Facebook is playing high game in Australia: who flashes first?

All of a sudden, Facebook turned the button last night. Australian news media and users were no longer able to share news. The pages of, for example, The Australian and the Sydney Morning Herald are completely empty.

The reason is a fight that Facebook and Google are fighting with the Australian government (and in the background a big publishers lobby) over a new media law that requires tech platforms to pay publishers. Google decided to do business with publishers this week and closed a number of deals. Facebook chose a different route and shows what power it has when it comes to it.

“ Facebook is wrong, Facebooks actions are unnecessary”, responded Finance Minister Josh Frydenberg. “This damages the companys reputation in Australia.” He is also angry because when blocking pages, government pages, for example, with corona information, were temporarily hit. It is also feared that the lack of quality news leads to more disinformation.

Negotiating with news media

According to the Australian government, there is an “imbalance of power” between media and tech platforms. That balance needs to be restored with agreements between publishers and tech platforms about fees for, for example, links in Facebook news overview and in Googles search results. Because the two parties are also making money from advertising revenue, Australia emphasises.

If the parties fail to decide between themselves, an arbitration committee shall determine the amount of compensation. The platforms are also required to share relevant changes to their algorithm with news media.

Facebook and Google have strongly opposed the proposals. Already in August, Facebook threatened to make sharing news items impossible. And Google said in January that if the law came into force, the company would be forced to shut down Google Search.

This is what the Facebook pages of Australian media now look like, this is the one of the Sydney Morning Herald:

The discussion to make the two parties, also major powers in the online advertising market, pay for news has been around for much longer. But an escalation like this in Australia was not there yet.

In a blog post, Facebook claims to have made this decision with a “burdened heart” and that the bill “fundamentally misunderstand” the relationship between the platform and publishers.

The company also says that it has little to gain in showing news on its platform. News would account for less than four percent of the total. The company offered news according to its own words because it is “important for a democratic society”. Links to news media on Facebook accounted for 5 billion references last year.

Media Crisis in Australia

What is more in the background is that there is a media crisis in Australia. Information from The Australian Newsroom Mapping Project shows that since January 2019, 184 editors have closed or shrunk their doors.

“ The crisis is unprecedented,” said Allan Fels, chairman of the organisation that keeps the overview, to The Guardian last year. He points out three causes: the consequences of digitisation, the coronacrisis and the forest fires. Publishers have to watch as Facebook and Google turn more and more revenue and make a profit.

This does not mean that one has a direct connection with the other. Independent tech analyst Benedict Evans, who has been following the media tech industry for years, points out that many of the advertising revenue that now flows into Facebook and Google did not necessarily go to newspapers before that. Evans also raises that no one has ever paid for linking to others. If it should now, why does it only apply to news?

At the same time, tech platforms have become more important players in the news domain and therefore compete in some respects with news media. Thats been bothering publishers worldwide for much longer.

Brussels, Washington and London

The situation in Australia should not be separated from regulation elsewhere in the world. For example, MEPs have already expressed their interest in Australias handling of this case; the EU is currently working on legislative packages designed to curb the power of large tech companies.

Brussels, but also Washington and London, will look closely at what is happening in Australia and who will be the first to blink and thus admit: the Australian government or Facebook.