Facebook rejects Australia's pay-for-news plan, proposes its own idea: How about no more articles at all, sunshine?

The toys are maintaining a constant horizontal velocity from the pram

+Comment Facebook has announced it will "reluctantly stop allowing publishers and people in Australia from sharing local and international news on Facebook and Instagram" if Australia's pay-for-news plan becomes reality.

By plan we mean a mandatory code of conduct that's been in a public consultation phase. Under these proposed rules, drawn up by Australia's Competition and Consumer Commission, publishers can negotiate primarily with Facebook and Google so that news outlets are paid a fee for having their articles shared and read on the aforementioned web platforms. If the negotiations fail, an independent arbitrator will decide the final offer from those put forward.

A post today by Facebook's managing director for Australia and New Zealand, Will Easton, said the draft code of conduct "misunderstands the dynamics of the internet and will do damage to the very news organisations the government is trying to protect" and that the commission "presumes that Facebook benefits most in its relationship with publishers, when in fact the reverse is true".

A choice of either removing news entirely or accepting a system that lets publishers charge us for as much content as they want

Easton said Facebook is open to working with Australian publishers, and has even contemplated introducing to the nation the Facebook News service it operates in America, in which it pays news publishers for linking to their content.

But Facebook's antipodean boss described Australia's proposal as "overcooked". Presumably the arbitration part is too much for the US giant to swallow. Indeed, we're told the code of conduct leaves Facebook "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."

As such, Facebook will pull the plug on sharing news in Australia unless it has its own way.

Easton's justification for his argument is that "news represents a fraction of what people see in their News Feed and is not a significant source of revenue for us".

Facebook wants to support journalism, it is alleged, and does so by providing tools that help publishers find an audience. Those efforts, Easton wrote, turned into 2.3 billion clicks of traffic in the first five months of 2020 alone. Facebook valued that traffic at AU$200m and suggested it allowed publishers "to sell more subscriptions and advertising".

"Facebook products and services in Australia that allow family and friends to connect will not be impacted by this decision," Easton said. "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."

Reg comment

Easton's argument misrepresents the arbitration process Australia proposes, while also proposing regulatory capture.

The misrepresentation is expressed in his assertion that publishers will be able to "charge us for as much content as they want at a price they want". The reality of the situation is that an independent arbitrator will be involved to set prices if bargaining breaks down, and that negotiation will be possible beforehand.

"If the news businesses and the digital platforms cannot strike a deal through a formal three-month negotiation and mediation process," the competition commission explained in July, "then an independent arbitrator would choose which of the two parties' final offer is the most reasonable within 45 business days."

That Facebook intends regulatory capture is evident in Easton's assertion that Facebook is happy to use its own pay-for-news scheme it operates elsewhere while rejecting Australia's proposed model.

The core of Australia's model is an attempt to balance the bargaining power between local media and web giants Google and Facebook.

As Facebook demonstrates in this post, its bargaining position is either to set all the rules itself or to take itself off the board and out of reach of the commission. Which to your humble hack's mind shows just how much power Facebook has, just as Google has shown its hand by plastering its properties with warnings about the implications of Australia's plans. ®

Bootnote

The Register is not eligible to receive payment under Australia's planned code of conduct – while we have staff in Australia and the Asia-Pacific region, we do not operate primarily in Australia for the purpose of serving Australian audiences – and reports this story as it is potentially a global precedent for how governments, publishers, and web giants interact.