Treasurer Josh Frydenberg slams Facebook threats

Josh Frydenberg has declared he won’t be intimidated by scare tactics from Facebook and Google.

Treasurer Josh Frydenberg. Picture: David Geraghty

Josh Frydenberg has declared he won’t be intimidated by scare tactics from Facebook and Google after the tech giants effectively threatened to ban news content on their platforms if world-first regulation passes in Australia.

The Treasurer told The Australian the government would push ahead with its plans to force the tech giants to pay media companies fairly for news, despite Facebook’s outburst on Tuesday.

“Australia makes laws that advance our national interest. We don’t respond to coercion or heavy-handed threats, wherever they come from,” he said.

“Our reforms to digital platforms are world-leading and following a groundbreaking 18-month inquiry by the ACCC.

“These reforms will help to create a more sustainable media landscape and see payment for original content.”

On Tuesday Facebook broke its silence on the proposed news media bargaining code, declaring it would be forced to block all news in Australia if the legislation went ahead.

In a blog post, Facebook’s Australia and New Zealand managing director, Will Easton, accused the Australian Competition & Consumer Commission of “misunderstanding the dynamic of the internet”. He said Facebook would be left with no choice but to withdraw news in Australia if forced to pay publishers fairly.

“Assuming this draft code becomes law, we will reluctantly stop allowing publishers and people in Australia from sharing local and international news on Facebook and Instagram,” Mr Easton said.

“This is not our first choice — it is our last. But it is the only way to protect against an outcome that defies logic and will hurt, not help, the long-term vibrancy of Australia’s news and media sector.”

Mr Easton said that during the first five months of 2020 Facebook sent 2.3 billion clicks from Facebook’s News Feed to Australian publishers, traffic he said was worth an estimated $200m to those media companies.

The tech giant also alerted users globally that it would be changing its terms of service to “remove or restrict access to your content, services or information if we determine that doing so is reasonably necessary to avoid or mitigate adverse legal or regulatory impacts to Facebook”. ACCC chairman Rod Sims described Facebook’s threats as “ill-timed and misconceived.”

“Facebook already pays some media for news content. The code simply aims to bring fairness and transparency to Facebook and Google’s relationships with Australian news media businesses,” Mr Sims said.

“We note that according to the University of Canberra’s 2020 Digital News Report, 39 per cent of Australians use Facebook for general news and 49 per cent use Facebook for news about COVID-19. As the ACCC and the government work to finalise the draft legislation, we hope all parties will engage in constructive discussions.”

Former ACCC chairman Allan Fels told The Australian that instead of making threats, Facebook should engage in constructive discussions with the regulator and the government.

“It’s normal when the ACCC proposes action that those potentially affected threaten job losses, investment strikes, bankruptcy, withdrawal from the country and so on,” he said.

“Experience shows that a smarter way to do business is to engage in serious negotiations with the ACCC. Usually the valid concerns are resolved.

“The ACCC would clearly have been aware that Facebook and others have withdrawn in somewhat similar circumstances overseas and have framed a law that will be harder to avoid.

“Also they are carrying in their back pocket the option, if all else fails, of a general 10 per cent tax on digital revenue and that would be a precedent the platforms would want to avoid.”

Facebook’s move comes after fellow tech giant Google began bombarding Australian users with a pop-up notification whenever they do a Google search, saying “the way Aussies use Google is at risk”.

Google and Facebook will both be covered by the mandatory code announced last month. They will have to pay media outlets for news and face fines of up to $10m if they fail to treat Australian media companies fairly.

The digital platforms also will be required to give media companies 28 days’ notice if algorithm changes are likely to materially affect referral traffic to news, and publishers will need to be inform­ed of substantial changes to the display and presentation of news.

The Australian reported last week senators and MPs had been flooded with emails, each containing the same body of text calling the mandatory bargaining code an “assault on Australia’s democracy”.

Mr Frydenberg has said the changes would address the “very unequal bargaining position ­between Australian news media businesses that produce original content and the digital platforms”.