Facebook faces $1.5bn fines over news media bargaining code

Meta’s decision to walk away from the deals with media outlets could result in enormous penalties, far exceeding the total sum it pays news publishers.

Mark Zuckerberg, chief executive officer of Meta. Picture: Kent Nishimura/Bloomberg

Meta, the parent company of Facebook, could potentially face fines of up to $1.5bn if it is found to have breached the news media bargaining code.

Last Friday, Meta announced it was walking away from the ­payment-for-content deals that require the tech giant, and ­Google, to compensate media outlets for their copyrighted news content that is monetised by Facebook.

One of the reasons Meta has given for its decision not to renew its deals with media companies is its claim that fewer people are consuming news content on Facebook – a point fiercely ­disputed by Australian news ­publishers.

Those deals, struck in 2021 and worth close to a combined $250m a year for Australian news ­publishers, are due to expire in the second half of 2024. But Meta’s decision to turn its back on negotiations to renew existing deals will likely contravene the code – and competition law – and could result in enormous ­financial penalties.

Depending on which sections of the code have been contravened, Meta could be fined 30 per cent of Facebook Australia’s ­“adjusted turnover during the breach period”.

In its interim report on its digital platforms service inquiry in March last year, the Australian Competition & Consumer Commission found that Australian advertising revenue for Meta-owned Facebook and Instagram in FY21-22 was between $4.7bn and $5.1bn.

While it should be noted that the ACCC acknowledged that these figures “are not recorded in the ordinary course of business by Facebook Australia and are not audited, verified or otherwise reported on”, the regulatory body described them as “approximate estimates of relevant advertising revenue attributable to Australia for Facebook and Instagram”.

If Meta is found to have breached the code across all sections of the relevant legislation, the fine could be as high as $1.5bn, if the numbers in the ACCC 2023 report are correct. Facebook Australia’s audited financial statements for calendar year 2022 put “gross amounts from advertisers” at $1.256bn, although unlike the ACCC’s 2023 report, that figure doesn’t include Instagram revenue. If the Facebook Australia figure is correct, Meta’s fine could still be $376m a year – which is more than the total sum it pays Australian news publishers under the terms of the existing deals.

Last week, Anthony Albanese said his government would hold the tech giants to account. “It is absolutely critical that media is able to function and be properly funded,” the Prime Minister said.

“We will consider what options we have available and we will talk to the media companies as well. The idea one company can profit from others’ investment, not just investment in capital but investment in people, investment in journalism, is unfair.”

News Corp’s global chief executive, Robert Thomson.

Earlier this week, News Corp’s global chief executive, Robert Thomson, said Meta’s move showed not just a blatant disregard for the Australian community but a lack of concern for the level of misinformation on social media.

“We have a certain amount of self-interest (in this issue) but it’s more about the Australian community, when you look at the damage that’s been done to communities.”

News Corp Australasia executive chairman Michael Miller said Meta’s behaviour showed a reckless disregard for the value of journalism across all communities, and represented a threat to the future of a viable democracy. News Corp is the publisher of The Australian.