SYDNEY, NSW, Australia - Facebook is continuing to negotiate with the Australian government over its controversial new law which will force tech-giants to pay Australian news publishers for referrals they make to their news sites and other outlets through a proposed News Media Bargaining Code.
This despite the abrupt move by Facebook to withdraw Australian news coverage from its platforms on Wednesday. The measure drew sharp criticism ventilated throughout Australia's media, almost all of which will benefit from the new bill, which passed in the House of Representatives, and will likely be passed by the Senate next week.
While Facebook has shuttered its Australian news coverage, it is still negotiating with the government.
"That is what we want to see, we want to negotiate," Prime Minister Scott Morrison said Saturday.
"We have had a lot of support as Australia has led the way on this issue as we have on many occasions."
The Australian government's bill is deemed by many to be the brainchild of Mr Rupert Murdoch's News Corp, the largest and most dominant media company in Australia. Mr Murdoch himself has been decrying for years how social media and search engines build their audiences by providing links and snippets of news content without contributing to the cost of producing it.
"Facebook and Google have popularized scurrilous news sources through algorithms that are profitable for these platforms but inherently unreliable. Recognition of a problem is one step on the pathway to cure, but the remedial measures that both companies have so far proposed are inadequate, commercially, socially and journalistically," the News Corp co-chairman said on 22 January 2018.
"There has been much discussion about subscription models but I have yet to see a proposal that truly recognizes the investment in and the social value of professional journalism. We will closely follow the latest shift in Facebook's strategy, and I have no doubt that Mark Zuckerberg is a sincere person, but there is still a serious lack of transparency that should concern publishers and those wary of political bias at these powerful platforms."
"The time has come to consider a different route. If Facebook wants to recognize 'trusted' publishers then it should pay those publishers a carriage fee similar to the model adopted by cable companies. The publishers are obviously enhancing the value and integrity of Facebook through their news and content but are not being adequately rewarded for those services. Carriage payments would have a minor impact on Facebook's profits but a major impact on the prospects for publishers and journalists," Mr Murdoch said.
The statement was carried on the News Corp website and can be accessed here.
The Verge ran a story at the time, headlined: Rupert Murdoch calls for Facebook and Google to subsidize the news business, with the sub-title: An extraordinary demand from a publishing powerhouse.
"Rupert Murdoch, the executive chairman of publishing empire News Corporation, issued a statement today proposing a new licensing deal between media organizations and platform-owning tech companies. His goal: get entities like Facebook and Google to pay money to publishers, effectively in exchange for the value news outlets bring to those platforms," the article by Nick Statt read.
Flash-forward three years and the Australian government is legislating to make the Murdoch proposal law. Flowing from the bill, on Thursday when News Corp announced its 3-year deal with Google it acknowledged the legislation would not have been possible without Rupert Murdoch's prompting.
"The deal simply would not have been possible without the fervent, unstinting support of Rupert and Lachlan Murdoch, and the News Corp Board. For many years, we were accused of tilting at tech windmills, but what was a solitary campaign, a quixotic quest, has become a movement, and both journalism and society will be enhanced," the company said in a statement published on Thursday.
The Australian government also figured strongly in News Corps' acknowledgement:
"Particular thanks are certainly due to the Australian Competition and Consumer Commission's Rod Sims and his able team, along with the Australian Prime Minister, Scott Morrison, and Treasurer Josh Frydenberg, who have stood firm for their country and for journalism," the News Corp statement said.
While the champagne is flowing over the Google deal, attention has now turned to Facebook, and its shock decision to pull the plug on Australian publishers.
"This is a disappointing day for the Internet and for news in many ways. First, Google: What Google's payment to News Corp demonstrates is that media blackmail works. Even if this is not a payment to pay directly for links, this is still a terrible precedent for the net and its architecture and ethic. No one, not Google, not you or I, should be pressured into paying for linking to content. That, as Sir Tim Berners-Lee told Australian authorities, breaks the web. I would have hoped that Google would have stood up for principle - that is for the open net. It's a company; even I - author of a book called What Would Google Do? - should not expect too much of them. On the one hand, they are not paying for links per se. But they still paid the devil Murdoch. They caved," Jeff Jarvis, the director of the Tow-Knight Center for Entrepreneurial Journalism at the Craig Newmark School of Journalism at the City University of New York said Friday.
"In the end, regulation that tries to take power away from platforms inevitably gives them more. In Europe, under the Right to be Forgotten, Google decides what we may remember. In Germany, under NetzDG, Facebook decides what speech is illegal, outside a courtroom. Now in Australia, Google decides which news organizations should get money. Small sites and startups will suffer for this is a power game; more money goes to the more powerful. I do not think Google cares much about news. There will not be much traffic to its News Showcase. The CPM cost of this - if we knew the amount - would doubtless be extraordinary. This is not a payment for news. It is baksheesh paid to Murdoch, demanded by his bagmen, the politicians in his pocket," Jarvis said.
"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," Jarvis said.
Jarvis was also interviewed by ABC Australia.
Other than Mr Murdoch's urging there appears to be little reason why the Australian government is pushing so forcefully to enshrine benefits for News Corp and Nine into legislation. It is particularly intriguing as the Senate inquiry has received an avalanche of submissions, almost of which overwhelmingly oppose the bill.
All of the discourse however in Australia, as disseminated in the media, principally owned by the two major beneficiaries, has been supportive.
Many commentators not related to the two Australia media giants however have slammed the Australian law saying it threatens net-neutrality
"The ability to link freely meaning without limitations regarding the content of the linked site and without monetary fees is fundamental to how the web operates, how it has flourished till present, and how it will continue to grow in decades to come," Sir Tim Berners-Lee, the inventor of the World Wide Web, said in a submission to the Senate inquiry.
"There is a right, and often a duty, to make references," adding that forcing websites to pay up when they share a hyperlink to another site "would undermine the fundamental principle of the ability to link freely on the web and is inconsistent with how the web has been able to operate over the past three decades."
"If this precedent were followed elsewhere it could make the web unworkable around the world," he said.
The Internet Association, a body representing the largest companies on the web has also voiced its concern, saying the Code is fundamentally discriminatory towards U.S. companies, sets a harmful global precedent, and undercuts critical principles of an open Internet.
The proposed bill, which was voluntary prior to the intervention of the Australian Treasurer in April last year when he moved to make the code mandatory, is not only about payments.
"The internet industry has strong concerns that the Draft News Media Bargaining Code violates Australia's trade obligations and unfairly discriminates against U.S. companies. While the Draft Code only applies to two companies, it sets a concerning precedent" the association said a submission last month. "The Draft Code requires U.S. digital companies to disclose proprietary information related to private user data and algorithms, as well as raises significant national treatment concerns. These requirements violate obligations in U.S. trade agreements, including national treatment and MFN, performance requirements, and the minimum standard of treatment."
"They pose a fundamental threat to digital companies' ability to thrive in foreign markets. Given the wide ramifications, we believe the ACCC should reconsider its proposed legislation and pursue a balanced solution for Australia's digital economy and consumers," the Internet Association submission said.
The Information Technology Industry Council (ITI), a global group representing seventy of the world's largest technology companies concurs.
"Imposing a uniform obligation on digital platforms to pay Australian news publishers for having their links and snippets of news content appear in search results or a feed is an unprecedented intervention that does not account for how consumers, news organizations, and platforms interact, and undermines some of the key benefits of the Internet for both readers and news outlets," the ITI said in a submission to the Senate committee in January.
"Search engines, websites, and other platforms often use links and snippets to make it easy for people to discover content and to drive traffic to websites, including news sites. The premise of these and other Internet services is that no payment is necessarily required by users, publishers, or platforms for creating, displaying, viewing, and sharing links. Requiring payment from the platform for surfacing links and snippets could undercut the benefits to both consumers and news organizations that come from the ability for intermediaries to link websites."
"The Code would require certain platforms to pay for links to Australian news websites, undermining the integrity of search and news platforms and limiting results for consumers. Instead of displaying and ranking links based on factors such as relevance, the existence of a commercial arrangement with publishers could become a key factor in determining placement in search results and feeds," the ITI submission said.
"This could also reduce competition and emergent players in the space that may design news consumption platforms that rely on differentiated ranking factors."
Jack Dempsey, the Mayor of Bundaberg in Queensland, in a very well articulated submission to the inquiry last month, outlined how the Code will not benefit regional communities in Australia, and in fact could be detrimental. He bemoaned the decision by News Corp to close 112 regional and suburban newspapers across Australia last year in the middle of the pandemic, which seriously impeded the ability of councils, communities and others to get news and information to the public. It should be noted the Australiasian Executive Chairman of News Corp Michael Miller on Friday told the Senate inquiry while 112 newspapers were closed, seventy-six of them were providing continuing operations through websites.
Mr Dempsey pointed out these are subject to pay-walls. He criticised the proposed bill for not including non-profit news organisations, pointing to an example in Bundaberg. To quality, participants have to be a corporation and they have to pass revenue qualifications.
While Facebook has now carried through with a threat to withdraw its news coverage in Australia, but according to Prime Minister Morrison is still engaged in negotiations, on Wednesday it stated its reasons for pulling out.
"In response to Australia's proposed new Media Bargaining law, Facebook will restrict publishers and people in Australia from sharing or viewing Australian and international news content," William Easton, Managing Director, Facebook Australia & New Zealand said in a statement.
"The proposed law fundamentally misunderstands the relationship between our platform and publishers who use it to share news content. It has left us facing a stark choice: attempt to comply with a law that ignores the realities of this relationship, or stop allowing news content on our services in Australia. With a heavy heart, we are choosing the latter."
"This discussion has focused on U.S. technology companies and how they benefit from news content on their services. We understand many will ask why the platforms may respond differently. The answer is because our platforms have fundamentally different relationships with news. Google Search is inextricably intertwined with news and publishers do not voluntarily provide their content. On the other hand, publishers willingly choose to post news on Facebook, as it allows them to sell more subscriptions, grow their audiences and increase advertising revenue," Easton said
"In fact, and as we have made clear to the Australian government for many months, the value exchange between Facebook and publishers runs in favor of the publishers - which is the reverse of what the legislation would require the arbitrator to assume. Last year Facebook generated approximately 5.1 billion free referrals to Australian publishers worth an estimated AU$407 million."
"For Facebook, the business gain from news is minimal. News makes up less than 4% of the content people see in their News Feed. Journalism is important to a democratic society, which is why we build dedicated, free tools to support news organisations around the world in innovating their content for online audiences," the Australian and News Zealand Facebook MD said.
"Over the last three years we've worked with the Australian Government to find a solution that recognizes the realities of how our services work. We've long worked toward rules that would encourage innovation and collaboration between digital platforms and news organisations. Unfortunately this legislation does not do that. Instead it seeks to penalise Facebook for content it didn't take or ask for."
"We were prepared to launch Facebook News in Australia and significantly increase our investments with local publishers, however, we were only prepared to do this with the right rules in place. This legislation sets a precedent where the government decides who enters into these news content agreements, and ultimately, how much the party that already receives value from the free service gets paid. We will now prioritise investments to other countries, as part of our plans to invest in new licensing news programs and experiences," Mr Easton added.
"Others have also raised concern. Independent experts and analysts around the world have consistently outlined problems with the proposed legislation. While the government has made some changes, the proposed law fundamentally fails to understand how our services work."
"Unfortunately, this means people and news organisations in Australia are now restricted from posting news links and sharing or viewing Australian and international news content on Facebook. Globally, posting and sharing news links from Australian publishers is also restricted. To do this, we are using a combination of technologies to restrict news content and we will have processes to review any content that was inadvertently removed," the Facebook managing director said.
"We recognise it's important to connect people to authoritative information and we will continue to promote dedicated information hubs like the COVID-19 Information Centre, that connects Australians with relevant health information. Our commitment to remove harmful misinformation and provide access to credible and timely information will not change. We remain committed to our third-party fact-checking program with Agence France-Presse and Australian Associated Press and will continue to invest to support their important work."
And in a note to Mr Morrison and Mr Frydenburg:
"We hope that in the future the Australian government will recognise the value we already provide and work with us to strengthen, rather than limit, our partnerships with publishers."