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As the ACCC inquires into the data use of digital platforms, the government is caught in a faceoff between News Corp and the tech giants. By Rick Morton.

Australia and digital data

Christian Porter at the National Press Club last month.
Credit: AAP Image / Mick Tsikas

As November drew to a close, Facebook’s vice-president of global public policy, Joel Kaplan, was in Australia.

But Kaplan, a former deputy chief of staff to President George W. Bush before he was headhunted to strengthen Facebook’s Republican credentials, was not in Sydney and then Canberra for the flurry of end-of-year Christmas parties.

He was here to work, and he was worried.

Google, too, seems spooked. It has sent senior executives to Canberra to meet with government MPs.

Facebook’s lobbying efforts last week focused strategically on Nationals MPs – they may represent a group hardest to win over – with plenty of puff about the tyranny of distance and the new world economy.

And lobbyists from the industry body DIGI – which represents Google, Facebook and Twitter – were in Parliament House the previous week telling government officials and politicians their businesses are under threat.

What the tech giants fear is that they may be in the government’s crosshairs because of the near or effective monopolies they have managed to amass in the media business.

For the past two years they have lobbied behind the scenes for reassurance, ever since Scott Morrison, then treasurer, directed the Australian Competition and Consumer Commission (ACCC) in December 2017 to launch an inquiry into digital platforms – by its nature almost exclusively focused on Google and Facebook.

Across two cities, Kaplan met with government MPs, spruiking the virtues of a company that had, in his words, cracked down on fake news.

He explained Facebook’s “identify, label, deprioritise” model to MPs, designed to help the company boost news sources that are considered legitimate and make it harder for users to see content that is misleading or flat-out wrong. At least in theory.

The model has been plagued by controversy, not least the inclusion of The Daily Caller, a website with ties to white supremacist organisations, within the cohort of “independent” fact-checkers tasked with weeding out misinformation on Facebook.

With a collective market capitalisation of more than $A2 trillion, Google and Facebook own so much personal data they can know what users are feeling, doing, thinking and buying; where they are going and where they have been.

In short, they could make for powerful enemies.

And their power has eroded the profitability of Australian media companies, all of which are in lock step about the need for change, although none so energised as Rupert Murdoch’s News Corp.

A view has emerged of a Coalition caught between a rock and a hard place – with News Corp hammering its claim on one side and two of the largest companies in the world on the other.

To complicate matters, neither of the tech titans has the political clout of Murdoch in Australia, and News Corp has leveraged that power to make its case clear.

Shortly after the ACCC’s interim report was delivered in December last year, News Corp dispatched its executive vice-president and global head of government affairs, Antoinette Bush, from New York to Canberra, where she briefed the company’s Press Gallery journalists and lobbied the Coalition.

In a frank and open meeting, Bush told colleagues the company had lost control of its own subscriber base and paywalled information to the search engine behemoth and sought only a “level playing field”.

Google, she said, was giving away for free content produced and paid for by News’s journalists. And it was controlling search rankings and, moreover, skimming data about subscribers to News Corp products if they clicked via a Google search result – denying the company extremely valuable details about its own audience.

When the ACCC’s final report was delivered to Josh Frydenberg at the end of July this year, it echoed these concerns.

“A significant number of media businesses rely on news referral services from Google to such a degree that it is an unavoidable trading partner,” the commission wrote.

“Many news media businesses would be likely to incur a significant loss of revenue, damaging their business, if Google users could no longer click on links to their website in search results.

“For commercial news media businesses, having links to their websites on Google is a necessity. The ACCC therefore considers that Google has significant bargaining power in its dealings with these media businesses.”

Five months on, the federal government has yet to respond to the ACCC report, or any of its 23 recommendations.

But then, a fortnight ago, Attorney-General Christian Porter stuck his head above the parapet and noted the “curious” decision of the Supreme Court of New South Wales in the case of Dylan Voller, who blew the whistle about conditions within the Don Dale Youth Detention Centre.

The ACCC inquiry dealt sparsely with defamation law, despite concerns about the current system raised by the Australian media and legal experts. However, Porter said the Voller decision warrants reform.

In that case, the court found traditional media companies were responsible as “publishers” under the law for defamatory comments about Voller that were made on pages hosted by Facebook.

“My own view is that these online platforms should be held to essentially the same standards as other publishers, but that how this should occur requires a sensible, measured approach to reform, taking into account the differences in the volume of material hosted between Twitter or Facebook and a traditional newspaper, for instance,” Porter told the National Press Club on November 20.

“But what is clear is the playing field is not at all fair at the moment.”

To companies such as Google and Facebook this is a terrifying prospect. They have long been protected from some of the more onerous media industry rules by institutional confusion.

That Voller decision was handed down within days of the ACCC delivering its final report to the treasurer.

The Saturday Paper has been told neither Facebook nor Google met with Josh Frydenberg or the attorney-general, although it is unclear how many government MPs have been lobbied. One source said the companies are working on backbench MPs to act as a guard against substantial action from the government via the party room. Given recent rumblings, the two online giants appear to be on the outer. Murdoch’s forces have the ear of key ministers, and Frydenberg is in frequent contact with its masthead editors.

Facebook’s Joel Kaplan did meet with Labor Opposition Leader Anthony Albanese, though, and other MPs. Not that his entreaties were terribly successful. Labor jumped ahead of the Coalition on Thursday, moving a motion to establish a select committee on foreign interference through social media, which would investigate matters similar to those that have embroiled Facebook in the United States.

To underscore Labor’s new resolve, Albanese will deliver a key speech on Saturday in which he will excoriate the social media giant for failing to deal with fake news, especially during elections.

 

The ACCC report lays out a stark picture of Australia’s media landscape. Google controls 96 per cent of the local general online search market and Facebook and its subsidiary, Instagram, take in more than half of all display advertising revenue in Australia.

The inability of traditional news providers to compete has shattered the market. As the ACCC reports, 106 local and regional newspaper titles closed across Australia in the decade to 2018. There are now 21 local councils once covered by these titles that now have no local coverage whatsoever, either from print or a dedicated online outlet.

But the focus of the ACCC is two-pronged, with enduring concerns about users and their personal information. Each month, about 19.2 million Australians run searches on Google and another 17.6 million watch videos on YouTube, which is also owned by Google. Facebook has 17.3 million active users each month in Australia and its photo property, Instagram, has 11.2 million.

“Policymakers should consider the extent to which important decisions about the dissemination of information, the collection of personal data and business’s interaction with consumers online should be left to the discretion of certain large digital platforms, given their substantial market power, pervasiveness and inherent profit motive, including their need for very strong profit growth,” the ACCC says.

Action by government on these fronts represents an existential crisis for Facebook and Google in Australia. Media companies such as News Corp Australia, meanwhile, view inaction as slow death.

Both sides are hoping to avoid a “regulatory nightmare” – as one tech giant employee told The Saturday Paper – in which they are forced by Australia’s legislators to dramatically shake up their business operations.

In the course of its inquiry, the ACCC identified five potential legal breaches, which it began investigating. One involves allegations that Google misled users about the level of control they had over their own location data, which the consumer watchdog has lodged in the Federal Court of Australia.

Google has said it intends to fight the charges.

The ACCC has recommended a sweeping array of reforms, including amendments to privacy law and the introduction of a statutory tort for serious invasions of privacy. The Australian information commissioner and privacy commissioner, Angelene Falk, has said she is making her own inquiries.

“The ACCC’s inquiry has helped to unveil the extent of their [digital companies’] data use, as well as the information asymmetry between these platforms and the individuals whose data they harvest,” Falk told the Australian Law Reform Commission on November 20.

“These asymmetries present significant challenges for people in making an informed decision about how their personal information is handled online.”

Asked about lobbying efforts, a Facebook spokesman told The Saturday Paper: “We proactively meet with a range of stakeholders – from governments and experts to non-profit organisations – to help them understand how our platforms operate and answer any questions they may have about our services.

“This active, open engagement is not unique to Facebook or our operations in Australia, and we will continue to do more of this as we work with governments around the world on a clear framework of rules for the internet.”

While the government is yet to respond to the ACCC report, it is moving swiftly on defamation reform. On Friday, November 29, the Council of Attorneys-General agreed to progress a second stage of defamation reforms “focused on the responsibilities and liability of digital platforms for defamatory content published online”.

This was Porter’s great wish and now, with his state and territory colleagues on board, consultation on potential changes will begin in the first half of next year.

For Google, Facebook and Twitter, the lobbying has only just begun.

This article was first published in the print edition of The Saturday Paper on Dec 7, 2019 as "Mounting the lobby horse".

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Rick Morton
is The Saturday Paper’s senior reporter.

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