Meta’s move will increase misinformation and harm democracy

Meta’s announcement on Friday it would not enter into new commercial deal for media content under Australia’s News Media Bargaining Code is as arrogant as it is damaging to Australia.

Meta’s Facebook grew as a platform offering a variety of media and other content sent via its news feed, and it allowed users to post content to other users — including media content.

To put Friday’s announcement into context, it is worth recalling the NMBC, which came into effect in March 2021, requires designated digital platforms to negotiate in good faith with all eligible Australian news media outlets and, failing agreement, for the amount of any payment for media content to be settled by independent arbitration.

The logic of the NMBC is based on the fact both Google and Facebook have significant power in their respective markets. They provide services consumers can use for no monetary payment, but consumers give over their data and attention, which is used by digital platforms to target advertising, from which they profit enormously.

This clever business model in essence uses the content of others to attract users to their sites. Prior to the NMBC the platforms would not entertain commercial negotiations to settle fair payment; if one media company removed its content the platforms would simply use other media content.

The purpose of the NMBC was to correct this market failure through a “negotiate/arbitrate” model.

In an attempt to stop the legislation Meta, in early 2021, and without any warning to the government, took down from Facebook’s app and website all news media content as well as emergency and health information.

Treasurer Josh Frydenberg with former ACCC Chairman Rod Sims at Parliament House in Canberra.

After negotiation with then treasurer Josh Frydenberg, Facebook agreed to do deals with Australian media companies and promptly did so with those likely employing around 85 per cent of Australian journalists.

Google flagged it would downgrade its search results if the NMBC became law but, also after discussion with Frydenberg, did deals with virtually all eligible Australian news media businesses.

Combined, the Facebook and Google deals amounted to close to $250m per year to support Australian journalism, which saw many more journalists employed and additional forms of news reporting.

Meta has justified its dramatic announcement by asserting its platform users do not value news and are now accessing much less of it. But, what users see is largely determined by Meta as it controls what is in the user “feed” and what is on its “news” tab.

Dropping the word “news” from “news feed” was seemingly in response to the NMBC requiring payment for news content.

It now appears Meta’s algorithms are significantly de-prioritising news media content to users to justify not paying for this content.

This attempt to protect its extraordinary profits comes at a serious cost to society. Users see less content from journalists whose reporting contrasts significantly with the often extreme and/or ill-informed posts from non-trusted sources. Misinformation increases and democracy suffers.

Journalism benefits society in many ways, even for those who do not access it, as it holds the powerful to account, provides a journal of record and is a forum for ideas. Quality journalism is a foundation for a well-functioning society and democracy.

We need to be clear here; Meta is not producing a better product, as occurred when the horse and buggy were replaced by the motor car. Meta’s actions will simply see less journalism.

It is excellent the Prime Minister has said: “The idea that one company can profit from others’ investment … is unfair. That is not the Australian way.”

The government has said it recognises the threat to journalism in Australia and will look at all available options to address this threat.

So, what are the government’s options? It can designate Meta under the NMBC and force it into the negotiate/arbitrate process. But, Meta could respond by removing all news media from its feed and not allowing anyone to post a media item to their Facebook friends. This is what it has done in Canada in response to Canada’s near copy of Australia’s NMBC.

So much for Facebook’s claim it is a mere conduit between people. It is too early to tell what this drastic measure has done to the attractiveness of the Facebook platform.

The government and the parliament could amend or supplement the NMBC by legislative action. It is certainly not restricted to working within the confines of the existing NMBC, given the strong parliamentary support for the goals of the NMBC.

The government has sensibly said it will seek advice, consult widely and reflect on the best approach to take. This is wise; best to make the right next move rather than a hasty one.

Meta founder and CEO Mark Zuckerberg. Picture: Mandel Ngan/AFP

I would expect Meta’s selfish action will not affect Google; I would expect it to continue doing deals with Australian news media businesses. Google needs news media content to run an effective search engine, and Google’s positive engagement has always been in stark contrast to that of Meta.

Of course, the government also needs to be thinking about the threat posed when journalism content is gathered to inform generative AI models.

It is also to be hoped this demonstration by Meta of its enormous market power and the impact on Australia of exercising this in its own, and not Australia’s, interest will give impetus to the government’s consideration of the ACCC’s 2022 recommendations to deal with the wider consumer and consumer harms caused by the digital companies, as other countries are now doing.

Australia led the world with the NMBC; we need to now protect the objectives which were then sought.

We also need to catch up with others in effectively dealing with the wider consequences of the market power enjoyed by the dominant digital platforms which affect all aspects of our lives.

Rod Sims is a professor at the Crawford School of Public Policy. He was ACCC chair from 2011-22, during which time the ACCC recommended the NMBC.