Charles Gutjahr

Melbourne, Australia

The draft news media bargaining code in Australia

20 Sep 2020 — a 7 minute read on opinion

Wow this ruckus over publishing Australian news on Facebook and Google is... weird.

Usually any time Aussie technology becomes a big story I'm all over it with opinions, but I haven't known what to think about this one. After letting it stew in my brain for a few weeks I've decided: Australia should go hard and regulate Facebook and Google; even though the ACCC code is unworkable nonsense it just might be the shakeup the internet needs right now.

Now for a long, arcane justification for why I think that:

Once upon a time, newspapers in Australia were big and powerful and earned "rivers of gold" from selling classified advertising. These ads paid for quality journalism (or at least lots of journalists) in a nice symbiotic relationship: the ads paids for the journalists who brought in the readers who attracted more ads. When the internet came along Australian media was slow to embrace it; they lost many lucrative job and real estate ads to early websites like Seek and REA. But the big collapse in advertising occurred when Google and Facebook arrvied a few years later; they could sell ads more cheaply (with no printing costs and no expensive journalists) which were also better targeted (due to sometimes invasive tracking of who you are and algorithms guessing what you might want). The classified advertising which once made up 90% of Fairfax's advertising revenue has almost completely disappeared now — and effectively moved to Facebook and Google ads. Hundreds of Aussie newspapers have closed and many thousands of journalists have lost their jobs.

In late 2017 the Federal Government told the ACCC to do something about it. The ACCC recommended media companies negotiate with Facebook and Google to develop a code of conduct to address power imbalances; when negotiations dragged on without a result the Government told the ACCC to develop a mandatory code. The result is the ACCC's draft news media bargaining code, which "would allow news media businesses to bargain individually or collectively with Google and Facebook over payment for the inclusion of news on their services."

Facebook and Google responded by having a conniption. Facebook said they'd block any news being shown on Facebook or Instagram in Australia. Google Search and YouTube were saturated with alarmist advertising (though Google's open letter was more nuanced).

Meanwhile I'm watching this play out and I can't decide whose side I'm on. It's fashionable to hate on Facebook these days, and I'm a proud patriotic Aussie. So shouldn't I be rooting for this code?

It's not that easy. There are a lot of problems in the ACCC's draft news media bargaining code, and it may be completely unworkable. Explaining why requires a lot of detail, but fortunately for me a lot of commentators piled on and pilloried the draft code so you can refer to one of them if you want to know this detail. Ben Thompson's article on Stratechery is a good example. I agree with some of his arguments, and disagree with some others.

I highlight just one detail that isn't in that piece: hyperlinks. A lot of this 'publishing' of news by Google and Facebook is just links to articles on newspaper and broadcast media websites. I feel very strongly that publishing a link to something must not be restricted or limited by copyright. A link is just a reference saying 'go look over there'. It is completely up to the publisher to decide whether or not to provide the article 'there', and they can change their mind at any time. A link to a newspaper article does not take away control from the publisher but gives them a chance to sell ads and subscriptions; any link should be good for the publisher yet this code implies that publishers should be paid if you want to link to their articles.

The problem with all that argument is it's right down in the weeds; it's missing the big point which is this: Google and Facebook are killing journalism in Australia. It was probably inadvertent; a market failure not an evil plan. But it is the job of the Australian Government to fix such failures, and losing news is a critical failure with dangerous effects on our democracy.

Perhaps the problem here is that sometimes governments want to be seen to be doing something, whether they are actually doing something is less important. They correctly identified a big problem but they failed to come up with a workable solution for it.

Except... actually they might have. I don't think the code can work as currently drafted. However the chain of events it set off might well lead to salvation.

The reaction from Facebook, in particular, backfired because it highlights the big problem: their immense market power. Facebook can block all news in Australia because they are more powerful than the media. Google could do the same. Market power isn't bad in itself, but if it can be used to block news — or worse, manipulate news — then it is fundamental danger to democracy. That probably sounded like a crazy conspiracy theory a few years back, but Facebook just turned that into a real threat.

The problem for Facebook is that blocking news could be fatal for them.

First up there's the political aspect. A foreign-owned, widely-disliked company suddenly shutting off the news source for two-fifths of Australians is easy political fodder. That would just open Facebook up to more and harsher regulation; it gives the Australian government cover to make changes that perhaps the public wouldn't have supported if Facebook was still just that company which shows you cute cat pictures.

The secondly and more importantly Facebook and Google face an existential threat if they are no longer the first place Australians turn to. Let's say Facebook and Google did actually block news. Would you decide you're never going to look at the news again? I'm guessing no: instead sometimes instead of going to Facebook you'll open up the ABC app or the Herald Sun app etc instead. When a friend mentions some big thing going on you'll open up The Age website and look there. Most of us value news, even if we don't pay for it. Take it away from us and I don't think the result will be we stop wanting news; I think the result is that we'll stop relying on Facebook and Google to bring it to us.

And that must give those companies nightmares. Facebook and Google have different business models but they both rely on you turning to them first. The tables are turned if you start going directly to the source — instead of them — as then it would be their advertising at risk.

Facebook's model is to keep you on Facebook at all times. You can see that in the implementation: view a news article on the Facebook app and it shows up inside the app, it doesn't let you leave. Yes the news publisher can control what is shown and they can show ads, but Facebook encourages you to dip into one article then return to Facebook for more Facebook ads. Facebook's other big app Instagram doesn't even honour links, you're stuck there until you make the conscious decision to leave.

Google Search might seem like the opposite: its whole point is to find you something quickly and then let you leave immediately to view it. But like Facebook its power is that it's first; it mediates the experience, it decides what you see. Google Search gets first dibs on the ads, perhaps dozens of times a day. And Google's other big app YouTube is just like Facebook in that you stick around instead of leaving and watching videos directly in the publisher's app.

Facebook claims they do not need news. "The ACCC presumes that Facebook benefits most in its relationship with publishers, when in fact the reverse is true" is what they said in their press release. They are wrong. Publishers are stuck in a prisoner's dilemma where any one of them leaving Facebook is bad for that publisher, but all of them leaving Facebook would instead be bad for Facebook.

Right now you can browse Facebook and it has everything you want in one place. You can settle in with YouTube and watch anything that interests you. You can search Google and find anything you want to know. They're comprehensive. But if they shut off news then suddenly you have to go elsewhere for news, and you going elsewhere is a fundamental threat to their businesses. You opening a newspaper app instead of their app means you might get hooked on a different news feed, a compelling real news feed, causing Facebook and Google to lose all those eyeballs and all those ad dollars.

So perhaps ill-thought out regulation from the ACCC is exactly what we needed. If it causes Facebook to block news then it could help news publishers by returning some of their audience. Alternatively it could cause Facebook to negotiate a fair deal with publishers to avoid losing their precious monopoly on our time.

It's not the prettiest way to make this sausage, but I'm glad its underway. If we didn't have this draft news media bargaining code then I think Australia would be stuck with the status quo while the fourth estate slowly dies.