SYDNEY (Reuters) – Facebook Inc on Tuesday said it would stop Australians sharing news content on its platforms if a proposal to make it pay local media outlets for their content becomes law, escalating tension with the Australian government.
“This global update provides more flexibility for us to change our services, including in Australia, to continue to operate and support our users in response to potential regulation or legal action,” a company spokesperson said.
Under Australia’s closely watched internet reform, the country will become the first to make the social media behemoth and Alphabet Inc’s Google pay for news sourced from local providers under a royalty-style system.
Facebook’s plan to block the sharing of news on Australian user accounts, rather than pay royalties, puts the firm broadly in step with Google on the matter and pushes the prospect of an agreement with the government further out of reach.
“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,” Facebook Australia Managing Director Will Easton said in a blog post, referring to two Facebook-owned platforms.
“This is not our first choice – it is our last. 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”.
Australian Treasurer Josh Frydenberg on Tuesday said the proposed law was in the national interest, followed 18 months of public inquiry and would create a more sustainable local media industry where original content was paid for.
“We don’t respond to coercion or heavy-handed threats wherever they come from,” Frydenberg said in an emailed response to Reuters’ request for comment.
Australian Competition and Consumer Commission (ACCC) Chair Rod Sims, who is overseeing the proposed law, said Facebook’s response was “ill-timed and misconceived”, and that the proposal “simply aims to bring fairness and transparency to Facebook and Google’s relationships with Australian news media businesses”.
“As the ACCC and the Government work to finalise the draft legislation, we hope all parties will engage in constructive discussions,” Sims said in a statement.
Bridget Fair, chief executive of Free TV Australia, a lobby group for free-to-air broadcasters, said Facebook’s plan amounted to “bullying” and that the US firm would “say and do anything to avoid making a fair payment for news content”.
“Australian Facebook users are being held to ransom as a tactic to intimidate the Australian government into backing down on this issue,” she said in a statement.
The proposed law was “the only reasonable way to even up the bargaining power between Facebook, Google and Australian News Media Businesses,” Fair said.
Facebook’s Easton in his blog post called the proposed law “unprecedented in its reach”, and said the company could either remove news entirely or agree to pay publishers for as much content as they wanted at a price with no clear limits.
“Unfortunately, no business can operate that way,” he wrote.
Like in most countries, Australia’s traditional media companies in recent years have seen their mainstay advertising income streams eroded by online competitors, and consumers shy away from paid subscription.
The matter is being watched closely around the world as it represents the biggest challenge so far to the way the US tech giants use news on some of the world’s biggest websites.
Last month, Google began an advertising campaign using pop-up ads on its main search page that said its free service would be “at risk” and users’ personal data could be shared if the firm is made to pay news organisations for their content. The ACCC called the statements “misinformation”.
WHAT DOES THE PROPOSED LEGISLATION SAY?
* The draft law states that Australian news outlets can negotiate individually or collectively with Facebook and Google over payment for content used on the tech firms’ sites. Other tech firms may be added if they are deemed big enough.
* If the parties cannot reach an agreement, an arbitrator will decide whose offer is more reasonable. If Facebook or Google break any resulting agreements, they can be fined up to A$10 million ($7.4 million) in civil penalties.
* The draft also requires tech firms give media outlets notice when they change search algorithms in a way affecting the order in which content appears. They must also share their use of consumer data extracted from news content on their sites.
* The Australian Competition and Consumer Commission began investigating “big tech” in 2017 and sought feedback on the draft until Aug. 28. It now hopes to work with government and industry to redraft the law before it goes before parliament.
* While internet and media companies have battled in other jurisdictions – notably in Germany over copyright of news snippets and other items published by Google – Australia’s proposal represents the most expansive reform.
WHY WAS THE LAW PROPOSED?
* In recent years, traditional media companies operating in Australia have suffered huge hits to income streams, such as subscriptions and advertising. For every A$100 spent on online advertising in Australia, excluding classifieds, nearly a third goes to Google and Facebook, the competition regulator has said.
* Last year, the regulator published a report stating news outlets lacked bargaining power when negotiating with digital firms over compensation for content posted on online platforms. It said this was a problem because those same publishers relied on Facebook and Google to reach many of their consumers.
* The government wanted the tech giants to abide by a voluntary code. Citing lack of progress in discussions, it decided earlier this year that legislation was necessary.
WHAT HAS THE RESPONSE BEEN?
* The local arm of News Corp is a vocal supporter of the legislation. It partly blamed the tech companies for the closure of dozens of mastheads earlier this year.
* Facebook and Google said they help connect media outlets with consumers, boosting their subscriptions and enabling them to charge advertisers more. Facebook said in the first five months of 2020 it sent 2.3 billion “clicks” worth about A$200 million to Australian news websites via articles appearing on Facebook users’ pages. Google has said it would pay for content, though no major media organisation has agreed to its terms.
* Australia has previously engaged in lengthy battles with major corporations. In 2012, the then centre-left government became the first in the world to prohibit cigarette companies from using designs on their packaging to attract consumers. Tobacco companies mounted legal challenges but the courts ultimately upheld the law.
($1 = 1.3501 Australian dollars)
(Reporting by Byron Kaye, Jonathan Barrett, Colin Packham and Bhargav Acharya; Additonal reporting by Munsif Vengattil; Editing by Subhranshu Sahu and Christopher Cushing)