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News Analysis 1 Sep 2020 - 3 min read

'Bullying, heavy-handed and misconceived’: Treasurer Frydenberg, ACCC, FreeTV, Nine muscle up on Facebook’s threat to pull news services from Australia

By Josh McDonnell - Senior Writer

Scratch that: News and other sites will be unblocked this week after concessions made.

Social media giant Facebook yesterday joined Google, going on the offensive against the Federal Government and ACCC's plans to force a mandatory revenue-sharing code with newsmedia, calling Australia an "outlier" as both tech giants scramble to block a move which would set an international precedent for other jurisdictions and regulators to follow. Treasurer Josh Frydenberg says the government would not bend to what he labelled “coercion or heavy-handed tactics”, while ACCC Chair Rod Sims says the move was “ill-timed and misconceived”. Facebook yesterday was also heavily engaged in shoring up support for its position among major advertisers and agency and industry groups.

What you need to know:
  • In response to impending government regulation forcing digital platforms to pay news organisations for content, Facebook has threatened to pull them from its platform in Australia.
  • Correspondence to advertisers from Facebook yesterday, obtained by Mi3, says "we want to reassure you that our product and service offerings for our Australian business and community will not be impacted by this decision...Both Facebook and Instagram are not primarily news sharing platforms, with news representing a very small part of the overall content. We are extremely disappointed that it has come to this..."   
  • Federal Treasurer Josh Frydenberg has made clear the government would not respond to the company’s “heavy-handed tactics”.
  • ACCC Chair Rod Sims labelled the move “ill-timed and misconceived” as the new code only intends to bring “fairness and transparency” to the conversation.
  • FreeTV denounced the decision as another example of “bullying behaviour” from the digital platforms, proving again the bargaining code’s value.
  • Nine noted the move as a “strange response” as it only demonstrated the “monopoly of power” Facebook has over its users.
  • Publishers have privately said for months that Facebook has been less engaged and more dogmatic than Google in the lead up to the ACCC's mandatory bargaining code, before both tech giants turned in recent weeks   

 

Another digital ‘dummy spit’

Facebook has become the second digital platform to threaten Australian lawmakers and publishers in as many weeks, as the tension mounts surrounding impending digital regulation.

The social media giant has followed in Google’s footsteps this week, announcing plans to switch off news sharing capabilities across the site should the Government’s media bargaining code go ahead, which is likely, creating new market tension here between media and the tech giants.  

The new draft code will force big tech platforms to strike revenue share deals with Australian media companies for news or risk fines of up to $10m if they don't treat them fairly.

The digital platforms will also need to give media companies 28 days notice if any changes to their algorithms are likely to materially affect traffic to news sites.

The threat follows Google’s 'Open Letter', released last month, condemning the government’s regulations.

The company's local boss Mel Silva spoke directly to users, arguing their data could be "at risk" and handed over to "big news businesses" as a result.

Other than media groups, advertisers and agencies have been largely silent on the issue.   

Facebook’s local boss Will Easton said in his own open letter to users yesterday that the ACCC’s presumption that Facebook benefits most in its relationship with publishers was untrue.

He said assuming the draft code becomes law, Facebook will “reluctantly” stop allowing publishers and people in Australia from sharing local and international news on Facebook and Instagram.

“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.

“The proposed law is unprecedented in its reach and seeks to regulate every aspect of how tech companies do business with news publishers.

“News represents a fraction of what people see in their News Feed and is not a significant source of revenue for us.”

What Facebook finds “most perplexing” is the move to force Facebook to pay news organisations for content that the publishers “voluntarily place” on its platforms

“And at a price that ignores the financial value we bring publishers,” Easton says.

“Still, we recognize that news provides a vitally important role in society and democracy, which is why we offer free tools and training to help media companies reach an audience many times larger than they have previously.”

The full statement can be found at the end of the article.

 

Treasurer steps in, publishers retort once more

Similar to Google’s move, government officials and publishers have fired back at Facebook, criticising it as another scare tactic.

Treasurer Josh Frydenberg was strident in his response yesterday.

"Australia makes laws that advance our national interest and we won’t be responding to coercion or heavy-handed tactics, wherever they come from," Mr Frydenberg said in a statement carried by AAP.

"We want a sustainable media environment and key to that is to seek payment for original journalistic content.

"And so we’re committed to these reforms – we won’t be bullied, no matter how big the international company is, no matter how powerful they are, no matter how valuable they are."

News Corp remained silent once more, offering no comment on the matter, while The Guardian was unable to supply a response at time of publishing when approached by Mi3.   

Below are the statements from the ACCC Chair Rod Sims, Nine and FreeTV CEO Bridget Fair.

ACCC Chair Rod Sims says:

“Facebook’s threat today to prevent any sharing of news on its services in Australia is ill-timed and misconceived.

“The draft media bargaining code aims to ensure Australian news businesses, including independent, community and regional media, can get a seat at the table for fair negotiations with Facebook and Google.

“Facebook already pays some media for news content. The code simply aims to bring fairness and transparency to Facebook and Google’s relationships with Australian news media businesses.”

A Nine spokesperson says:

“We find it a strange response as it is a demonstration of Facebook’s use of its monopoly power while failing to recognise the importance of reliable news content to balance the fake news that proliferates on their platform.

“We are ready to engage and hope to come to a constructive outcome with Facebook which will work for both of us and importantly the Australian community.”

Free TV Australia CEO Bridget Fair said:

“What we’re seeing today is a global monopoly that will 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.

“This type of bullying behaviour is exactly the reason that the ACCC concluded that the Mandatory Code was the only reasonable way to even up the bargaining power between Facebook, Google and Australian News Media Businesses.

“Facebook is already awash with fake news and conspiracy theories. Removing trusted Australian news from their platform will only serve to allow misinformation to be further spread unchecked and unchallenged. Unfortunately Australian consumers will be the collateral damage in Facebook’s campaign to hold onto monopoly profits.”

 

Below is the full letter from Facebook Australia CEO Will Easton:

"Australia is drafting a new regulation that misunderstands the dynamics of the internet and will do damage to the very news organisations the government is trying to protect. When crafting this new legislation, the commission overseeing the process ignored important facts, most critically the relationship between the news media and social media and which one benefits most from the other.

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. 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.

We share the Australian Government’s goal of supporting struggling news organisations, particularly local newspapers, and have engaged extensively with the Australian Competition and Consumer Commission that has led the effort. But its solution is counterproductive to that goal. The proposed law is unprecedented in its reach and seeks to regulate every aspect of how tech companies do business with news publishers. Most perplexing, it would force Facebook to pay news organisations for content that the publishers voluntarily place on our platforms and at a price that ignores the financial value we bring publishers. 

The ACCC presumes that Facebook benefits most in its relationship with publishers, when in fact the reverse is true. News represents a fraction of what people see in their News Feed and is not a significant source of revenue for us. Still, we recognize that news provides a vitally important role in society and democracy, which is why we offer free tools and training to help media companies reach an audience many times larger than they have previously.  

News organisations in Australia and elsewhere choose to post news on Facebook for this precise reason, and they encourage readers to share news across social platforms to increase readership of their stories. This in turn allows them to sell more subscriptions and advertising. Over the first five months of 2020 we sent 2.3 billion clicks from Facebook’s News Feed back to Australian news websites at no charge – additional traffic worth an estimated $200 million AUD to Australian publishers. 

We already invest millions of dollars in Australian news businesses and, during discussions over this legislation, we offered to invest millions more. We had also hoped to bring Facebook News to Australia, a feature on our platform exclusively for news, where we pay publishers for their content. Since it launched last year in the US, publishers we partner with have seen the benefit of additional traffic and new audiences. 

But these proposals were overlooked. Instead, we are 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. Unfortunately, no business can operate that way.

Facebook products and services in Australia that allow family and friends to connect will not be impacted by this decision. Our global commitment to quality news around the world will not change either. And we will continue to work with governments and regulators who rightly hold our feet to the fire. But successful regulation, like the best journalism, will be grounded in and built on facts. In this instance, it is not."

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Josh McDonnell

Senior Writer

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