Pressure mounts on Facebook to be part of solution to ‘problem they’ve caused’

The federal government could use tax law and content rules to maximise pressure on Facebook to pay for Australian content, with former competition regulator Allan Fels backing the case for tougher action to force the outcome.

Days after Prime Minister Anthony Albanese said “all options” were on the agenda, the competition boss said the government would be justified in considering tax rules, age verification and other big decisions in the light of the clash over content payments.

But another former chair of the Australian Competition and Consumer Commission, Graeme Samuel, questioned the case for action and said Facebook and its corporate owner, Meta, were likely to avoid payments by switching off local news.

The federal decisions will shape the media industry’s future claims for compensation from Meta for its use of Australian news content after the company said last week it would not negotiate further deals with the sector.

With the social media giant ruling out voluntary deals, the federal government would have to “designate” the company under federal law to force it to bargain with the media industry in a compulsory arbitration.

“The government has a strong case for designating Facebook under the media bargaining code to ensure they can continue to contribute to solving a problem they’ve caused,” said Fels, who led the ACCC for eight years to 2003.

Facebook has refused to negotiate on further deals with Australian media companies.Credit: Reuters

“This may justifiably colour government actions in fields such as content regulation, age verification, other regulation and taxation.

“And the Australian community should be concerned at the detrimental effect on the very survival of public interest journalism, which is currently in crisis.”

Assistant Treasurer Stephen Jones said last week he was open to “designating” Facebook under the code, while Albanese said on Saturday the company “shouldn’t get a free ride” and could be exposed to other options to make it negotiate.

The federal government can exert pressure on Facebook under laws that attempt to extract more tax from internet platforms worldwide, given years of concerns that the companies record revenue from Australian customers in tax havens overseas.

The federal government also has content rules that impose restrictions on social media platforms, particularly after Facebook distributed violent video from the shootings at two mosques in Christchurch in 2019.

The government has backed away from imposing age verification on Facebook and other platforms in response to concerns from parents about the content their children view, but the Coalition is challenging Labor to act on the problem.

Parliament passed the News Media Bargaining Code with cross-party support in 2021 to give the government the power to “designate” social media giants and force them to submit to arbitration to settle claims from media companies over the payment for news content.

Coalition communications spokesman David Coleman said the question for Labor was less about the process it would follow than the result it would achieve, given the previous government had put the scheme in place and gained a financial boost for the industry.

“It takes money, and Meta has to pay. The Coalition achieved this, and it’s now up to the government to ensure this continues,” he said.

Another former ACCC chair, Rod Sims, estimated the media industry stood to gain $1 billion over four years from Facebook, Google and other companies under the code, which was designed under his leadership and put in place by former treasurer Josh Frydenberg.

Meta has deals in place with many publishers that finish towards the end of 2024 but has declined to speculate on the future of deals that are currently in effect.

The federal law encouraged Meta and Google to strike commercial deals three years ago to pay news organisations including the ABC, NewsCorp Australia, Guardian Australia, Seven West Media, Australian Community Media and Nine Entertainment, the owner of this masthead.

Samuel, who led the ACCC for eight years to 2011, questioned whether the code had met its stated aim of encouraging investment in journalism by forcing the social media giants to reimburse Australian companies for the news content.

“The government policy is to provide financial subsidies to media proprietors without any audit or check to see if it is being used to enhance quality journalism,” he said.

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