Facebook will not comply with Australia's code of conduct for news content

By Emmanuel Legrand

 Facebook has made it clear that it would not abide by any Australian regulation requiring social networks to remunerate news publishers for the use of their content and will block content from Australian news sources from being shared on both Facebook and Instagram if the planned legislation goes through.

  Facebook's reaction followed the decision from the government to open a consultation regarding the proposed “Draft Mandatory Code of Conduct Governing Digital Platforms and Media Businesses,” which had been drafted by the Australian Competition and Consumer Commission (ACCC). The code calls for social media platforms to “negotiate in good faith” remuneration for the use of news content.

  Treasury Minister Josh Frydenberg said at the end of July 2020, when he opened the period of consultation that the ACCC's final report "identified that Facebook and Google have each become unavoidable trading partners for Australian news media businesses in reaching audiences online, resulting in an imbalance in bargaining power.”

Penalties up to A$10 million

  The law will set a three month bargaining period for parties to negotiate an agreement. If no agreement could be reached, the parties would go into arbitration, which would be "limited to the issue of payment or remuneration," according to Frydenberg.

  News companies can negotiate individually or collectively and he deals can include financial payment or provision of data. If platforms failed to comply with the code, the legislation called for "maximum penalties of up to A$10 million per breach or three times the benefit obtained or 10 per cent of annual turnover, whichever is greater."

  All major news publishers, in particular Rupert Murdoch's News Corp. support the scheme, which would exclude public broadcasters such as ABC and SBS.

Misunderstanding the dynamics of the internet

  In a long blogpost, Facebook Australia & New Zealand managing director Will Easton explained that the new proposed regulation "misunderstands the dynamics of the internet and will do damage to the very news organisations the government is trying to protect." He added: "When crafting this new legislation, the commission overseeing the process ignored important facts, most critically the relationship between the news media and social media and which one benefits most from the other."

  He then warned: "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. 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."

Facebook's opposition in six points

  Easton made reference to five points that Facebook has outlined to explain why it does not support the proposed legislation. These five points were detailed in a document titled 'Facebook’s response to Australia’s proposed News Media and Digital Platforms Mandatory Bargaining Code':

  1 - It ignores the benefit news businesses get from using Facebook for free to distribute their stories.

  2 - It creates a one-sided, binding arbitration process that forces Facebook to pay for news at a level far beyond its value to Facebook, and what we already invest in news.

  3 - It intervenes in significant aspects of commercial relationships between platforms and news businesses.

  4 - It gives news businesses unprecedented notice of product updates.

  5 - It hits services that are not news products.

 

  Easton said the new code "would force Facebook to pay news organisations for content that the publishers voluntarily place on our platforms and at a price that ignores the financial value we bring publishers. The ACCC presumes that Facebook benefits most in its relationship with publishers, when in fact the reverse is true. News represents a fraction of what people see in their News Feed and is not a significant source of revenue for us."

 

Code intended to facilitate fair payment

 

  In contrast, Easton said that over the first five months of 2020 Facebook "sent 2.3 billion clicks from Facebook’s News Feed back to Australian news websites at no charge – additional traffic worth an estimated A$200 million to Australian publishers." Facebook's VP of Global News Partnership Campbell Brown added that "over 95% of the traffic Facebook News delivers to publishers is incremental to the traffic they already get from news feed."

  However, the ACCC estimated that Google collects 47% of all online advertising in Australia and Facebook 21%, and that much of this advertising is generated by traffic from news content. Google made A$4.3bn in advertising revenue in Australia last year and Facebook made A$0.7bn, noted The Guardian Australia, which explained that the platforms "do appear determined not to have to pay for news content on their main services, including Google Search and Facebook news feed. This may be because they are concerned this could set a global precedent, resulting in similar legislation and larger payments in other countries."

  The Guardian concluded: "The code is not intended to compensate news companies for the loss of advertising income due to digital disruption. It is intended to facilitate fair payment for the benefit the platforms receive from news."