The Australian government’s attempt to make Google and Facebook pay for information looks likely to destroy media startups caught in the crossfire as platform giants become more extreme in their reactions to the proposed settlement.
Two weeks ago, Facebook announced it would ban social media news in Australia if legislation that required it to strike deals with news companies goes ahead.
The expectation that Facebook’s definition of “news” will be broad to avoid any legal fallout has caused panic in digital-only newsrooms.
In particular, lifestyle and youth publishers who derive the majority of their traffic from Facebook face closure, while traditional media players who have campaigned for the laws appear to be the relative winners in a media environment of ” scorched earth” after the regulations.
Hannah Marshall, competition law expert at Marque Lawyers, says Facebook’s planned ban shows exactly what’s wrong with regulation.
While the code in its current form mandates payment from platforms to news publishers, significant value flows the other way in the form of traffic referrals. Digital natives will be particularly affected by the loss of this audience. “They might not survive,” Marshall said. “The resulting landscape in Australia is likely to look very bleak. Only these very big players are likely to survive.
Marshall says the only way to prevent the two companies from pulling out of the Australian news market would be to create a legal obligation to provide the “service”. It would make sense if the news industry paid, not the other way around.
The code contains a “non-discrimination” clause that penalizes Facebook or Google for favoring companies outside the code. To avoid the code, they will need to define “news” and “new business” as broadly as possible.
A group of 10 digital-only Australian publishers, including youth culture site Junkee and lifestyle title Concrete Playground, say “the current proposal has the potential to simply further entrench the big traditional media companies and accidentally destroy the media diversity in the process”.
The situation is worse than the tone of the statement suggests. Schwartz Media CEO Rebecca Costello – whose news headlines are not in the 10 group – said her own company would be able to handle a Facebook pullout.
But “I fear it could have devastating consequences for smaller, digital-only publishers who weren’t necessarily going to benefit from the new rules in the first place,” she said.
She says a tax on Facebook and Google would be a better solution than the code.
“I find it ironic that Facebook finds it seemingly simple to ban real news when they have failed to remove fake news and misinformation from the platform.”
Eric Beecher, chairman of independent group Private Media, says that while his publications would potentially benefit from the code in its current form, it is flawed.
“What message does it send when a government creates legislation to force two specifically named companies to pay an unlimited amount to others for innovating and surpassing them?” Beecher said. “What message does it send about investment and innovation in Australia?”
Despite the prospect of closed businesses, shrinking media and innovation diversity, and the lack of a helping hand for startups, few publishers want to account for the true extent of the damage in a world Facebook post. Naturally, they fear an exodus of advertisers in an already difficult market.
On top of that, there’s a widespread feeling that the current threat shows exactly why the code was developed in the first place: the platforms that can kill addicted businesses – which they also compete with for ad dollars – should be regulated.
It is for this kind of situation that competition law and regulators were created. The argument is compelling – until it comes up against the details of ACCC legislation. A platform cannot be forced to provide a service and be obliged to pay for this service. To do so would amount to turning the regulation in question into a kind of economic machine in perpetual motion.
The more discerning on the Australian media scene say Facebook and Google’s reactions to the proposed code were predictable and privately hope the government takes a break.
What happens next likely depends on what News Corp and Nine, the media gorillas in the room, think about the latest developments and their prospects in a post-platform world.