo of a global playbook for the Big Tech social platform.

The Australian Competition and Consumer Commission (ACCC), which is the South Pacific country’s competition and consumer protection authority, is in the process of finalising a “code of conduct” bill for Parliament that would force Facebook and Google to bargain and reach agreements with Australian news companies for content that appears on their sites.

Within the Australian legislation is the establishment of an arbitration panel that would determine what Facebook and Google would pay publishers when agreement cannot be reached. The arbitrator’s ruling would be final, and the platforms could not exit the agreements.

Facebook took recent back-and-forth with Australian news media companies up a notch on Tuesday, threatening to stop allowing Facebook users to share articles from news publishers.
Facebook took recent back-and-forth with Australian news media companies up a notch on Tuesday, threatening to stop allowing Facebook users to share articles from news publishers.

Weeks after a Google campaign against the Australian legislation, Facebook hit back hard Monday with the threat to discontinue “allowing publishers and people in Australia from sharing local and international news on Facebook and Instagram,” according to a Facebook document, which the company has sent to publishers in several countries as it ramps up a global lobbying offensive to head off the Australian law.

“This is not our first choice — it is our last,” Facebook said in the document. “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.”

Publishers respond

Publishers called Facebook’s move on Tuesday “anticipated” and “expected” given the platform’s downplaying of the value of news in recent months. Facebook has hit out strongly against the ACCC the past two years, during a long-running formal inquiry and then again during the drafting of the code. Facebook suggests the regulator is protecting the interests of publishers rather than consumers. Missing in Facebook’s arguments is the connection the ACCC is making between professional journalism and societal good.

Distilling feedback from news publishers shared with INMA in the past 24 hours, the publisher pushback focuses on the nature of the Australian threat by Facebook. Its threatened actions, by themselves, reinforce the publisher points that:

  • Too much power over distribution exists with Facebook.
  • Sidelining high integrity news brands further opens the door to toxic misinformation purveyors on Facebook.

To boot, inflammation of the digital news ecosystem like in Facebook’s Australian threat will further spur regulators to action, publishers argue. While publishers take the threat seriously, they know Facebook's pronouncements and Google’s recent campaign in Australia against the regulations are primarily designed to force the ACCC to back down.

ACCC Chair Rod Sims called the Facebook threat “ill-timed and misconceived.” Former ACCC Chair Allan Fels said the code of conduct was “not ambitious” like a tax would be, and that the global platforms should expect worse financial penalties if they pull all news from their products in Australia. Under the final draft code, the platforms would need to remove all internationally sourced news if they also withdraw Australian news. This requirement would apply to all the platform’s brands.

On August 17, Google suggested it may cut services in Australia, hinting that free services could be at risk and lamenting the “special treatmen” given the large media companies in the proposed code of conduct. It is currently promoting its arguments directly to consumers on every Google Search request and in all Google News or YouTube searches.

Australian regulation proposals: pros and cons

Facebook made five key points against the ACCC proposals in materials circulated this week. Here are the verbatim points made by Facebook alongside the publisher counter-arguments put together by the INMA Digital Platform Initiative Committee:

Facebook says

Publishers say

1. It ignores the benefit news businesses get from using Facebook for free to distribute their stories. It presumes only Facebook benefits from news content. This is simply not true. News content represents a fraction of what people see in their News Feed and presents a negligible source of revenue for us. News organisations in Australia and elsewhere choose to post news on Facebook to reach prospective subscribers, monetise their content, and sell more advertising.

Facebook ignores the wider benefits of having professional news from credible, verified sources across its platforms. This is particularly important for Facebook in its existential battle against falsified news. The Australian regulator says half of Australians receive their news via Facebook. The biggest value to publishers of Facebook is using paid posts to seed content in front of prospective subscribers and readers (for which Facebook receives the post revenue). Publishers receive little from their general content on the Facebook network, as the reader is not directed to the publisher Web site so doesn’t view any ads from publisher clients.

2. It creates a one-sided, binding arbitration process that forces Facebook to pay for news at a level far beyond its value to Facebook, and what we already invest in news. It encourages news businesses to demand payment for content far beyond its commercial value and what we already invest, and to pursue an arbitration process purposefully skewed in their favour. This process ignores the financial value we bring publishers and our existing multi-million dollar investments in Australia's news industry.

Facebook spends on its journalism grants a fraction of the cost of creating the professional news which appears on Facebook. The code may encourage a big ask, but the arbitration is designed to determine what is the fair cost of producing and the wider network-wide value to the platform. Arbitration will only be used if agreement cannot be reached. Facebook has offered most Australian publishers nothing to appear in its Facebook News tab, and globally has so far favoured a few bigger publishers. 

3. It intervenes in significant aspects of commercial relationships between platforms and news businesses. It does not promote collaboration and instead grants publishers an unprecedented level of control over how we operate many of Facebook's products and features. Instead, it allows news businesses to seek commercially sensitive information on our products and services with few protections in place. We don't believe any external business or creators requires this level of access.

The arbitration mechanism is designed to address what the regulator says is a massive power imbalance that Facebook has over publishers during commercial negotiations. The code seeks to enforce standards of behaviour on Facebook after a history of unilaterally changing products and algorithms to the detriment of publishers. Specifically, this requires giving 28 days’ notice of changes which may hurt the publishers commercially. 

4. It gives news businesses unprecedented notice of product updates. It gives news organisations an unfair advantage on notifications about product changes, service updates, and changes to how News Feed works. 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.

It’s not an advantage; it is designed to neutralise a current disadvantage to which the news media is subjected. Publishers have been constantly caught out by Facebook changes which affect products the news companies have invested heavily in. These were investments based on what publishers believed to be the Facebook parameters at the time. Publishers think the current process of platform change-by-stealth is grossly unfair and commercially negligent. This is of secondary importance compared with payment for use of professional content. 

5. It hits services that are not news products. Facebook has many different products, and only a small proportion of our community shares news content on Facebook. The proposed legislation overreaches to include platforms within the broader Facebook family that are not primarily used to share news content, like Instagram and Facebook Groups. There's no reason they should be subject to the rules of this proposed legislation.

The code affects any platform-operated brand which carries Australia or international news content. This material is currently carried on all Facebook family products including Facebook Watch, Instagram, WhatsApp, and Groups, so it needs to apply to all. 

 

Facebook’s international outreach

On Tuesday, Facebook rolled out enhanced publisher communications internationally, drawing attention to the Australian situation. While each communication was unique and from Facebook country managers, four themes emerged:

  1. The Australian regulation will hinder the relationship between Big Tech companies and news companies.
  2. The Australian regulation fails to understand the relationship between the news media and social media.
  3. If the Australian regulation becomes law, Facebook will discontinue allowing publishers and people in Australia to distribute news on their platforms.
  4. If the law goes into effect, Facebook will continue to support journalism enterprises worldwide. Several communications point to the investments in partnerships and programmes to develop media business models, help with COVID-19, grants for local news, grants for fact-checking organisations, and journalism support funds.

Containing the Australian threat 

If the Facebook threat is real, why is Australia so important? The likely answer is: a gold-standard competition precedent from a highly regarded regulator with political backing.

One of the key learnings from INMA’s Digital Platform Initiative has been that because of the global nature of the Big Tech platforms, the highest bar for regulation becomes a global standard. The outcome in Australia will become the new bar for every country’s publishers seeking an equitable financial relationship with Facebook and others.

Facebook’s Head of News Partnerships Campbell Brown told NBC News yesterday that “Australia is an outlier” and therefore Facebook News will continue its expansion internationally.

The publisher outreach worldwide today was designed, at worst, to contain the precedent of the Australian regulator and provide a warning that this is worth a fight to Facebook.

Yet we know from INMA’s “How to Decode the Publisher-Platform Relationship” report last year that regulatory movements against Facebook — as well as Google, Apple, and Amazon — are bubbling up not only in Australia but in the European Union, the United Kingdom, Germany, and in the United States at the federal and state levels. INMA identified Australia as the likely hot spot for 2020.

What is missing from Facebook’s response in Australia is a big picture look at the sustainability of journalism. The U.K.’s Cairncross Review found the “opacity of the market for online advertising and the market shares of Facebook and Google are justification for regulators ... to ensure that the unbalanced relationship between publishers and online platforms does not threaten the viability of publishers’ businesses.” Applying that rationale to Australia, the 70% market share of digital advertising owned by Facebook and Google is the justification for evening out the unbalanced relationship. Paying for news in any form is a means to a sustainable end.

INMA’s lead on its Digital Platform Initiative, Sydney-based Robert Whitehead, said the code, which at this hour only applies to Google and Facebook, has undergone many changes after several public reviews on its way to its current final draft. 

It will only be when the regulator publishes the final code in the coming weeks that the tech giants will know precisely the scale of the challenge they are fighting, Whitehead said. In the meantime, they appear to be fearing the worst in terms of the price they will be forced to pay for content, and they are mobilising globally to attack the law’s core philosophy and mechanisms.

About Dawn McMullan

Dawn McMullan is senior editor at INMA, based in Dallas, Texas, United States. She can be reached at dawn.mcmullan@inma.org.

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