By Jim Anderson, SocialFlow CEO and Tech Analyst
This article first appeared on Medium.
The news, about the news, from Australia, is not good.
Facebook followed through on its promise to restrict publishers and people in Australia from sharing or viewing Australian and international news content. Facebook says the move is in response to Australia’s new Media Bargaining Code, noting that the proposed law “fundamentally misunderstands the relationship” between Facebook and publishers.
While the current contretemps is limited to Australia, the underlying issues are universal: the relationship of news media to tech platforms; the ebb and flow of advertising dollars; and the role of government in picking winners and losers. Citizens of any free country should take note.
The Australian government, supported by publishers, is reacting to the fact that Facebook and Google have taken a disproportionate share of digital advertising dollars while bearing few of the costs of creating quality content. Facebook says that publishers willingly choose to post news on Facebook and reap the attendant benefits of site visitors, subscriptions, and advertising. By restricting news content in Australia, Facebook is choosing to fight.
In contrast, Google is choosing to settle. This week Google announced partnerships with a number of Australian news organizations, capped by a deal Wednesday with Rupert Murdoch’s News Corp. These deals will allow Google to avoid the most onerous elements of the Media Bargaining Code, and will effectively set a market price for any complaints that are subject to arbitration.
This leaves Facebook as the tech giant standing alone on this issue, and with 2020 revenues of US$71 billion, they make an unsympathetic victim. Further, the political realities in Australia may preclude anything that appears to be appeasement of a Big Tech platform. Even so, there is room to maneuver, as Facebook could—and likely would under the right circumstances—commit a significant sum to sidestep this issue. Especially if it sets a precedent for other countries seeking to emulate Australia’s approach.
Facebook has already demonstrated a willingness to devote hundreds of millions of dollars to support journalism, and could readily commit billions of dollars the cause. What they need in exchange for that level of commitment is cost certainty. No business should willingly accept a situation where commercial license fees can be substantially increased via forced arbitration.
SocialFlow provides software to publishers while at the same time serving as a partner to Facebook, Twitter, and other tech platforms. We’ve seen the layoffs and shared the tears, and can testify first-hand that the economic pain driving the Australian Media Bargaining Code is quite real. At the same time, it’s hard to blame Facebook for choosing to avoid rules by which it cannot abide.
The Australian government and Facebook can and should find a way to settle. Unless cooler heads prevail, we all may learn the true value of news publishers and platforms—but in a way that benefits neither.