Facebook won’t share ad revenue

Facebook has rejected demands to share advertising revenue with local media organisations.

The country’s largest media companies, Nine Entertainment and News Corp Australia, want Facebook and Google to pay for the content taken from their outlets and used on social media platforms.

Facebook has rejected demands to share advertising revenue with local media organisations, and threatened to remove news from its platform if it is forced to.

It was “not healthy nor ­sustainable to expect that two private companies, Facebook and Google, (would be) solely responsible for supporting a public good and solving the challenges faced by the Australian media ­industry”, it told the Australian ­Competition & Consumer Commission.

The competition regulator was tasked by Josh Frydenberg in April to develop a mandatory code of conduct dealing with how the two companies should pay for news content generated by local media companies used on their platforms.

“It’s only fair that those that generate content get paid for it,” the Treasurer said at the time.

In its response to that process, Facebook said even “if there were no news content available on Facebook in Australia, we are confident the impact on Facebook’s community metrics and revenues in Australia would not be significant”.

“News content is highly substitutable and most users do not come to Facebook with the intention of viewing news,” the submission reads.

The country’s largest media companies, Nine Entertainment and News Corp Australia, want Facebook and Google to pay for the content taken from their outlets and used on social media platforms, estimating the share of advertising should be between $600m and $1bn.

News Corp Australia executive chairman Michael Miller has previously said any agreement would have to be about more than revenue sharing, and include fair arrangements for ­access to data, understanding of algorithms “and fair treatment of news organisations’ unique and valuable content”.

News Corp Australia is the publisher of The Australian.

The ACCC, in its 2018 Digital Platforms Inquiry, estimated that the two tech giants had roughly $6bn of the local online advertising market. The regulator was initially tasked with ­developing a voluntary code to share some of that revenue but told the government an agreement was “unlikely”.

That inquiry also found Facebook and Google had “substantial market power”, with the latter earning almost 96 per cent of all search advertising revenue in Australia.

“The reduction in advertising revenue over the past 20 years, for reasons including the rise of online advertising, appears to have reduced the ability of some media businesses to fund Australian news and journalism,” the final inquiry report reads. “Australian commercial media, and in particular traditional print media (now print/online media), first suffered a significant reduction in advertising revenue through the unbund­ling of classified advertisements from newspapers.”

Facebook’s submission said the absence of news on its platform “would mean publishers miss out on the com­mercial benefits of reaching a wide and diverse audience, and social value would be diminished ­because news would be harder to access for millions of ­Australians”.

Referrals to online publi­cations from its News Feed for the first five months of the year were worth $195.8m to the media companies, Facebook said.

“The code needs to recognise that there is healthy, competitive rivalry in the relationship between digital platforms and news publishers, in that we compete for advertising revenue,” it said.

Facebook also threatened to increase the cost of advertising if it was forced to share revenues.

A draft code is expected to be released next month.