Over the last several months, both Facebook and Google were locked in a battle against the Australian government over a proposed legislation which would require them to pay news publishers. They warned users of worsening services, they warned that users’ data would fall into wrong hands, and even threatened to pull some of their services from the country.
But then, on Wednesday, the two companies chose diverging paths.
How did we get here?
At the heart lies a proposed News Media Bargaining Code — currently in the Australian Parliament — released by the Australian competition watchdog which forces Google and Facebook to enter into arbitration with news publishers to decide a price for their content. The code also requires platforms to give news companies nearly a month’s notice of any changes to its algorithms which may affect referral traffic to news sites, or those affecting rankings of paywalled news, and “substantial changes” to how news is displayed, and even advertising of news.
But why? The idea was simple: the regulator felt that news publishers had paid dearly since the advent of social media, and internet giants. This disparity, according to Australia’s competition watchdog, has created “fundamental bargaining power imbalance” between news publishers and digital media platforms like Facebook and Google. “This imbalance has resulted in news media businesses accepting less favourable terms for the inclusion of news on digital platform services than they would otherwise agree to,” the watchdog said.
The watchdog’s concerns were proven by researchers as well. The Digital News Report 2020, published by the University of Canberra in June 2020, said that “the number of consumers going directly to news brand websites or apps for news is declining and indirect access to news on digital platforms is increasing, particularly among older generations […] news consumers are trying to find efficient ways to curate and organise the vast amount of news available to them. A growing number of people are accessing news through mobile alerts, newsletters and aggregator apps.”
Google opposes code, later changes tune
Google had earlier warned users that the code would lead to a dramatic drop in search results on both Google Search and YouTube. It had said that users’ data, which Google had kept safe, would fall into the hands of media businesses. In fact, it also went so far as to say that if the code were implemented in the country, it would pull out of if altogether.
But everything changed on Wednesday when Google struck a global multi-year deal with NewsCorp. As part of the deal, the internet giant will offer the company’s publications “significant payments” for featuring them in its News Showcase.
The extent of the deal goes well beyond Australia — publications like The Wall Street Journal, Barron’s, MarketWatch, and the New York Post in the US, the UK’s The Times and The Sunday Times, and Australia’s The Australian, news.com.au, Sky News, and a bunch of other regional news outlets will reap dividends of this deal.
The deal also includes the development of a subscription platform, the sharing of ad revenue via Google’s ad technology services, the cultivation of audio journalism and investments in video journalism by YouTube. Before signing the deal with NewsCorp, Google had already signed deals with Australian publishers like Seven West Media, and Nine Entertainment.
What exactly led to Google’s changed attitude towards paying news publishers is unknown. But, if Microsoft were to be believed, it could have come after the company spoke to Australia’s Prime Minister Scott Morrison, assuring him that its Bing search service would continue to operate in the country and would even share revenue with publishers, should Google choose to suspend its services.
Meanwhile, Facebook remains defiant
Contrary to Google, Facebook remained defiant. In an unprecedented development, it decided to ban all news sharing on its platform, as it had warned of doing in September 2020, should the code be implemented. At the time, Facebook had said that it was left with a choice of either removing news entirely or “accepting a system that lets publishers charge us for as much content as they want at a price with no clear limits”, and that “unfortunately, no business can operate that way”.
“The proposed law fundamentally misunderstands the relationship between our platform and publishers who use it to share news content,” Facebook’s Australia and New Zealand managing director, William Easton wrote in a Wednesday blog post, while announcing that Facebook would be blocking all news sharing in Australia. He added: “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.”
While making this announcement, Easton also spoke about the fundamental difference in how his company, and Google views news. “Google Search is inextricably intertwined with news and publishers do not voluntarily provide their content,” Easton said, arguing that on Facebook, “publishers willingly choose to post news, as it “allows them to sell more subscriptions, grow their audiences and increase advertising revenue”.
“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.” — Facebook, after suspending news sharing in Australia
What Facebook’s decision means for Australian publishers:
- They are restricted from sharing or posting any content on Facebook Pages
- Admins will still be able to access other features from their Facebook Page, including Page insights and Creator Studio
- International publishers can continue to publish news content on Facebook, but links and posts can’t be viewed or shared by Australian audiences.
But as the social media giant set out to block news pages on its platform, it left a lot of collateral damage in its wake. The impact of blocking these pages was wide reaching, as the company ended up blocking non-news pages including state health departments, charities, pages offering information on the infamous Australian bush fires, and even Facebook’s own Facebook Page.
This thread captures the haphazard way in which Facebook implemented its decision:
Compiling a thread of non-news organisations caught in the Facebook ban, here.
— Kevin Nguyen (@cog_ink) February 17, 2021
How news publishers are faring elsewhere in the internet era
Aside from the NewsCorp deal, Google has started paying news publishers elsewhere as well. In January, it signed a deal with news publishers in France to pay them for content appearing as preview snippets in search results. It said it’ll pay a publisher based on its contribution to political and general information, the daily volume of publications, and its monthly internet traffic. Google made this decision after being ordered by France’s competition authority to do so.
In December 2020, Google had said it would start paying select news organisations for access to their paywalled content for its News Showcase program, as part of its $1 billion investment in news.
In the US, both Google and Facebook have been accused of being a reason for declining revenues for news publishers, due to their alleged predatory advertising practices. For instance, during a congressional hearing last year, congresswoman Pramila Jayapal explained that since Google is running the marketplace (via Ad Exchange), it controls the buy-side, and through the middlemen like Google Ads, it also controls the sell-side, thereby rigging the entire process. As a result, Google can set low rates as a buyer of ad space compared to newspapers, thus depriving them of ad revenue, and then sells it for higher revenue to small businesses who depend on Google for advertising, she said.
However, Facebook’s actions in Australia also raise a question on whether news publishers can actually survive without internet giants. For instance, in 2014, Spain had passed a similar law that led to Google no longer offering Google News in that country. A 2017 study found that this had led to a 20% drop in readership of news websites. Then in Germany, Axel Springer, one of the country’s top publishers, chose to block Google from showing snippets from its articles in 2014. However, it reversed the decision quickly after it led to a drop in site traffic.
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