Facebook’s unfriendly request

Facebook has warped views of fair pay and competition. Picture: AFP

In April the Morrison government ordered the Australian Competition & Consumer Commission to formulate a world-first mandatory code for Google and Facebook to pay media companies for their content, after talks failed on a voluntary code. We weren’t surprised. Monopoly tech giants treat the internet like private property, a playground to plunder, where might is always right. It became clear the platforms had not been bargaining in good faith; a deal with publishers was unlikely by the November deadline. So the ACCC was asked to come up with a draft code by the end of next month. Google and Facebook will be directed to share data, properly display news content and pay a fair price for it. Still, ACCC chairman Rod Sims fired a warning, telling the titans not to use dirty tricks, such as pulling news content from platforms in the interim, as had occurred overseas.

Imbalance of market power is one thing but outright theft of content that is expensive to produce — such as The Australian’s stories, images, audio and video — ruined the business model of news outlets. COVID-19 has ramped up pressure on publishers, including our parent, News Corp Australia, forcing newspaper closures, rationalisation of titles and job losses. In April, Josh Frydenberg said it was only fair search engines and social media giants pay for the original news content they use to drive traffic to their sites. “It is time the tech titans were held to account and we have genuine competition, we have a level playing field, we have more transparency, and we get payment for original journalistic content,” he said.

A landmark 18-month ACCC probe revealed the power of the privateers. More than 98 per cent of searches on mobile devices are with Google, while Facebook has about 17 million users who are connected to its platform for at least a half-hour a day. That level of market concentration and power was never envisaged by our regulatory system, the Treasurer said. For every $100 spent by advertisers in Australia on online advertising, excluding classifieds, $47 goes to Google, $24 to Facebook and $29 to other participants. This market is worth almost $9bn a year in Australia and has grown more than eightfold since 2005.

Major media companies Nine Entertainment and News Corp expect Facebook and Google to pay between $600m and $1bn a year for original news content. But Facebook now flatly rejects the notion of sharing advertising revenue and threatens to remove news from its platform if it is forced to. In a submission to the ACCC, it even argues 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”. That takes some front and ethical bankruptcy. Then Facebook doubles down, provocatively claiming online referrals from its News Feed for the first five months of the year were worth $195.8m to media companies.

Working out a fair payment framework should not be impossible. Mr Frydenberg has suggested a “value option”, based on the number of eyeballs to digital platforms, or a “cost option”, meaning the tech giants would pay only a fraction of the vast cost of producing news. The ACCC found that between 8 and 14 per cent of searches contain news stories. “There is value on both sides here,” Mr Sims noted. But Facebook, even this late in the game, neither accepts the ACCC’s original analysis of market power nor the government’s moral argument that the laws of the physical world must apply in the digital realm. Shamefully, Facebook claims “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”. Having built obese, predatory trillion-dollar companies by plundering our content, the titans are not in the habit of sharing or abiding by the rules of fair play, nor the least bit concerned about the health of a dying news ecosystem.