Facebook, which relies on advertising to make money, is threatening to block all news content in Australia instead of having to pay news organisations for use of its content.
The threat comes as Australia’s competition watchdog, the Australian Competition and Consumer Commission (ACCC), intends to force technology giants Facebook and Google to compensate Australian media outlets for the use of their content.
Such a move is a first worldwide, with the Australian Government Treasurer Josh Frydenberg stating it would establish a “more level playing field”. Facebook and Google do not pay news organisations for the news content they use.
Facebook Australia and New Zealand Managing Director Will Easton said on Tuesday that it would not pay, instead it would have to ban all news content from being seen by Australian users if the news code was introduced.
“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,” he said in a statement.
“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.”
Easton said Facebook objected most strongly to the “perplexing” argument that Facebook should be forced to “pay news organisations for content” while ignoring “the financial value we bring publishers”.
Facebook, which reported its ad revenues in the second quarter increased 10.2% year over year to US$18.32 billion, reiterated its earlier argument that news content was not a big money-spinner for the platform.
“The ACCC presumes that Facebook benefits most in its relationship with publishers, when in fact the reverse is true,” Easton said.
“News represents a fraction of what people see in their News Feed and is not a significant source of revenue for us.”
The ACCC’s plans also provoked an aggressive campaign by Google in Australia, which saw the trillion-dollar business add warnings to its search page and pop-up messages on YouTube about the proposed law, claiming its free services would be put “at risk” in Australia.
ACCC chairman Rod Sims said the campaign contained “misinformation” as Google would not be required “to charge Australians for the use of its free services” under the draft law, or “share any additional user data”.
“The draft code will allow Australian news businesses to negotiate for fair payment for their journalists’ work that is included on Google services,” said Sims.
“This will address a significant bargaining power imbalance between Australian news media businesses and Google and Facebook.”
Swinburne University social media senior lecturer Dr Belinda Barnet told news.com.au Facebook’s threat could have a “significant impact on their traffic in Australia” and was akin to “cutting off their nose to spite their face”.
Barnet said if Facebook goes ahead with the threat, it will impact Facebook’s business.
“They have enormous reach in Australia for news — much more than any other platform — so they’re shutting down a sizeable chunk of their own business in terms of extracting data about users’ preferences and advertising revenue from that eyeball time,” she said.
“Obviously, the stakes are high for Facebook.
“If Australia succeeds at getting Facebook to pay for news content, the global precedent will be set and other countries will look on.”