Frydenberg’s Facebook triumph

Measured by degree of difficulty, Josh Frydenberg has just landed a 10 out of 10. Not only has the Treasurer, with the support of Scott Morrison, long championed the need to address the market imbalances and the resultant distortions created by the rapid unchecked emergence of the tech giants, but he has personally driven high-stakes negotiations to nail a highly technical and quite remarkable manoeuvre. Unusually in modern politics, which is so often overshadowed by popularism and partisan polarity, Mr Frydenberg has pursued, somewhat bravely and with a single-minded purpose, and then delivered on a reform promise that many Australians would not have considered a priority or well understood. But in fact that reform is fundamental to a properly functioning, healthy society in which important, sensible, sometimes challenging public debate can flourish and inform rather than continue to allow the rapid emergence of an unhealthy information landscape that promotes emasculation over emancipation.

Mr Frydenberg stands apart today from lawmakers around the world who have not been able to pull off such a delicate and technically difficult legislative outcome. Incredibly, the Treasurer has managed to personally convince the leaders of Google, and the notoriously ruthless founder of Facebook, Mark Zuckerberg, to sign up to a multimillion-dollar regime unlike any other attempted elsewhere in the world.

The government, with admirable cross-party support in the parliament, took on a challenge it could have easily ignored. In doing so it also managed to expose to the Australian community exactly why it needed to act, when Google and Facebook revealed their hands and threatened to pull the plug on Australians. As part of the deal, Facebook will restore news content to Australians. The government will push ahead with laws that work as a backstop to force digital companies to negotiate to pay for content they currently take for free. There have been minor changes agreed to the new laws, including giving notice to services that will be covered, but not to the centrepiece recommended by the Australian Competition & Consumer Commission for final offer arbitration if commercial agreement cannot be reached.

The about-face by both Google, which threatened to withdraw service from Australia, and Facebook, which blocked sites extending well beyond news media, is of international significance. Since making its threat, Google has negotiated agreements with major publishers, including with News Corp, globally. Regulators are co-operating across jurisdictions including the US, Canada, Europe and Australia to bring the digital giants to heel. The issues go well beyond threats to the financial viability of journalism and focus on the monopoly powers of major digital companies and how they are prepared to use these powers to eliminate competition and challenge government. The global pushback includes antitrust actions in the US to challenge monopoly behaviour and efforts to break the vertical integration stranglehold that a small number of digital companies have on the multibillion-dollar online advertising market. The Treasurer was able to declare on Tuesday that Facebook had “re-friended Australia”. Facebook had committed to entering into good-faith negotiations with Australian news media businesses and seeking to reach agreements to pay for content. Global analysts agree that Facebook and Google overplayed their hands in Australia. It was interpreted as hubris, a demonstration of what Mr Morrison said was a belief by big tech companies that they were bigger than governments and that the rules should not apply to them. From railroads to telecommunications, corporate history is littered with examples of pioneers that have grown too big, exploited monopoly power and been cut down by regulators. The push-back on big tech, started in Australia, could open a new era of competitive digital innovation that will benefit everyone.