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On Australia’s Attempt To Demonise Facebook

It is a free country. Feel free to treat the battle between Australia and Facebook as a case of Facebook using its immense power to bully a sovereign nation, and as prime evidence for why Mark Zuckerberg needs to be taken down a peg. That’s certainly been the dominant theme of the media coverage to date. Feel free to sign on. Yet the basic credibility problem I have with this scenario is that it paints Rupert Murdoch and his cronies in the Morrison government as being the puny, innocent victims of Facebook. Believe me, this story isn’t a case of the Big Tech behemoth picking on the little guy.

For my money, it’s more a case of Big Media once again demonstrating its inability to compete online, and turning to its pals in government to bail it out. The risk is that our government will follow suit and rush to offer even more assistance to the traditional media companies in this country in similar fashion – basically, by propping up Big Media’s failing business model with revenue transfers from their online competitors, large and small.

The Australian legislation at the heart of this conflict can be found here. The ministerial speech at the second reading debate on the bill is available here. The speech includes the claim that by Treasurer Josh Frydenberg that “We are not seeking to protect traditional media companies from the rigour of competition or, indeed, technological disruption, which we know benefit consumers.” You promise, hand on heart? BTW, Facebook’s explanation for what it is doing can be found here.

Did you see what I just did there? I linked to a series of original sources, and included a snippet of material from one of those sources. By doing so, I threw my tiny, tiny audience back to those sources, to their benefit. On a giant scale, that is exactly what Facebook does. Until now this has been seen to be a win/win situation. As Werewolf has been arguing for years, online platforms and traditional media are in a symbiotic relationship, not a parasitical one.

In a nutshell, the core problem with the Australian legislation is that it seeks to monetise Internet links by making online platforms pay a fee for news links and for any news snippets they utilise, thereby siphoning funds from online platforms (large and small alike) to the benefit of Rupert Murdoch, Channel Seven’s owners and their pals. Oh, and along the way this could well destroy the Internet as we have come to know it.

No doubt, there is much that’s wrong with the tone of some Internet debate, and some of the content you can find, or be driven to, online. Yet I’d argue that the current Internet model – warts and all – is preferable to what the Aussie legislation would ultimately bring about, given how much the legislation culpably misunderstands the nature of online platforms. At core, these platforms are not publishers of news but carriers, to the mutual benefit of them and the news originators. Maybe it is here that I should declare a vested interest. Because under the sweeping ambit of the Aussie legislation it would not merely be Facebook that has to pay blackmail money to Murdoch and Co, but small online news commentary sites and start-ups as well.

No one has understood this better than Sir Tim Berners Lee, the Internet pioneer, who formally testified against the bill along these lines:

“Specifically, I am concerned that that [the Australian legislative] Code risks breaching a fundamental principle of the web by requiring payment for linking between certain content online,” Berners-Lee told a Senate committee scrutinizing a bill that would create the New Media Bargaining Code. If the code is deployed globally, it could “make the web unworkable around the world”, he said.

Moreover, the price-for-use involved here, as Facebook’s regional vice president Simon Milner has said, “is uncapped and unknowable.’ Google has already caved in. Essentially, that’s because it flinched at a provision in the Bill that sets up an arbitration panel with the power to set a binding – and entirely arbitrary – monetary value on public service journalism As the Independent (see link above) has put it

Uniquely, Australia’s code includes a negotiation safety net. An arbitration panel would prevent digital giants from abusing their dominant negotiating positions by making take-it-or-leave-it payment offers to news businesses for their journalism.

Fine, in theory. In practice, this arbitrary power raises as many problems as it resolves. This has been pointed out by Peter Lewis, director of the think at the Australia’s Institute’s Centre for Responsible Technology:

“How do you value fact-based news absent advertising? News has always been valued on the back of how much ads that the outlet can sell. Because Google and Facebook have dominated the advertising market and taken that out of the equation, we’re now trying to work out the value of public interest journalism,” Lewis added.

As mentioned, Google has caved in to this threat of compulsory arbitration – and of arbitrary price setting - by negotiating multiple million dollar licensing content agreements with Australian media companies through its own News Showcase endeavour. Famously, Facebook has responded by blocking users from accessing and sharing Australian news. While doing so, it scored a public relations own goal. Briefly, Facebook blocked some public service health and safety announcements and websites, which it has since restored.

By way of explanation, Facebook’s Simon Milner argued that this wasn’t a failure of the algorithms, but a by-product of flaws in the Bill itself:

Milner told the ABC the capture of non-news pages reflects what Facebook argues is a broad definition of "news" as defined in the law." One of the criticisms we had about the law that was passed by the House of Representatives yesterday is that the definition of news is incredibly broad and vague."

All the more reason one might have thought, for Facebook to have test-driven the ban before implementing it.

Paying for.. What?

The sharpest criticism of the Australian government position has come from New York University journalism professor Jeff Jarvis, who began his opinion piece on the Australian website Crikey with this fusillade:

The code is built on a series of fallacies. First is the idea that Google and Facebook should owe publishers so much as a farthing for linking to their content, sending them audience, giving them marketing. In any rational market, publishers would owe platforms for this free marketing, except that Google at its founding decided not to sell links outside of advertisements. The headlines and snippets the platforms quote are necessary to link to them, and if the publishers don’t want to be included, it is easy for them to opt out.

Jervis is right. ( Elsewhere – see link below – Jarvis has cited NYU research that suggests the bigger the news snippet cited on the social media platform, the bigger the audience driven to the original news outlet tends to be.) Also, as Jarvis says, if news outlets really wanted to stop Facebook, Google etc from allegedly “ripping them off” by using their news stories, they could easily attach a simple bit of code to stop the content from being linkable, or searchable. But that would be to cut off their nose to spite their face. In reality, they want to continue to be amplified by Facebook, and to gain the marketable audience driven their way by the Facebook links, - plus extra money on top to replenish the money they’ve lost in advertising revenue to Facebook, Google, Youtube etc. Basically, it’s a scam : a government devised funnel and wealth transfer from online companies to traditional media that will serve only to bolster their dying business models. There is little likelihood that any of this revenue would be ploughed back into journalism, and into jobs for journalists.

Why would it be likely to do so, when the same Big Media companies that stand to benefit most from the Australian legislation have been busily shutting down regional newspapers across Australia?

A study of local news consumption by the News and Media Research Centre at the University of Canberra shows 32% of people in small local government areas with populations under 30,000 have been turning to social media to fill the news gap. Newspaper closures and job losses have hit regional Australia hard. More than 100 local news outlets have closed during the COVID-19 pandemic. Removing news from Facebook will further restrict the choices of people with already limited access to news.

That last line is significant. Small businesses and news consumers in rural Australia who have become reliant on Facebook – partly because Big Media has closed their former news sources and advertising options – look like being the real victims of this conflict.

What to do about Facebook.

As other observers like the Vox website have noted, the Australian legislation is a response to complaints from traditional news outlets that Google and Facebook — and their huge digital ad operations — have been responsible for the decline of journalism and the decimation of its ad-based business model. As Vox says, Facebook seems to have made the strategic decision that the law won’t apply to it as long as Aussie news links aren’t shared on its platform. To date, the Morrison government has been gambling on public resentment of Facebook, which has been fuelled by partisan News Corp messaging that Australia is being picked on. It hasn’t help Facebook’s cause that Mark Zuckerberg is not a very likeable media presence.

Yet… It was Australia that started this. Keep in mind also that in the recent past, Western governments have felt no similar pressing need to limit the global reach and market dominance enjoyed by the equally unlikeable Rupert Murdoch and his News Corp empire. Rather than confront Murdoch, a procession of Western leaders have courted him and bent their policies in order to win his editorial seal of approval. Yet for argument’s sake lets go along with the proposition that Facebook does present a serious and totally unprecedented set of problems for society at large. Here are the options open to any government:

(a)If the problem is that Facebook, Google etc aren’t paying sufficient tax, then pass fair and effective tax laws against them.

(b) If the problem is that Zuckerberg’s empire and Google enjoy too much market dominance and exert virtual monopoly power in the social media and search platform markets, then follow Elizabeth Warren’s suggestion and launch major anti-trust actions against them. Doing so would break up these monoliths into competing firms, as US regulators did successfully before (a) in the 1970s against the A T & telco empire, and (b) in 1910 against John D. Rockefeller’s Standard Oil. Don’t tell David Seymour – because he’d cry – but markets do need to be regulated time and again, to ensure that they stay free. That’s the paradox of anti-trust law.

© If the problem with Facebook is its tone and content – ie people saying mean things online and/or posting socially harmful content - then regulate the acceptable parameters, define the content in question, and shoulder all the repercussions this would have for free speech. Governments shouldn’t continue to moan about Facebook and Youtube if they lack the political will to act.

(d) If the problem is the demise of public service journalism because Facebook and other multinationals have won the competition for ad revenue against the media dinosaurs,, then fund public service journalism and administer it through a combination of taxation and regulation. Again…instead of whining about Facebook, face up to the problem of having public service media watchdogs funded by the government. In practice, this may be no worse than having journalism dependent on advertisers. And besides…in the current fight, we have Scott Morrison and Co negotiating in behalf of news publishers, whose journalists are supposed to be holding Morrison’s officials to account.

In the end, what we’re getting is none of the above. For a variety of reasons (some of which are ideological ) conservative governments in Australia and Europe have lacked the courage to tax, regulate and /or use the anti-trust weaponry at their disposal. Instead they have chosen to misconstrue Facebook as a publisher – and not treat it as what it is, a platform for content - and are demanding that it pay what is essentially an extra copyright fee. All in order to channel money into the old media dynasties that have failed so spectacularly to rise to the online challenge to their traditional ways of life. As NYU journalism professor Jeff Jarvis said during this excellent interview about the Australian situation:

This is not a payment for news. It is baksheesh paid to Murdoch, demanded by his bagmen, the politicians in his pocket. What also disturbs me is that news organizations, which lately turned from utopian in their coverage of technology to dystopian, never reveal their own conflict of interest in their coverage of the Net and its current proprietors. The moral panic in media coverage serves media's ends as this episode sorely demonstrates. Let us be quite realistic about the use of these funds. It will not go to journalists. It will not improve news. It will go to the rapacious owners and hedge funds that control news companies.

And besides. Jarvis adds, maybe Facebook would be happy enough to kiss news goodbye.

There are two interpretations. The positive one is that Facebook stood on principle, decided not to cave in to Murdoch's blackmail (or not again as Zuckerberg already presented a cheque to News Corp's Robert Thomson in New York a year ago), and defended the sanctity of the link on the net. The cynical interpretation is that news is a damned pain in the ass for Facebook and this moment allows them to return to a Facebook devoted to puppies, parties, and getting laid. We shall see. I worry, though, about what will happen when your Australian uncle Joe shares disinformation and you are not allowed to combat that by sharing news.

Finally….in most circumstances, it would be amusing to watch an old Thatcherite like Murdoch scrabbling so cravenly for state protection against the winds of change. It would be amusing, if not for the fact that the Ardern government appears to be considering whether to curry favour with the likes of Granny Herald, by joining in.

Footnote One: If you want a easy-to notice example of how news links work to the advantage of trad news outlets keep an eye out for how often these same mainstream news stories link to their sources in other publications, Answer: generally, they don’t. That should be taken as firm evidence that news links really do drive audiences back to those sources and generate ad revenue. Obviously, trad media doesn’t want to enrich its rivals by linking to them. But that’s also why online platforms shouldn’t have to pay for doing traditional media a favour.

Footnote Two: I’m not being blind to the commercial realities here. Yes, Google does send traffic back to traditional media, but – arguably- since Google, Facebook and Youtube dominate the advertising landscape so thoroughly, those gains in traffic cannot be monetised as successfully as they once were in the past. (If it’s a favour, the value of it is declining.) True enough. And I feel for News Corp in its plight and (seriously) for smaller news operations facing the same problem. But it is still hard to see how the solution can be to penalise some online operations for their success, by making them subsidise traditional media, for the purpose of keeping Big Media’s tottering news operations upright for a wee bit longer.

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