Facebook’s battle with Australia over news is just the beginning

Facebook’s deal with Australia gives it a way to avoid paying publishers for news content, as long as the company works to reach agreements with publishers on its own initiative.

“We appreciate that the government has created flexibility to continue to close deals with publishers, while giving us 30 days notice of the designation,” said Campbell Brown, vice president of Global News Partnerships from Facebook. If Facebook’s negotiations with individual Australian publishers don’t satisfy the government, the company could reinstate its news ban rather than be forced to comply with the terms of the new payment determination law.

“I hope that step will not be necessary,” said Mrs. Brown.

The intended compromise would be an alternative to the voluntary payments that Facebook has made to “partner” news outlets for its News Tab product for mobile users in the US and other countries.

The payments Facebook has made so far are not overly expensive for the company, whose ad business drove to record $ 86 billion in sales last year. News content accounts for just 4% of what people see in their main news feed, Facebook said when it announced last week that it would remove news from the platform in Australia.

News publishers rely on the audience that Facebook and Alphabet have Inc.’s

Google delivers. In the hours following Facebook’s decision to stop news sharing in Australia, news publishers in the country saw traffic from readers outside of Australia drop by about 20%, data from analytics company Chartbeat showed.

According to a fall 2020 study by Pew Research, about 36% of Americans get their news from Facebook, compared to 23% from Alphabet’s YouTube and 15% from Twitter

If Facebook had to pay for news content worldwide, the cost would be significant, Cascend Securities analyst Eric Ross said. “Margins disappear when you suddenly have to pay for things that were free,” he said.

The brouhaha between Facebook and Australia’s news providers is coming as it is and Google is facing antitrust lawsuits in the US and regulatory oversight elsewhere. Australia and other countries seeking payment for news content on behalf of publishers argue that Facebook is abusing its market power by trying to minimize or avoid such spending. A 2019 Australian report identified the major platforms as a threat to social media start-ups, advertisers and the news industry in general.

Both Facebook and Google say their platforms help journalism. As Facebook itself has pointed out, publishers worldwide are already trying to maximize the exposure of their work on social media without any promise of compensation.

A US news outlet said the Facebook dispute in Australia suggested the social media company is showing renewed interest in paying publishers after previously reluctant to do so.

“We’re at a tipping point,” said Maribel Perez Wadsworth, publisher of USA Today, Gannett’s flagship title. Co.

, the largest newspaper chain in the US “There is finally a much greater appreciation for the value of credible journalism.”

USA Today participates in the Facebook news tab offering in the US through a license agreement.

News Corp

owner of The Wall Street Journal, has a commercial agreement to deliver news via Facebook. Last week, the company reached a three-year deal with Google to license content from the publication and to produce new products for Google platforms.

Australia’s efforts may prompt nontraditional media, such as independent journalists publishing articles on writing platforms such as Medium, to demand payments, Bernstein analyst Mark Shmulik said. “The concern is: what if we no longer draw a line at media conglomerates? … That’s a path that Facebook doesn’t want to take, ”he said.

Earlier this month, Australian officials spoke with their counterparts from Canada, Germany, France and Finland about those countries setting similar rules for tech platforms that pay news outlets, said Steven Guilbeault, the Canadian minister in charge of cultural policy, adding that the coalition of countries could extend overtime.

Mr Guilbeault said he was encouraged by developments in Australia and intends to take action this spring that has the support of his global allies and relevant stakeholders. On Monday, Canadian Prime Minister Justin Trudeau spoke with his Australian counterpart, Scott Morrison, about possible collaboration in the pursuit of regulation of online platforms, according to a summary of the conversation released by Mr Trudeau’s office.

“We need to find a solution that is sustainable for news publishers, digital platforms small and large, and for the health of our democracy,” said Guilbeault.

The battle for payments to news outlets has been simmering in Europe for over a decade – and sometimes boiling over. A new European Union copyright law passed in 2019 and the involvement of antitrust regulators have given new impetus to news media by, among other things, creating new copyright controls for press releases over the use of their publications on the Internet by technology companies, except in the case of highly short fragments and hyperlinks.

In France, the only country to have implemented EU law so far, Google signed licensing agreements for its News Showcase product last November with several publications, including Le Monde. The agreements came after a French court upheld an order from the country’s antitrust regulator that Google is to negotiate.

Google said it has closed News Showcase deals with more than 500 publications in a dozen countries, including Germany, the UK and Australia. Google pledged $ 1 billion over three years for such licensing deals last October, but declined to say how much of that amount was spent on Tuesday.

“We have hundreds of partnerships with news publishers large and small, making us one of the largest funders of journalism,” said a Google spokeswoman.

Facebook said posting their articles on its platform by publications is licensed under French law and remains unchanged. The company currently only shows links, instead of rich previews, when users themselves post news articles from French publications, unless the publication has explicitly given Facebook permission.

A Facebook spokesperson said the company is in talks in France and Germany to launch its Facebook News product, which is worth buying licenses for articles from news outlets. The product launched in the UK last month with articles from the Guardian, among others.

Facebook has previously said that it has provided hundreds of millions of dollars in publications through its various advertising and subscription tools.

—Sam Schechner and Paul Vieira contributed to this article.

Write to Jeff Horwitz at [email protected] and Sarah E. Needleman at [email protected]

Corrections and reinforcements
Facebook generated record sales of $ 86 billion last year. An earlier version of this article falsely stated that Facebook generated $ 70.7 billion in revenue. (Corrected on February 23)