Expect delays and power plays: Google and Facebook brace as news media bargaining code is set to become law


Tim Dwyer, University of Sydney

The long-awaited mandatory code that will force Google and Facebook to pay Australian media companies for news content was finally unveiled yesterday.

The Treasury Laws Amendment Bill 2020 (news media and digital platforms mandatory bargaining code) will be introduced to parliament today, before being referred to a Senate committee.

Many of Australia’s news businesses have been on a hiding to nothing for more than a decade, as their revenue is undercut by the targeted advertising business model used by major digital platforms.

The most visible casualty has been public interest journalism — with the prospect of a well-informed citizenry on a slower, less obvious burn.

Against a backdrop of reports suggesting intense lobbying efforts by Facebook and Google against the new legislation, it appears some key concessions have been achieved by the platforms that weren’t present in the draft code.




Read more:
No more negotiating: new rules could finally force Google and Facebook to pay for news


What’s changed in the revised code?

First, the revised code will now abide by an added “two-way value exchange” principle. This allows the monetary worth of traffic sent to news providers to be taken into account when determining the financial value of a particular news business’s content to the platforms.

How this will be calculated, however, will likely be an ongoing bone of contention for both parties.

A second major concession will see Facebook’s Instagram and Google’s YouTube exempted from the application of the new law. But the Treasurer will be able to add these (and other platforms) at a later date, should he deem it justified at the time.

A third concession is the halving of the 28-day notice period for the platforms to warn news websites of major changes to their ranking algorithms. These directly impact how news articles are displayed on Facebook’s Newsfeed and Google Search.

It seems the basic idea to “level the playing field” between platforms and news providers remains baked into the revised code, but only time will tell whether it works in practice.

A figure stands under a Google sign.
Following a year of discussion, Google last month struck a deal with French media in which the tech giant is expected to pay about €150 million (roughly A$245,003,250) over the next three years.
JAE C. HONG/AP

A related objective — to implement a process that sustains public interest journalism — remains equally tricky and may hinge on the revised code’s success.

But many will be pleased the public broadcasters ABC and SBS now fall within the code’s scope, too. Both will be financially compensated for news content along with their commercial rivals.

This may seem like a win, and it may be eventually, but for now it’s unclear how this will actually play out in terms of the government’s ongoing funding of these broadcasters.

Although conjecture at this stage, it may emerge in a forum such as Senate estimates that any compensation payments should be factored into overall funding calculations for the public broadcasters.

The arbitration model

One pivotal feature of the new legislation is it will address the entrenched power of the platforms by introducing a “final offer arbitration” model for price negotiations.

This process, overseen by the Australian Communications and Media Authority, will be mandatory when parties are unable to independently reach an agreement. It will likely be central to the new code’s success, or lack thereof.

Curiously, the revised code’s framework encourages deals to be struck outside of it. In these situations, key elements of commercial negotiations between the parties can be “turned off” with mutual agreement.

This appears to be a pragmatic recognition by the ACCC the code will never be able to control the realities of commercial media deal-making, which continue to be struck despite the code’s new bargaining marketplace.

However, where negotiations break down, news media businesses will be able to trigger the code’s provisions for meeting minimum standards.

This will cover advance notice of algorithmic changes and the requirement to engage in good faith bargaining for up to three months, before participating in the mandatory arbitration process.

Smaller news publishers will be able to bargain collectively, or accept “standard” offers from the platforms.

When one party fails to engage

The code has reasonably strong enforcement provisions in cases where there is a failure to negotiate in good faith, comply with an arbitration decision, avoid participation or engage in “retaliatory action against news media companies”.

The maximum penalty for a breach by Google or Facebook is the greater of either 10% of the platform’s annual Australian turnover, A$10 million, or three times the benefit obtained as a result of hosting the specific news business’s content.

Facebook and Google have put their previous threats to switch off local news content on hold until they see the final version of the code. For now, they appear to be engaging with the ACCC.




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Facebook vs news: Australia wants to level the playing field, Facebook politely disagrees


We still need to tackle media concentration

As we await the final version of the code, the irony is not lost on those of us also waiting eagerly for events to unfold before another Senate committee on media pluralism.

The committee was set up in response to a petition started by former Prime Minister Kevin Rudd. Amassing more than 500,000 signatures, Rudd’s petition has called for a royal commission into the negative influence of News Corp’s power in Australia’s highly concentrated media landscape.

A rich history of Australia’s parliamentary inquiries into the media indicates we can expect delays, power plays and ongoing lobbying in both these committees. And clearly there will be winners and losers in both.The Conversation

Tim Dwyer, Associate Professor, Department of Media and Communications, University of Sydney

This article is republished from The Conversation under a Creative Commons license. Read the original article.

World is watching plan to make Facebook and Google pay for content: Frydenberg


Michelle Grattan, University of Canberra

The Morrison government will introduce on Wednesday its legislation forcing Google and Facebook to face arbitration if they fail to come to commercial deals with traditional media on payment for content.

The government resorted to the mandatory bargaining code after it was clear agreement wouldn’t be reached for voluntary arrangements on content payment. A voluntary model had been recommended by the Australian Competition and Consumer Commission.

Treasurer Josh Frydenberg told a news conference Tuesday the government wanted the parties to reach deals outside the code. Where agreement could not be reached, the arbitration would kick in.

The ABC and SBS are among the media that will benefit from revenue under the legislation, which won’t be dealt with by parliament until next year.

Communications Minister Paul Fletcher said the ABC had indicated it would devote the revenue it receives to regional journalism. He told Tuesday’s news conference the government would not seek to offset such revenue in its funding for the ABC.

The legislation will set minimum standards for digital platforms including requiring a fortnight’s advance notice of deliberate algorithm changes that have an impact on news media businesses.

The negotiations for payment will need to incorporate the value to providers of the additional eyeballs brought by having their content on the tech platforms.

This provision was put in following consultations on the code with the tech companies. But Frydenberg stressed the money flow was only one way – from the tech companies to the traditional media.

Frydenberg said it was the government’s intention “to ensure that the rules of the digital world mirror the rules of the physical world and ultimately to sustain our media landscape here in Australia”. He described the outcome as fair and balanced.

He said “we live in the age of digital disruption – and nowhere is this more apparent than in our media landscape.” Dollars spent on print advertising had fallen by 75% since 2005; in that time, dollars spent on online advertising increased eightfold.

The application of the code can be extended beyond Facebook NewsFeed and Google Search to other digital platform services if they “give rise to a bargaining power imbalance”. The treasurer has the power to add new services.

Frydenberg said “the word coming back to us is that there are deals that may be struck very soon between the parties”.

He described the scheme as a “world first– and the world is watching what happens here in Australia”.

The Australia Institute’s Centre for Responsible Technology said the legislation was a “globally significant response to the growing power of Big Tech”.

The centre’s director, Peter Lewis, said the move “would give media organisations a fighting chance at building a viable business model, in the face of the market domination of Google and Facebook”.

Lewis called for cross party support for the legislation.The Conversation

Michelle Grattan, Professorial Fellow, University of Canberra

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Calls for an ABC-run social network to replace Facebook and Google are misguided. With what money?



shutterstock.

Fiona R Martin, University of Sydney

If Facebook prevented Australian news from being shared on its platform, could the ABC start its own social media service to compensate? While this proposal from the Australia Institute is a worthy one, it’s an impossible ask in the current political climate.

The suggestion is one pillar of the think tank’s new Tech-xit report.

The report canvasses what the Australian government should do if Facebook and Google withdraw their news-related services from Australia, in reaction to the Australian Competition and Consumer Commission’s draft news media bargaining code.

Tech-xit rightly notes the ABC is capable of building social media that doesn’t harvest Australians’ personal data. However, it overlooks the costs and challenges of running a social media service — factors raised in debate over the new code.

Platforms react (badly) to the code

The ACCC’s code is a result of years of research into the effects of platform power on Australian media.

It requires Facebook and Google to negotiate with Australian news businesses about licensing payments for hosting news excerpts, providing access to news user data and information on pending news feed algorithm changes.

Predictably, the tech companies are not happy. They argue they make far less from news than the ACCC estimates, have greater costs and return more benefit to the media.

If the code becomes law, Facebook has threatened to stop Australian users from sharing local or international news. Google notified Australians its free services would become “at risk”, although it later said it would negotiate if the draft law was changed in its favour.

Facebook’s withdrawal, which the Tech-xit report sees as being likely if the law passes, would reduce Australians’ capacity to share vital news about their communities, activities and businesses.




Read more:
If Facebook really pulls news from its Australian sites, we’ll have a much less compelling product


ABC to the rescue?

Cue the ABC then, says Jordan Guiao, the report’s author. Guiao is the former head of social media for both the ABC and SBS, and now works at the institute’s Centre for Responsible Technology.

He argues that, if given the funding, ABC Online could reinvent itself to become a “national social platform connecting everyday Australians”. He says all the service would have to do is add

distinct user profiles, user publishing and content features, group connection features, chat, commenting and interactive discussion capabilities.

As a trusted information source, he proposes the ABC could enable “genuine exchange and influence on decision making” and “provide real value to local communities starved of civic engagement”.

Financial reality check

It’s a bold move to suggest the ABC could start yet another major network when it has just had to cut A$84 million from its budget and lose more than 200 staff.

The institute’s idea is very likely an effort to persuade the Morrison government it should redirect some of that funding back to Aunty, which has a history of digital innovation with ABC Online, iView, Q&A and the like.

However, the government has repeatedly denied it has cut funding to the national broadcaster. It hasn’t provided
catch-up emergency broadcasting funds since the ABC covered our worst ever fire season. This doesn’t bode well for a change of mind on future allocations.

The government also excluded the ABC and SBS as beneficiaries of the news media bargaining code negotiations.

The ABC doesn’t even have access to start-up venture capital the way most social media companies do. According to Crunchbase, Twitter and Reddit — the two most popular news-sharing platforms after Facebook — have raised roughly US$1.5 billion and US$550 million respectively in investment rounds, allowing them to constantly innovate in service delivery.

Operational challenges

In contrast, over the past decade, ABC Online has had to reduce many of the “social” services it once offered. This is largely due to the cost of moderating online communities and managing user participation.

Illustration of person removing a social media post.
Social media content moderation requires an abundance of time, money and human resources.
Shutterstock

First news comments sections were canned, and online communities such as the Four Corners forums and The Drum website were closed.

Last year, the ABC’s flagship site for regional and rural user-created stories, ABC Open, was also shut down.

Even if the government were to inject millions into an “ABC Social”, it’s unlikely the ABC could deal with the problems of finding and removing illegal content at scale.

It’s an issue that still defeats social media platforms and the ABC does not have machine learning expertise or funds for an army of outsourced moderators.

The move would also expose the ABC to accusations it was crowding out private innovation in the platform space.

A future without Facebook

It’s unclear whether Facebook will go ahead with its threat of preventing Australian users from sharing news on its platform, given the difficulties with working out exactly who an Australian user is.

For instance, the Australian public includes dual citizens, temporary residents, international students and business people, and expatriates.

If it does, why burden the ABC with the duty to recreate social media? Facebook’s withdrawal could be a boon for Twitter, Reddit and whatever may come next.

In the meantime, if we restored the ABC’s funding, it could develop more inventive ways to share local news online that can’t be threatened by Facebook and Google.




Read more:
Latest $84 million cuts rip the heart out of the ABC, and our democracy


The Conversation


Fiona R Martin, Associate Professor in Convergent and Online Media, University of Sydney

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Platform regulation in Australia is just the start. Facebook and Google are fighting a global battle


James Meese, RMIT University

Google and Facebook have launched a nationwide public relations campaign in response to the Australian Consumer and Competition Commission’s draft news media bargaining code.

Rather than agree to negotiate with media companies to pay for using news content, Google has launched petitions and written an open letter complaining of the “risk” to its services, while Facebook has threatened to stop distributing news on its platform.

At first glance, these responses might look like overreactions. For multinational companies with billions of dollars in revenue each quarter, paying for Australian news would be small potatoes.

But their more pressing concern may be that whatever happens in Australia could set a precedent for other countries. Other nations are holding inquiries on how best to regulate big tech platforms, and they are watching developments in Australia very closely.

Platforms and the plight of news

These inquiries address a range of issues, from disinformation to antitrust . But some have specifically examined the relationship between platforms and news publishers. These include Canada’s Broadcasting and Telecommunications Review and the United Kingdom’s Cairncross Review.

Both reviews call for new regulations to manage the relationship between platforms and news publishers. The UK specifically mentions a code of conduct. The Canadian inquiry discusses the possibility of a code but also suggests that online platforms could pay money into a fund to support Canadian content (including news).




Read more:
‘Suck it and see’ or face a digital tax, former ACCC boss Allan Fels warns Google and Facebook


However, neither government has yet taken up these reforms. One reason for the delay in the UK is that the government there has a busy policy agenda around digital platforms, and is waiting for recommendations from multiple reviews before introducing major regulatory reform.

The second reason is that the UK and Canada are watching and waiting to see what happens in Australia.

Similar countries may adopt similar rules

Watching Australia makes sense. Canada and the UK have similar media systems to Australia. All three countries also share a common law heritage and often turn to each other for policy ideas.

As a result, it would be relatively easy for these countries to translate aspects of the ACCC’s draft bargaining code to their own codes of conduct.




Read more:
Google’s ‘open letter’ is trying to scare Australians. The company simply doesn’t want to pay for news


Canada is already being influenced by the Australian reform process. The country been quite active on the international stage and has tried to establish global cooperation around platform regulation through its participation in the International Grand Committee. The Committee has brought together legislators from around the world who are working together to establish baseline regulatory principles for the internet and share policy solutions.

However, Canada is starting to move away from these international discussions and consider national solutions. Canada’s heritage minister Steven Guilbeault recently called on platforms to pay for news content, which suggests Australian developments might be informing Canada’s regulatory response.

Europe is already pushing Google to pay

Another problem for platforms is that countries without a shared legal heritage with Australia are also pursuing similar reforms. France is the most notable example: in April its competition authority ordered Google to pay publishers for news.

The decision essentially forced Google to engage in a bargaining process like the one proposed in Australia. However, Google has been accused of not bargaining in good faith, and French publishers are returning to the regulators to reset the negotiations.

French publishers have also tried to streamline the process by joining with their German colleagues with the goal of establishing a one-stop shop for bargaining.

An international approach

This combination of active reforms and dormant inquiries helps to explain why Google and Facebook have reacted so dramatically. Australia is engaging in a “world first” regulatory endeavour. However, it is important to remember that Australia is not the only country considering reforms, they are just the first to implement them. The big question is whether other countries are influenced by the Australian response.

The threat of a consistent international approach that would see Google and Facebook pay for news in multiple countries is what has brought the platforms onto the front foot, engaging in a dedicated public relations exercise. The cost of paying for news globally has not been accounted for in their business models, and it’s an expense they are not keen to wear.




Read more:
It’s not ‘fair’ and it won’t work: an argument against the ACCC forcing Google and Facebook to pay for news


The Conversation


James Meese, Research fellow, RMIT University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

It’s not ‘fair’ and it won’t work: an argument against the ACCC’s news media bargaining code



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Damien Spry, University of South Australia

Google and Facebook have threatened to limit or remove news services for Australian users, in response to the Australian Competition and Consumer Commission’s draft news media bargaining code.

This week, Facebook announced should the code become law, the company would stop letting publishers and users share local and international news on its Australian Facebook and Instagram sites.

Google has also made implicit threats to limit its Australian news services – potentially by removing Google News in Australia, as it did in Spain in 2014.

Arguments in favour of the code centre on two points. First, that Australian media outlets are in critical danger of going bust because of Google and Facebook’s dominance of the digital advertising market.

Second, that Google and Facebook are Godzilla-like entities dominating the market and resisting any regulation attempt – especially one that could set an international precedent.

It’s true regulation has a role in addressing the anti-competitive aspects of the digital advertising industry, but I have doubts about the ACCC’s code. It would allow commercial news businesses to bargain with Google and Facebook, in order to be paid for Australian news content included on their platforms.

But I don’t think it will work (which I say reluctantly as both Google and Facebook have much to answer for). I also don’t think the code is fair – and there’s a better way to solve the problem.




Read more:
In a world first, Australia plans to force Facebook and Google to pay for news (but ABC and SBS miss out)


Misunderstanding how news works on social media

For years, Facebook has tinkered with its algorithm to prioritise posts from users’ personal connections, in what chief Mark Zuckerberg characterised as a preference for the digital lounge over the digital town square.

Basically, your Facebook News Feed (the main feed in which you discover new content) isn’t really a “news” feed. Rather, it features personalised content from those you most often, or have most recently, connected with.

If a news story appears on your feed, it has likely been shared by one of your connections. Or, you may be following that company’s Facebook page, or the company may have paid to advertise (boost) the content.

Which news stories you come across on Facebook depends on a variety of factors and algorithmic decisions. This process is complicated and vastly different to how news is presented on a publication’s website, or in a newspaper.

The ACCC’s attempt to have media businesses “fairly” paid for the value of Australian news on social media is problematic because accurately attributing value to this content is anything but straightforward.

It’s worth noting a major point of resistance against the ACCC code is the requirement for Google and Facebook to give 28 days’ notice of algorithmic changes that will affect either referral traffic to news, or the ranking of news behind paywalls.

A person engages with content on facebook via their mobile.
Social media algorithms dictate you’re more likely to be exposed to content that reflects your past online activity, as well as the activity of your online friends.
Shutterstock

The opaque business of digital advertising

Commercial news today is funded largely through advertising based on audience numbers and demographics, rather than content alone (excluding subscription models).

Traditionally, however, audiences have been targeted based on news content. For example, ads for wedding dresses would be placed in bridal magazines. In such scenarios, the content itself is valuable to advertisers because it attracts their specific audience.

In digital advertising, however, the news content is often secondary or even inconsequential for generating ad revenue. The ads target their audience directly based on a user profile of recorded behaviours, characteristics and preferences. The page the ad appears on may be a factor, but one of many.

This is called programmatic advertising. When you visit a site, an automated “bidding war” is instantly conducted where your user profile is matched against potential advertisers. The winner takes the ad spot – and this is decided by several factors including offer price, as well as the likelihood of the ad being clicked.

All of this happens in the time it takes for a website to load (about 200 milliseconds).

The ACCCC code proposes remuneration for publishers based on a negotiated value of news content, but the value of news for online advertisers isn’t derived from the content as much as the targeted audience.

Hence, the tussle between the ACCC, Google and Facebook is both confusing and confused.

Assessing the value of news

The ACCC code also conflates the ways digital news content and social media users are socially and commercially valued. In explaining the need for the code, the ACCC states:

While bargaining power imbalances exist in other areas, the bargaining power imbalance between news media businesses and major digital platforms is being addressed as a strong and independent media landscape is essential to a well-functioning democracy.

This “public sphere” ideal is the premise for treating news content as being important enough to force digital giants to subsidise it. Fair enough, but the ACCC’s “professional standards test” which news businesses must pass to qualify for remuneration sets a low bar.

It doesn’t consider important aspects of public interest journalism, such as concentration of ownership, or newsroom diversity – a vexed issue in Australia’s news landscape.

Also, the code states the ABC and SBS are not able to claim remuneration (but can still benefit from information about algorithms and data). This is based on the idea that commercial news media are more vulnerable than public broadcasters, due to advertising revenue lost to Google and Facebook.

With this, the argument has changed: the value of news is not only democratic, it’s also commercial.

There is another way

It seems Google and Facebook would rather take extreme measures than be forced to pay for news, or provide news businesses information about algorithm changes and user data. Both companies have claimed they provide greater value to Australian news businesses than they receive.

Perhaps the way forward is to regulate programmatic advertising. Specifically, we should scrutinise the complex network of companies that discretely trade data profiles and advertising space. And this industry is dominated by, guess who, Google and Facebook.

Reform in this space may help address the advertising revenue and market power problems the code seeks to resolve.

The ACCC’s next cab off the rank is a review and report on the ad tech industry that considers these issues.

Hopefully it will suggest approaches to regulating the digital advertising market. This seems a better option than the compensation currently being sought.




Read more:
How the shady world of the data industry strips away our freedoms


The Conversation


Damien Spry, Lecturer, University of South Australia

This article is republished from The Conversation under a Creative Commons license. Read the original article.

If Facebook really pulls news from its Australian sites, we’ll have a much less compelling product



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Rob Nicholls, UNSW

Facebook has announced it will ban publishers and people in Australia from sharing local and international news on Facebook and Instagram if a proposal to force tech giants to pay for news becomes law.

The announcement follows the release of the Australian Competition and Consumer Commission’s draft news media bargaining code, under which Google and Facebook would be forced to pay for news on their sites to help fund public interest journalism. Treasurer Josh Frydenberg announced in April the code would be mandatory.

On its website, Facebook Australia’s Will Easton said:

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.

Google is campaigning against the same draft code, telling users of Google Search and YouTube the services would be under threat unless the government dumped its proposed revenue-sharing laws.




Read more:
‘Suck it and see’ or face a digital tax, former ACCC boss Allan Fels warns Google and Facebook


Facebook risks making its products less compelling

If Facebook follows through with this threat, it will potentially lead to very uncompelling content on both Facebook and Instagram. Can you imagine Instagram or Facebook without the ABC or Australian news sources?

How are you going to share interesting information with family and friends without being able to put links into posts?

Facebook claims the ACCC code “misunderstands the dynamics of the internet”. But it seems Facebook misunderstands how mandatory industry codes work. If you want to be a platform business in Australia, you have to follow the relevant code. If not, you can exit.

The ACCC code is similar to the franchising code of conduct. For instance, if I want to set up a pizza franchise in Australia, as a franchisee I have to abide by the franchising code of conduct.

Those are the rules of the game in Australia because there’s a recognised power imbalance between franchisors and franchisees. The same goes for news media businesses and social media platforms.

Facebook’s public response focuses largely on the exchange of money for news content but the ACCC code is much broader than that; it’s not just a way for news media businesses to be paid. It recognises Australian news content on social media platforms provides value to both sides and any resulting payment is simply a net of that value.

On the other hand, Facebook has suggested it will have to pay for every bit of news that appears on its platforms. In fact, the code allows for the private values of each news media business to be revealed during negotiations, which may end up in a price that is actually very low for Facebook, or even free.

The ACCC allows for both the news media businesses and platform businesses to negotiate, but Facebook’s threat today suggests they are in no mood for negotiation.

A blanket ban

If Facebook sticks to its claims, it would need to implement a blanket ban on all Australian news media businesses.

This proposition isn’t compelling because it means no news at all. And then there’s the issue of fringe news and information sources.

You could argue citizen journalists and amateur news content creators aren’t media businesses, so you’ll still have them – but they won’t have the checks and balances in place required by the media industry.

Sources such as QAnon actively and deliberately spread misinformation and will also remain. These sources could cause irreparable damage if they go unchecked or without any reliable rebuttal.

A calculated, commercial response

Facebook’s position is a commercial one and presumably has been carefully thought through.

To the extent Facebook fails to go ahead with the threat of removing all news for Australian users, the platform will inevitably be captured by the ACCC code.

If they were to post news without paying, the ACCC would likely come down on Facebook. The penalties could be as high as 10% of Facebook’s annual revenue in Australia.

What about Facebook News?

Facebook News offers news content from approved publishers (who are paid), collated for users to consume within the Facebook platform. The service launched last year in the US and could have been a viable option for Australia’s news media businesses.

But this service wasn’t offered early enough to Australia. The current debacle is a result of both Facebook and Google holding back in negotiations when there could have been a voluntary code of conduct much earlier.

Voluntary codes are non-mandatory sets of standards that aim to help organisations such as industry associations deal with their members and customers. They only apply to those who sign up to them.

Initially, the ACCC was directed to try to negotiate a voluntary code and the change to a mandatory one was driven by the failure of these negotiations.

It’s Facebook’s failure to make a sensible offer early enough that has landed it in this position.

At the end of the day, if Facebook follows through on its threat, we’ll end up with a platform that is much less appealing. More than anything else, that’s likely to drive the decline of Facebook.




Read more:
In a world first, Australia plans to force Facebook and Google to pay for news (but ABC and SBS miss out)


The Conversation


Rob Nicholls, Associate professor in Business Law. Director of the UNSW Business School Cybersecurity and Data Governance Research Network, UNSW

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Facebook and Google used to be the future of news. But now media companies need more strings to their bow



Kedar Dhond/Unsplash, CC BY

James Meese, RMIT University and Edward Hurcombe, Queensland University of Technology

Given the recent commentary about the reforms proposed for the news media sector, you would be forgiven for thinking Google and Facebook are the only game in town.

The planned reforms arose from last year’s Digital Platforms Inquiry by the Australian Competition and Consumer Commission (ACCC), which focused squarely on the corporate behaviour of these two tech behemoths.

It is clear Google and Facebook will be the first platforms regulated under the draft mandatory code that will potentially force them to pay for content produced by Australian news media companies. The move is a response to what the ACCC describes as “a significant bargaining power imbalance […] between Australian news media businesses and Google and Facebook”.

This idea that news companies are essentially stuck with Google and Facebook, for better or worse, is a common view. Yet while that might have been true a few years ago, media companies are realising there are other ways to cultivate readers, and there’s no need to be beholden to tech platforms that generate clicks but don’t want to pay for the privilege.

In the mid-2010s, many news companies seemed to follow Facebook’s every move. When Facebook promoted video, the media invested in video. When it down-ranked clickbait headlines, content writers frantically altered their style to maintain their presence in the news feed. Newsrooms have had a similarly dependent (albeit less direct) relationship with Google.

The focus on adapting to Google and Facebooks’s algorithms completely changed newsroom practices over the past decade, as journalists have weighed editorial considerations against audience metrics.

Is this still the case?

This dependency developed at a time when major platforms, particularly Facebook, were engaging substantially with the distribution of news. But in recent years this trend has declined, as governments have begun to regulate platforms in response to concerns over “fake news”.

Facebook performed perhaps the most public pivot, changing its algorithm in January 2018 to promote content from users’ friends and family. As a result, traffic to news sites fell, leaving profit-starved media companies to pursue alternative strategies or simply lay off staff.




Read more:
‘Suck it and see’ or face a digital tax, former ACCC boss Allan Fels warns Google and Facebook


In our research, published earlier this year, we spoke to 15 Australian journalists and editors who had collectively worked across 11 media companies after the dust had settled from the 2019 crisis.

We asked them whether their companies still depend on Facebook for traffic, or whether they have moved to other platforms, or are now doing something else entirely to cultivate their readership.

Breaking up with Facebook

Many respondents, particularly those who had worked at newer companies focused on social media, revealed they had followed the demands of the Facebook algorithm at times. They had pivoted to video and had focused on share counts. However, respondents working at older media companies also noted that lots of readers still visited their publication’s home page, which challenges the idea that companies depend totally on Facebook.

Companies were also exploring different ways of generating revenue. These included placing ads inside content (known as native advertising) and holding events.

The standout trend, however, was a renewed focus on subscriptions, ensuring that a certain percentage of readers actually paid money for the news product at some point.

The Conversation (which does not charge for access to its content) was one of the newsrooms that saw a steep drop in traffic as a result of the January 2018 algorithm change. As such, it has pivoted its digital strategy to prioritise the channels over which it has the most control, particularly its daily newsletter.

That’s not to say companies have stopped trying to engage with big platforms. Many are consciously trying to make their news easy to find via Google search (a process called search engine optimisation. Some companies (including The Conversation) have also begun distributing news through Instagram (which is owned by Facebook).

Yet although the big platforms are doubtless here to stay, our research reveals a distinctly changed relationship between news and social media, compared with the past decade. Many companies, particularly newer ones like Buzzfeed and Vice, previously built huge audiences off the back of social media, and grew at a dizzying rate as a result. Now, companies are more interested in securing a stable revenue stream than in harvesting clicks.

The pandemic effect

This has become even more important amid the economic chaos caused by COVID-19. Advertising spending has dried up, leading to another round of media industry layoffs.

This suggests news media are still struggling to secure an alternative income stream to plug the hole in advertising revenue. The big question is whether big tech platforms will step in and help fill the gap by making financial contributions to news providers. Google’s current campaign against the draft mandatory code suggests they are deeply unwilling to do this.




Read more:
Google’s ‘open letter’ is trying to scare Australians. The company simply doesn’t want to pay for news


Our research shows the relationship between news media and big tech platforms is far from straightforward. This is supported by a recent survey, which found that while many young people access news through social media, older people still prefer television or news websites. Not every Australian gets their news via social media.

There may come a time when platforms become the central access point for news, but it hasn’t happened yet. This doesn’t mean the ACCC should abandon platform regulation, but it does mean news companies are probably wise to find other ways of reaching their readers while they still can.The Conversation

James Meese, Research fellow, RMIT University and Edward Hurcombe, Research associate, Queensland University of Technology

This article is republished from The Conversation under a Creative Commons license. Read the original article.

‘Suck it and see’ or face a digital tax, former ACCC boss Allan Fels warns Google and Facebook




Andrea Carson, La Trobe University and Andrew Dodd, University of Melbourne

Have you used Google lately and been greeted by a yellow warning saying that the way Australians search on Google is under threat?

To understand why these messages are appearing, Media Files interviewed former chair of the Australian Competition and Consumer Commission (ACCC), Professor Allan Fels, and CEO of the Public Interest Journalism Initiative (PIJI), Anna Draffin (full recording above, recorded from home due to the pandemic).




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Google’s ‘open letter’ is trying to scare Australians. The company simply doesn’t want to pay for news


This episode of Media Files is about world-first laws to be introduced later this year that will force Google and Facebook to pay for news on their sites to help fund public interest journalism.

The yellow warning messages by Google (which also appear on its sister site, YouTube) aim to garner public support for a campaign to pressure the federal government to dump revenue-sharing laws planned for later this year.

In a similar vein, Facebook’s Australian and New Zealand director of public policy, Mia Garlick, argued in the Sydney Morning Herald before the draft laws were released, that Facebook already provided top value to media outlets with

billions of opportunities for publishers to monetise their stories, gain new paying subscribers, serve ads, and keep Australians on their websites.

And while Allan Fels said he’s not surprised by the tech giants fighting back against the new law, the public will expect the tech giants to “suck it and see”.

“I think people will ask Google and Facebook to ‘suck it and see’ to see what turns out instead of just going home with a cricket bat or baseball bat,” said Fels.

“It’s normal, it’s par for the course, in ACCC matters, that parties make threats […] with jobs, investment, higher prices, leave the country. Everything!”.

Fels believes the Morrison government may well respond with a new digital tax if Google or Facebook pulls some business out of Australia, like it did in Spain in 2014. Then, the Spanish government charged Google copyright fees for using news snippets, so Google shut down its news service.

“Personally, I think that the government has got this huge stick in the closet if Google walks or partly walks, and that is to put on a digital tax,” Fels said, adding that

A digital tax is being talked about globally, mainly at the OECD. And virtually every member of the OECD wants to put a digital tax on the platforms except the US. Certainly the US under Donald Trump […] But even if the US continue to oppose it, I think a lot of countries are just going to proceed with their own digital tax.

How did we get here?

Following the ACCC digital platforms inquiry report last year, the consumer watchdog recommended the two tech giants pay Australia’s major newsrooms (excluding the SBS and ABC) an annual fee to use news on their sites.

Anna Draffin and the big media companies agree with the ACCC’s findings that media companies cannot fairly compete with the digital platforms to win advertising revenue, and that this revenue shortfall has led to masthead closures and journalism job cuts.

Draffin said its introduction is urgent as COVID-19 has accelerated the demise of many news outlets, particularly in regional Australia.

At first, the ACCC was to oversee a voluntary code with the technology companies negotiating in good faith with the big news outlets.

But, unhappy with the progress of the bargaining talks, Treasurer Josh Frydenberg announced in April the code would be mandatory. The government released draft laws in July sparking Google’s fear campaign warning its users that Australians “search experience will be hurt by new regulation”.

In an August 24 blog post, Google argues it helps “more than 20 million Australians” and is unlikely to shut down Australian news from its search engines.

A screen shot of a blog post from Google Australia.
Google Australia’s blog post said the firm helps ‘more than 20 million Australians and over one million businesses in Australia.’
Google

Facebook contends news is just a fraction of the information on its platform and the mandatory code is unnecessary.

ACCC chair Rod Sims, on the other hand, argues that

News content brings significant benefits to the digital platforms, far beyond the limited direct revenue generated from advertising shown against a news item […] News media businesses should be paid a fair amount in return for these benefits.“

The mandatory code includes transparency measures to force the digital platforms to share data and insights about how it uses algorithms to rank news content online.

Draffin said while the proposed laws are welcome, at this stage, they do not include the public broadcasters nor do they include smaller newsrooms with annual turnover under A$150,000.

“The code alone isn’t necessarily going to be the solution particularly for that [smaller] end of the market,” said Draffin.

“New market entrants would largely sit outside of any benefit from the code. So there could be room for a loan or venture capital fund for start-ups as a separate policy setting,” she said.




Read more:
In a world first, Australia plans to force Facebook and Google to pay for news (but ABC and SBS miss out)


The draft laws force the companies to negotiate for up to three months or face a binding binary dispute resolution where independent arbiters determine the winning bid among the bargaining parties. Breaches of the news laws would attract fines of up to $10 million or 10% of a company’s annual domestic turnover.

Public consultation into the draft mandatory bargaining code closes this Friday, August 28.


Additional credits

Theme music: Susie Wilkins.

Image

ShutterstockThe Conversation

Andrea Carson, Associate Professor, Department of Politics, Media and Philosophy, La Trobe University and Andrew Dodd, Director of the Centre for Advancing Journalism, University of Melbourne

This article is republished from The Conversation under a Creative Commons license. Read the original article.

In a world first, Australia plans to force Facebook and Google to pay for news (but ABC and SBS miss out)


Rob Nicholls, UNSW

The Australian Competition and Consumer Commission has released its draft news media bargaining code, announced today by Treasurer Josh Frydenberg.

The draft code allows commercial news businesses to bargain – individually or collectively – with Google and Facebook, in order to be paid for news the tech giants publish on their services.

According to ACCC chair Rod Sims, the code aims to address the bargaining power imbalance between news publishers and major digital platforms, to bring about fair payment for news. As Frydenberg said:

We want Google and Facebook to continue to provide these services to the Australian community which are so much loved and used by Australians. But we want it to be on our terms.

The ACCC has previously found Google and Facebook’s failure to pay for news content is eating into the advertising revenues which fund journalism.

But what’s ‘news’?

The code is set out as exposure draft legislation and an explanatory memorandum.

These set out the rules for who can bargain. To be eligible, a news business must have employed journalists, earn more than A$150,000 per year in revenue and be registered with the Australian Communications and Media Authority (ACMA).

And they must provide “core news”, defined as:

journalism on publicly significant issues, journalism that engages Australians in public debate and informs democratic decision making, and journalism relating to community and local events.

How will bargains be struck?

The code does not specify how much news businesses should be paid. Instead, it provides a negotiating process in which Google and Facebook must take part. The negotiating phase lasts three months and includes at least one day of mediation.

If there is no agreement at the end, the process moves to compulsory arbitration (by an ACMA appointed panel) which both parties pay for. The arbitration panel will then select one of the final offers in a process sometimes called “baseball determination”. Their decision will be binding.

The range of Facebook services subject to arbitration include Facebook News Feed, Instagram and the Facebook News Tab. The Google services are Google Search, Google News and Google Discover.

WhatsApp (owned by Facebook) and Youtube (owned by Google) are not included. But if both parties agree, arbitration under the draft code could include other relevant digital platform services, too.

The ACCC will also be able to make submissions in the arbitration process (which the arbitrator can decide to consider or not). Under limited and unlikely circumstances, the arbitrator may adjust the more reasonable of the final two offers.

Algorithmic change notices

The draft code introduces a series of “minimum standards” for digital platforms to meet in their dealings with news businesses.

These include a requirement for Google and Facebook to give 28 days’ notice of any algorithmic change that will affect either referral traffic to news or the ranking of news behind paywalls.

This gives news businesses the opportunity to adapt their business models to ensure their content retains its prominence. More importantly, it means their negotiated revenue will not drop. It may also help in decisions about what content stays behind paywalls.

The same notice period is required for substantial changes to the display and presentation of news and advertising directly associated with news.

There will be an obligation on Google and Facebook to give businesses clear information about the nature and availability of user data collected through users’ interactions with the news.

This does not mean Google or Facebook must share the data itself — only that news businesses will be informed of what kind of data are being collected.

More moderation opportunities

There are also obligations on the tech giants to publish proposals which appropriately recognise the media business’ original news on their platforms and to provide those businesses with flexible tools for user comment moderation.

In addition, Google and Facebook must allow news businesses to prevent their news from being included on any individual platform service. For instance, they may choose for an article to appear on Google Search but not Google News.

News businesses will be able to moderate comments more easily. This is important considering they can be sued for comments published on their posts via platforms such as Facebook.




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ABC and SBS lose out

The ABC and SBS only benefit from the minimum standards imposed on digital platforms under the code. They are excluded from the remuneration process. The government said this is because advertising revenue is not the principal source of funding for public broadcasters.

Anti-discrimination provisions are expected to prevent Google and Facebook from prioritising publicly-funded news to take advantage of this.

Not a windfall, but still good news

The draft code won’t result in a A$600 million payday for news businesses, as Nine’s chair proposed in May. However, the negotiation and arbitration process does provide certainty of a positive commercial outcome for news providers relying on advertising.

There will also be more work required for Google and Facebook to give notice of algorithmic changes, which are managed in the United States. This obligation will mean adjustments to both the tech giants’ business models.

Google has already taken steps down this path by successfully negotiating revenue sharing with some Australian news businesses. In effect, it has created a benchmark for its position in the new negotiation framework.

Meanwhile, Facebook has argued “news does not drive significant long-term commercial value” for it. However, it said it was committed to following “sensible regulatory frameworks for digital news”.




Read more:
Facebook vs news: Australia wants to level the playing field, Facebook politely disagrees


Penalties for breach

A breach of the code by Facebook or Google could have a few potential outcomes. The first is an infringement notice which has a penalty of A$133,200 for each breach.

If the ACCC takes one of the tech giants to court, the maximum penalty is the higher of A$10 million, 10% of the digital platform’s turnover in Australia in the past 12 months, or three times the benefit obtained by the tech giant as a result of the breach (if this can be calculated).

The ACCC has previously had success against franchisers for breaches of the mandatory Franchising Code. It will likely be just as vigilant in policing the news media bargaining code.

The draft code is open for public comment until the end of August. The final version will likely be considered by parliament in September.The Conversation

Rob Nicholls, Associate professor in Business Law. Director of the UNSW Business School Cybersecurity and Data Governance Research Network, UNSW

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Facebook vs news: Australia wants to level the playing field, Facebook politely disagrees



Shutterstock

Tim Dwyer, University of Sydney

The Australian government is setting out to develop a “bargaining code” to address power imbalances between news media publishers and digital platforms such as Facebook and Google. The creation of this code was recommended last year in the final report of the Digital Platforms Inquiry held by the Australian Consumer and Competition Commission (ACCC).

The ACCC is planning to publish a draft version of the code at the end of July, but in the meantime it has asked interested parties to contribute their views. Most submissions won’t be made public until the draft code is released, but some stakeholders – including Facebook – have published their submissions themselves.

In Facebook’s submission, it sets out to rebut the ACCC’s understanding of the digital media landscape.

Facebook argues it doesn’t really need news publishers because news content is substitutable, and anyway the platform prioritises content from family and friends in people’s news feeds.

In effect, Facebook is saying it does more good than harm to journalism and news media businesses. The bargaining process hinges on a dispute over the value of news content and exactly what it contributes to the platform’s business – which is currently unclear, particularly to those outside the tent.




Read more:
No more negotiating: new rules could finally force Google and Facebook to pay for news


Valuing news

Facebook’s approach plays into a narrative about how consumers and advertisers migrated to the web in the early 21st century, collapsing the 150-year-old advertising model of newspapers.

Historically, news was the “poor cousin” in direct commercial arrangements between advertisers and newspapers (and later broadcasters). News evolved as byproduct of this exchange and so it remains, secondary to the main game, a kind of subsidy and a “filler” to be used by these giant digital machines of platform capitalism.

But news is also acknowledged as a public good with broader societal benefits. Platforms are slowly realising they cannot avoid regulation to reduce the harms that result from their own market dominance.

Facebook’s chief executive Mark Zuckerberg has identified the platform’s key problematic areas as “harmful content” (such as hate speech and inappropriate imagery) and “election content” (such as targeted political advertising).

Facebook itself has moved from strongly opposing external regulatory interventions to guardedly accepting the idea, as long as the particular regulation suits them.




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Media Files: ACCC seeks to clip wings of tech giants like Facebook and Google but international effort is required


A strategic rebuttal

In its ACCC submission, Facebook argues it hasn’t contributed to the demise of news businesses by hoovering up advertising revenue. Instead, it points out the rise of the internet had already sent news media into structural decline.

If anyone is to blame, according to Facebook, it is the news businesses themselves who didn’t see the digital tsunami on the horizon.

Unsurprisingly, Facebook does not mention its own substantial market power: with Google, the social media giant carries the bulk of online advertising. As US media scholar Victor Pickard has noted, Facebook and Google between them collect 85% of all growth in digital advertising revenue, leaving very little for news publishers.

Facebook’s take on the news market

Facebook argues the ACCC, the news industry and the rest of us are all suffering from “misconceptions”. In broad terms these are: that Facebook is responsible for the market failure of news; that it “steals” news content and news publishers have no control over its surfacing; and that there’s a value imbalance between the platforms and news media businesses which favours Facebook, and therefore Facebook should compensate the businesses at commercial rates.

However, Australians are increasingly getting their news via social media newsfeeds. Research from the University of Canberra shows the COVID-19 pandemic has boosted this trend, and Reuters has found older Australians too are increasingly using social media as a pathway to news.

Australians are increasingly getting their news via social media.
Shutterstock

Clearly, digital platforms and news media businesses have a symbiotic relationship. But it is far from an equitable one: with a market capitalisation of US$671 billion, annual revenue of more than US$70 billion, and around 1.73 billion users every day, Facebook dwarfs any news media business.

As social media platforms are growing more important when it comes to accessing news, and news is a social good, the ACCC is calling for a more sustainable, if not an aspirationally equitable relationship.

Facebook likes the idea of a new Australian Digital Media Council modelled on the Australia Press Council. It would arbitrate disputes between news media publishers and digital platforms.

But is this a reasonable comparison? Can news publishers be equated with individual complainants who seek remedies?

Trying to dodge responsibility?

The central theme of Facebook’s submission is a refusal to acknowledge there is a power imbalance between news media businesses and Facebook and Google that needs to be addressed.

Facebook questions the idea of even casting their relationship to the news media sector in that way. Indeed, the company appears to be in denial about the simple fact noted by Treasurer Josh Frydenberg’s comment on the handing down of the Digital Platforms Inquiry report:

Make no mistake, these companies are among the most powerful and valuable in the world.

If nothing else, Facebook has demonstrated its well-oiled PR machine and the phalanx of people ready to defend its surging revenue base. Its counter-arguments to the ACCC are evidence of this, and also a determination to maintain absolute algorithmic control over the news feed.

From Facebook’s perspective, a key impact of COVID-19 has been that people are now spending increasing amounts of time on their platform.The Conversation

Tim Dwyer, Associate Professor, Department of Media and Communications, University of Sydney

This article is republished from The Conversation under a Creative Commons license. Read the original article.