Back in April, when the Australian Government announced its proposed new regulatory reforms that would essentially force both Google and Facebook to share a portion of their revenue with Australian news publishers for use of their news coverage, in different forms, on their respective platforms, we noted that:
"In all likelihood, neither Google nor Facebook will be intending to make a switch in their approaches, and will instead seek to alter their processes in accordance with revised local laws. That could lead to significant changes in the way content is displayed on the digital giants, which, if anything, will only take traffic away from the traditional media players, and provide more instead to less mainstream outlets."
That, indeed, appears to be what's going to happen. This week, in its response to the Australian Government's proposed changes, Facebook has issued a strong rebuke, criticizing the draft laws, the regulators, the Australian Government - basically anyone who's had anything to do with the proposal.
And Facebook's right - for example, in his opening statement, Facebook Australia and New Zealand Managing Director Will Easton says:
"Australia is drafting a new regulation that misunderstands the dynamics of the internet and will do damage to the very news organizations the government is trying to protect. 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."
This is the absolute crux of the issue at hand - the Australian Government's proposed regulation is reliant on the fact that Facebook and Google need content from Australian news publishers in order to continue operating as they currently do. Which is not correct. Both Facebook and Google could simply block the URLs of these providers, and they'd still be highly used by Australians.
What Google did in France, which proposed similar regulations last year, was that it implemented a new system which meant that only news publishers that had explicitly agreed to its terms would be displayed in search resuilts. That's some pretty lucrative digital real estate to have, so naturally, many publishers agreed. Some didn't, and they no longer get referral traffic from Google. Most did, negating years of disputes and negotiations.
Google may end up doing the same in Australia - while Facebook, right now at least, is saying that it too is considering eliminating content from Australian news outlets entirely.
"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."
Will that lead to people using Facebook and Instagram less? Probably not - it'll no doubt have some impact on overall engagement. But the ones that will really feel the pinch are the news publishers, the organizations that the regulations are supposed to be helping.
Which is why the proposal, as Facebook notes, is "counterproductive".
"The proposed law is unprecedented in its reach and seeks to regulate every aspect of how tech companies do business with news publishers. Most perplexing, it would force Facebook to pay news organizations for content that the publishers voluntarily place on our platforms and at a price that ignores the financial value we bring publishers."
Easton even has the specific stats to prove his point:
"Over the first five months of 2020 we sent 2.3 billion clicks from Facebook’s News Feed back to Australian news websites at no charge – additional traffic worth an estimated $200 million AUD to Australian publishers."
Easton also notes that Facebook has invested millions into Australian news businesses, and had also been hoping to open up new opportunities with the expansion of Facebook's dedicated News Tab to Australian users, for which it pays publishers for content.
Now, those plans are on hold, at least for the time being.
"Facebook products and services in Australia that allow family and friends to connect will not be impacted by this decision. Our global commitment to quality news around the world will not change either. And we will continue to work with governments and regulators who rightly hold our feet to the fire. But successful regulation, like the best journalism, will be grounded in and built on facts. In this instance, it is not."
Facebook's tough words follow a public campaign from Google which seeks to alert Australian users to other potential impacts of the coming regulatory changes.
In essence, both Facebook and Google are saying that the only outcome, if the Australian Government pushes forward with this proposal, will hurt local news publishers, not help them. And while others may seek to play down these responses as scaremongering to protect their own interests, it is grounded fact. As private enterprises, Facebook and Google are under no obligation to display content from any source they don't choose to.
How you view each stance then will come down to whether you believe that news content is critical to both platforms, or not. The scale of each platform's operations outside of news material should be evidence enough to indicate that losing such will not be a death blow for either.
But it could be for the publishers - the impetus behind the proposal is that Australian news publishers are losing revenue as their traditional ad streams dry up, with more companies switching to online promotional sources instead of classifieds and print ads. Those losses have been further exacerbated by the COVID-19 shutdowns, and with the sector crying out for help, it appears that the Australian Government sees this as a lifeline.
But the blunt basis of the proposal is that Facebook and Google make lots of money, while news publishers don't. The detail in between seems to have largely been overlooked, including how, exactly, news publishers benefit from these platforms.
Really, there's no equitable way for Facebook nor Google to approach this. If they negotiate, in any way, that will open the floodgates for every other nation to implement the same, potentially costing them billions each year. Which they just don't have to pay - and while the Australian Government looks set to push ahead in its game of chicken, hoping that Facebook or Google will pull out, the final outcome could be very bad for the Australian news sector.
It's a gamble that's unlikely to pay off as the Government might hope. Now we wait and see if there's any change in course from the regulators.