Facebook parent company Meta risking mammoth $1.5bn fine after pulling out of landmark Aussie news agreement

The parent company behind Facebook could face a mammoth fine if found to have breached a major agreement with news publishers.

Facebook’s parent company Meta could face a fine of up to $1.5bn – about 30 per cent of the adjusted turnover of the company’s Australian arm – if found to have breached a landmark media bargaining code.

The social media giant provoked outrage after last week revealing it would not renew deals with local media outlets when the agreement expires in April.

It is expected to cost publishers – including Nine, News Corp (the publisher of this masthead) and the ABC, among other outlets – as much as $200m.

But the government is now probing whether Meta could be liable for millions in fines for breaching the News Media Bargaining Code it signed to pay for third party news content published on Facebook.

The maximum penalty for a single breach, if found by a court, is $50m, but that figure can go even higher in some circumstances.

Meta, the parent company behind Facebook, could face millions of dollars in fines if found to have breached Australia’s News Media Bargaining Code, after it announced it was walking away from the deal last week. Picture Fabrice Coffrini / AFP

In a statement, Meta attributed their decision to back out of the agreement as part of an “ongoing effort to better align our investments to our products and services people value the most”.

A company spokesman said the number of people using Facebook News in Australia had dropped by more than 80 per cent in 2023.

“We know that people don’t come to Facebook for news and political content – they come to connect with people,” the spokesman said.

Meta chief executive Mark Zuckerberg. The company said it would not renew its agreement with news publishers from April citing dropping use of Facebook News. Picture: Andrew Caballero-Reynolds / AFP

The bargaining code, signed three years ago, required tech giants like Meta and Google to negotiate with Australian news media businesses to pay them for content available on their digital platforms.

Meta’s agreement will come to an end in April.

The Code carries up to $50m in penalties for breaches by a designated digital platform, the four key ones including:

• Negotiate in good faith
• Participate in arbitration in good faith
• Comply with the outcomes of arbitration, and
• Not differentiate between news businesses, irrespective as to whether they are registered with the Australian Communications and Media Authority (ACMA)

That figure could still balloon out to 30 per cent of Facebook Australia’s turnover for the period during which the breach took place, depending on the seriousness of the breach.

It’s a result of the Federal Government strengthening competition laws in 2022 by substantially increasing the maximum penalties for anti-competitive conduct.

According to the Australian Competition and Consumer Commission’s (ACCC) interim report on the digital platform services inquiry from March last year, Australian advertising revenue on Meta through Facebook and Instagram was between $4.7bn and $5.1bn.

However, the same report notes the figures are not recorded in the ordinary course of business by Facebook Australia and are not “audited, verified or otherwise reported on”.

The report described them as only approximate estimates of the relevant revenue attributable to Meta.

Meta could face penalties of up to $50m but that figure could go higher depending on the severity of the breaches, and the total Australian ad revenue collected by the company. Picture: Supplied

Meta’s decision to pull out of the agreement was met with outrage from the government.

Communications Minister Michelle Rowland said the move was “a real threat” to journalism in Australia.

“It’s a threat and it’s one that we take very seriously,” she said.

“Unfortunately, Meta has made this decision. It’s a decision which suits their commercial interests and imperatives.

“But, it is inconsistent with the government’s overall aim of ensuring that we have strong public interest journalism in this country that it is properly compensated.”