News

When Facebook flexed its muscles and temporarily banned Australian news content, negotiations around the media bargaining code took a dramatic turn. By Mike Seccombe.

Facebook and the news

Treasurer Josh Frydenberg on Wednesday.
Credit: AAP Image / Mick Tsikas

On Thursday last week, Australians awoke to discover Facebook had banned all Australian news content from its platform. In a blog post, the social media giant announced that the Morrison government didn’t understand its own legislation, aimed at forcing platforms to pay publishers for news, and that as a consequence Facebook had removed news pages from its site.

The move was almost universally condemned – Facebook itself conceded it had “erred on the side of over-enforcement” – but it certainly had the desired effect. After three years spent formulating its media bargaining code, the government was forced into a flurry of last-minute renegotiations. A succession of conversations between Treasurer Josh Frydenberg and Facebook chief executive Mark Zuckerberg eventually meant the ban was lifted in return for a number of amendments.

And at the battle’s end, if you believe Frydenberg, only minor tweaks were made.

The bargaining code still will allow all news providers with a revenue of more than $150,000 to negotiate payments from big tech for the use of their content. According to Frydenberg, the changes will actually make negotiations easier: “These amendments also add further impetus for parties to engage in commercial negotiations outside the Code – a central feature of the framework that the government is putting in place to foster more sustainable public interest journalism in Australia.”

A statement from Campbell Brown, Facebook’s vice-president of global news partnerships, raised some concerns, however.

“After further discussions with the Australian government, we have come to an agreement that will allow us to support the publishers we choose to, including small and local publishers.”

The statement continued: “Going forward, the government has clarified we will retain the ability to decide if news appears on Facebook so that we won’t automatically be subject to a forced negotiation.”

A little parsing of Frydenberg’s media release announcing the changes also encourages doubt. A decision to “designate” whether a digital platform has to negotiate – and possibly be subjected to arbitration – must “take into account whether a digital platform has made a significant contribution to the sustainability of the Australian news industry through reaching commercial agreements with news media businesses”.

This line has invited worry about whether the law might allow big tech companies to negotiate with big media players, voluntarily and outside the code, and therefore be deemed to have made sufficient contribution to journalism – leaving behind smaller organisations.

In the senate, Greens senator Sarah Hanson-Young attempted to amend the bill to make clear that a “significant contribution” should include deals with small, medium and rural media businesses. It was voted down.

On Thursday morning, the chair of the Australian Competition and Consumer Commission (ACCC), Rod Sims, who was instrumental in drafting the code, expressed great confidence that the new regime would work for everyone, not just the big companies. He did not see it as a weakness that a number of the big players had struck agreements outside the formal process, or that they were the main beneficiaries so far.

“In any situation like this, you’d expect deals to be done with the bigger players first, and you work down the list,” he told ABC Radio. “But I don’t see any reason why anybody should doubt that all journalism will benefit. Obviously, the more journalists you’ve got, the more you benefit.”

Sims expected the tech giants would eventually strike deals with the hundreds of smaller players, given the extra cost of doing so would be commensurately smaller. “I just don’t see why Google and Facebook would leave them out,” he said.

Nonetheless, Sims said, it was “clearly an issue for the treasurer” to ensure the payments were made equitably to media players of all types.

Speaking to The Saturday Paper, Hanson-Young made the same point. “It is now Frydenberg’s job to make sure this works, and if it doesn’t, it will be his fault.”

As Sims said, this has a long way to play out. But the reality is that a lot of smaller players have expressed frustration at their failed attempts to get Google and Facebook to deal, or even to acknowledge their approaches.

Giles Parkinson, the founder and editor of RenewEconomy, presents his company’s experience as a case study. RenewEconomy is a site devoted to news and analysis about climate change and the developments in the technological, business and investment response to it.

Parkinson approached Google, seeking a deal with its news aggregator Showcase, and was knocked back.

“Apparently, we are not public-interest journalism,” he says, “but Sky News and a website that focuses on who’s cheating on whom in [Married at First Sight] is.”

Peter Lewis, director of The Australia Institute’s Centre for Responsible Technology, has heard Parkinson’s complaints and similar gripes from other smaller media players, and says they are “completely valid”.

Nonetheless, he supported the implementation of the bargaining code and does not think it has been weakened by the amendments.

“What we have now is a system of commercial negotiation, bolstered by legislative leverage,” says Lewis.

“The big tech companies themselves have seen it as the first step of a broader package of reform,” he says, suggesting that explains why “all hell broke loose” at its prospect.

“A conservative government is pushing ahead with world-leading reform. Frankly, if you can’t get this sort of legislation up in Australia, by conservative government with the backing of Murdoch, then you’ll never get any regulation at all. So we are very much backing this important first step.”

The problem facing traditional media is that the big digital players are taking a lot of their revenue, a share that’s been growing larger every year. Once upon a time, before the internet changed everything, news-gathering was funded by advertising. Then, beginning in the mid-1990s, that began to change.

Fiona Martin, associate professor of online and convergent media at the University of Sydney, says the development that “really cut through” the nexus between advertising and news was the establishment in the United States of Craigslist, in 1995, that moved classified ads online. “And then slowly but surely, different versions of it started up online.”

Real estate, car sales and services of all kinds moved to sites that not only offered the same function as classifieds but more cheaply. “What all of these different marketplaces have done,” she says, “is removed the middle person.”

The decline was exacerbated by the fact many media companies initially responded by providing their news free online, which led consumers to further devalue it, and to resent it when paywalls were subsequently introduced.

Long story short, the lion’s share of advertising revenue in this country now goes to the two tech giants, Google and Facebook. In 2019, according to the ACCC, of every $100 spent on advertising, $53 went to Google, $28 to Facebook and $19 to all other websites and ad tech.

As a consequence, news organisations have been hollowed out or driven out of business and thousands of media jobs lost. And all too often, the companies that survived did so by shifting from expensive public-interest reporting to lightweight news and opinion.

When Facebook switched off news last week, it was making a simple point: that media companies need it more than it needs them. And it looks as though that is true.

Data provided to The Saturday Paper by the digital marketing agency We Are Social suggests there was no decline in the usage of Facebook after it implemented its ban, although there was an increase in traffic to some other platforms that provide news, including Twitter and Reddit.

Perhaps more concerning, though, was the evidence of a dramatic reordering among the top social media domains, with sites that offer serious news going down and those offering less weighty stories rising up the ranks. The No. 1 site, with 22.57 million “total interactions”, is Murdoch’s news.com.au. No. 2, with a bullet, was another Murdoch site, skynews.com.au, which is a proper news site by day, but after dark becomes a trafficker in extreme right-wing opinions, disinformation and conspiracy theories, and which grew 66 per cent in the past year.

So, yes, people like Giles Parkinson have cause to worry about what kind of media that extra money extracted from the tech giants might support.

But what is the alternative?

In her usual forthright way, Jacqui Lambie, the independent senator from Tasmania, offered one option during this week’s debate. She called the government’s plan a “shakedown”.

“This is a bipartisan shakedown delivered by a consensus of absolute stupidity here this evening. Journalism is important enough to deserve better than the poorly researched, poorly understood justifications being thrown around…”

She argued that simply transferring money from the pockets of the rich owners of digital platforms to the pockets of the rich owners of Australian media companies would not do much to arrest the decline of journalism in this country.

“If we want more money for journalism, let’s tax companies making heaps of money and put that money … directly into journalism,” she said.

It sounds simple, but there is one big problem: how that money would be distributed. Could government be trusted to hand it out free of partisan considerations?

The political consensus was no. Lambie’s was, in the end, a lone voice.

And so we are left with the amended bargaining code. We’d better hope it works.

Schwartz Media was a launch partner for Google Showcase.

This article was first published in the print edition of The Saturday Paper on Feb 27, 2021 as "Bargaining with a behemoth".

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Mike Seccombe is The Saturday Paper’s national correspondent.