Facebook's decison to block the sharing of news on its services in Australia marks a serious escalation by the company in its worldwide battle to protect its colossal advertising revenues from traditional, financially squeezed news outlets. The row's resolution may help define on a global scale the future relationship between old and new media platforms and the long-term financial viability of the former.
Determined not to knuckle under to Australian legislation currently in parliament which will create a statutory framework for bargaining over licensing of republication rights between news groups and the most powerful online platforms, Facebook is instead, like a child, taking its ball and walking off the pitch. The decision includes blocking all Australian news outlets from posting on the site globally. Its Australian clients will have to rely on other sources to access reliable news outlets, giving a free hand to fake news purveyors and restricting access to important sources of pandemic public health information.
News organisations, which have seen social media organisations hoover up some 80 per cent of ad revenues, warn that Facebook and Google, which have refused to pay content producers for their stories, are killing off those who actually invest in journalism. They have applauded the Australian willingness not only to take on Big Tech but to acknowledge that in forcing the latter to the negotiating table, they must also redress the negotiating imbalance between the two sides. Breaking deadlock by compulsory arbitration is seen as an important way of doing that, and is bitterly opposed by the tech firms.
Facebook claims bringing readers to newspaper sites is helping the news industry to survive, arguing these “free referrals” were worth €290 million last year in Australia alone.
Google, in a bid also to avoid the dreaded enforced arbitration, has taken a different route. Although it had also threatened to pull out of Australia, it has in the last few days reached licensing agreements there with prominent publishers News Corp and Nine. Whether the shape of such deals, still secret, will satisfy the rest of the news industry or impact positively on vulnerable small local news businesses is unclear. While a recent deal in France would pay out a reported €22 million a year between 120 publishers, Nine was said by Australian media to have secured a similar sum for itself.
Australia's prime minister Scott Morrison said Facebook's actions were "as arrogant as they were disappointing" and pledged to press on with the bill. His tussle with Big Tech is being watched internationally and is likely to inform discussions within Ireland's Commission on the Future of the Media. At European Commission level, legislation is planned and the Australian model has strong advocates in the European parliament.