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.

Vital Signs: Google’s huge market share doesn’t automatically make it a monopoly



shutterstock.

Richard Holden, UNSW

This week the United States Department of Justice (DoJ) filed a lawsuit accusing Google of using “anticompetitive tactics to maintain and extend its monopolies in the markets” for search and advertising.

It is the most significant antitrust case since the US government took on Microsoft in 1998 for using its dominant position as the provider of the Windows operating system to force PC makers to bundle its Internet Explorer web browser.

That case was fought out in US courts for years before Microsoft agreed to settle in 2001. This case will no doubt be heavily litigated, and likewise take years to conclude. But it’s not too soon to consider the basic economics.

The bottom line is more complicated than one might think. Yes, Google has a huge share of the search-engine market – 92% globally according to statcounter.com, compared with 2.8% for Microsoft’s Bing, 1.6% for Yahoo! and 0.5% for DuckDuckGo.

But does that give Google a lot of “market power” – the ability to charge high price or produce low-quality products? Probably not.

To judge if a company like Google is really a monopolist, it is crucial to understand the difference between ordinary markets (like those for clothes, cars, or breakfast cereal) and technology markets (like those for internet search, social media, or ride sharing).




Read more:
The US is taking on Google in a huge antitrust case. It could change the face of online search


Markets with ‘network externalities’

Any introductory economics textbook will tell you a large market share is smoking-gun evidence of market power; and that with market power comes the ability to shut out competitors, charge high prices and even get away with producing low-quality products.

Economists of all stripes agree that regulating monopolies and making markets more competitive benefits consumers, through lower prices and better products.

Indeed, this was the motivation behind the so-called “trust-busting” movement in the US in the early 20th century. The most famous scalp was John D. Rockefeller’s Standard Oil, which the US Supreme Court ordered in 1911 be broken up into 34 separate companies. (The break-up made Rockefeller the world’s richest man).

But internet search isn’t like oil. Neither is social media, ride sharing or platforms like Amazon. These are what economists call “markets with network externalities”. That is, when more consumers use the product, it becomes more valuable for other consumers.




Read more:
Lawmakers keen to break up ‘big tech’ like Amazon and Google need to realize the world has changed a lot since Microsoft and Standard Oil


Facebook is useful because it connects one with lots of other users. A thousand little, disconnected social media platforms would be much less useful. Amazon connects lots of sellers with million of consumers. This is hugely valuable for both. Google connects lots of consumers with advertisers and information. Again, this is valuable to both sides of the market.

Because network externalities mean — all else being equal — the bigger the market share the more valuable the company’s product is to consumers, we tend to see one dominant company and a few smaller ones in such markets.

Just because tech companies have a big share of the market now, however, doesn’t mean they are destined to keep it.

Remember Netscape? In the mid-1990s it had a 80% share in the browser market, before losing it to Microsoft’s Internet Explorer.

Netscape Navigator Version 1.11
Netscape Navigator version 1.11.
OiMax/flickr, CC BY-NC-ND

But Internet Explorer’s dominance, peaking at 95% share in the early 2000s, didn’t last either. It now claims barely 1% of the browser market.

This is why companies in markets with network externalities are never asleep. Uber and Facebook are constantly running experiments to innovate their products, as are other companies like Amazon and, you guessed it, Google.

Influencers and defaults

An important part of the Department of Justice’s suit against Google is that it allegedly pays Apple as much as US$11 billion a year to be the default search engine on the Safari browser on every iPhone.

This is a bit like paying for a social media influencer to plug your product — with a twist. Making something the default doesn’t mean the user has to use it, but the small effort to choose an alternative means most don’t bother.

But if it really wasn’t a good product and didn’t deliver good search results, wouldn’t consumers (a) remove it and (b) be less likely to buy iPhones?

There’s a big difference between something being a default and there being no choice. Articulating this difference may end up being an important part of how the Google litigation plays out.

Indeed, Microsoft making Internet Explorer the default browser in Windows has been an ongoing source of back and forth with US and European competition authorities.




Read more:
Twitter is banning political ads – but the real battle for democracy is with Facebook and Google


Ultimately misguided

As with the suits against Standard Oil and Microsoft, the case against Google will be decided by the courts, perhaps ending with the US Supreme Court. The outcome will be instructive as to whether other tech companies like Amazon, Facebook or Uber will also wind up in the firing line.

Ironically, at a time of extreme polarisation in US politics, breaking up big tech companies is popular on the left and the right.

But we should remember that consumers are huge beneficiaries from these tech companies. Think about how much it used to cost to take and print photographs. A 2018 International Monetary Fund report cites research suggesting US consumers would need more than US$25,000 a year to compensate for the loss of free services from tech companies.



International Monetary Fund, Measuring the Digital Economy, 2018

That’s a lot.

What is crucial for competition regulators around the world to note is that the markets in which big technology companies operate are not like other markets. Because of network externalities they tend to have big “in” firms (with a large market share) and smaller “out” firms (with small market shares but providing competitive discipline).

That doesn’t mean these markets aren’t competitive. It means the “in” companies have a lot to lose by being leapfrogged by a small competitor. Which is why they work so hard to innovate and keep prices low.The Conversation

Richard Holden, Professor of Economics, UNSW

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

The US is taking on Google in a huge antitrust case. It could change the face of online search


Katharine Kemp, UNSW

The US Department of Justice (DoJ) has filed an antitrust lawsuit against Google for unlawful monopolisation. The department says Google’s conduct harms competition and consumers, and reduces the ability of new innovative companies to develop and compete.

It’s the most important monopolisation case in the US since 1998, when the DoJ brought proceedings against Microsoft.

It’s possible the current proceedings, given their timing, are politically motivated. US President Donald Trump and other Republicans have repeatedly voiced the view that Google is prejudiced against conservative beliefs.

But even if Democratic candidate Joe Biden is elected president, this action against Google is unlikely to go away.

The ramifications for Google, if the court rules against it, could ultimately be dramatic. The DoJ’s associate deputy attorney general, Ryan Shores, has refused to rule out seeking orders to break up the tech giant, saying “nothing is off the table”.

Google’s monopoly power

Google’s economic power is no secret. Regulators around the world, including in the European Union, are investigating the company’s conduct and bringing actions under competition, consumer and privacy laws.

US Attorney General William Barr said the new DoJ action:

[…] strikes at the heart of Google’s grip over the internet for millions of American consumers, advertisers, small businesses and entrepreneurs beholden to an unlawful monopolist.

Specifically, the DoJ claims Google is illegally monopolising the markets for online search and search advertising (the advertising that appears alongside search results).

According to the DoJ, Google’s US market share is roughly:

  • 88% in the market for general search services

  • 70% in the search advertising market.

However, holding a dominant position isn’t against the law. A company is allowed to enjoy a dominant position or even a complete monopoly, as long as it doesn’t do so by unlawful means.




Read more:
The ACCC is suing Google for misleading millions. But calling it out is easier than fixing it


So what has Google allegedly done wrong?

The DoJ’s main complaint is Google has entered into several “exclusionary agreements” that preserve its monopoly power by hindering competition from rivals (and potential rivals). Exclusionary agreements are deals that restrict the ability of at least one party to deal with other players.

The DoJ says Google spends billions of dollars each year on:

  • long-term agreements with Apple that require Google to be the default search engine on Apple’s Safari browser

  • exclusivity agreements that forbid pre-installation of competing search services by certain mobile device manufacturers and distributors

  • arrangements that force certain mobile device manufacturers and distributors to pre-install Google search applications in prime locations on mobile devices and make them undeletable, regardless of consumer preference

  • using monopoly profits to buy preferential treatment for its search engine on devices, web browsers and other search access points.

The DoJ claims these agreements have created a “continuous and self-reinforcing cycle of monopolisation” in the market for online search and search advertising (which relies on Google’s dominance in online search).

Google has responded by describing the court action as “deeply flawed”. In a blog post it said:

[…] people don’t use Google because they have to, they use it because they choose to.

It also said users are free to switch to other search engines.

But even if that’s technically true, Google’s agreements for pre-installation, default settings and preferential treatment give it a substantial advantage over its rivals.

Does any of this matter when Google is ‘free’?

Google provides services that are hugely valued the world over — and with no direct financial cost to the user. That said, “free” services can still cause harm.

According to the DoJ, by restricting competition Google has harmed search users, in part “by reducing the quality of search (including on dimensions such as privacy, data protection, and use of consumer data)”. This is an important recognition that price is not all that matters.

The logic behind this claim is that other search engines with better track records on privacy, such as DuckDuckGo, might otherwise be more successful than they are.

Or, to frame that another way, Google might actually have to compete vigorously on privacy, instead of allegedly imposing privacy-degrading terms on its users.

DuckDuckGo logo
DuckDuckGo says it ‘does not collect or share personal information’ from users.
Shutterstock

What might happen if the action succeeds?

If Google is found to have contravened the prohibition against monopolisation under the US Sherman Act, it could face substantial fines and damages claims.

But perhaps more concerning for Google would be the prospect of the DoJ seeking to break up Google’s various businesses.

Google owns a range of highly successful services, including Google search, Google Chrome, the Android operating system, and numerous ad tech (“advertising technology”) services. Google’s position and access to data in one business arguably give it advantages in its other businesses.

Eleven Republican attorneys general from various US states have joined the proceedings and could individually seek remedies.

The action won’t be having a major impact any time soon, though. Google’s lawyers estimate the case would only come before the US District Court for the District of Columbia in a year.

Could our competition watchdog be taking notes?

Google could contravene Australia’s misuse of market power law under the Competition and Consumer Act 2010, if it has engaged in conduct of the kind alleged by the DoJ that has an effect on Australian markets.

As part of its 2019 Digital Platforms Inquiry, the Australian Competition and Consumer Commission (ACCC) said Google has substantial market power in the general search and search advertising markets in Australia. It has a market share of about 95% in both cases.

If this is true, it would be unlawful for Google to engage in any conduct that substantially lessens competition in a market (or has the purpose or likely effect of doing so). This could include entering exclusionary agreements that affect Australian markets.

So far, the ACCC has twice brought proceedings against Google, alleging it misled users about how it collects and uses their data. It is also investigating the conduct of Google and Facebook, in particular, in digital advertising markets as part of its ad tech inquiry.

While Australia’s consumer watchdog might wait and see how proceedings against Google fare in the US and the EU, the recent DoJ action could encourage the ACCC in any action it might be contemplating under Australian law on misuse of market power.




Read more:
Every step you take: why Google’s plan to buy Fitbit has the ACCC’s pulse racing


The Conversation


Katharine Kemp, Senior Lecturer, Faculty of Law, UNSW, and Academic Lead, UNSW Grand Challenge on Trust, UNSW

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

Vital Signs. Google shouldn’t subsidise journalism, but the government could



Jeff Chiu/AP

Richard Holden, UNSW

You might have missed it – what with the biggest recession since the 1930s and a pandemic going on – but there may be big, and bad, changes happening to a media landscape near you.

Right now the Australian government is considering amending the Competition and Consumer Act 2010 to force Google and Facebook to pay local commercial media organisations for the sharing of their content on the digital platforms.

The News Media and Digital Platforms Bargaining Code proposed by the Australian Competition and Consumer Commission will require the tech and media companies to make terms through “mandatory binding arbitration”. It will also oblige them to divulge parts of their core intellectual property (such Google’s search algorithm).

It has been lauded as a world-first in addressing the power imbalance between the platforms and traditional news organisations.

Champions such as commission chief Rod Sims argue it’s a simple matter of forcing Google and Facebook to pay a fair price for extracting value from journalism for which they pay nothing. As Sims put it:

What this was all about was the imbalance in bargaining power, the market failure that comes from that, and underpayment for news having a detrimental effect on Australian society.

Who could argue with that? Even federal treasurer Josh Frydenberg has described it as “a question of fairness”.

But from an economic standpoint the whole bargaining code is hopelessly confused. It fails to properly understand the source of competitive pressure for media companies, and why they have lost revenues over the last 15 years.

Mandatory binding arbitration between tech and media companies is also a completely inappropriate policy tool to achieve the public policy goal of fostering high-quality journalism.

As I have written about in detail for the Stigler Center at the University of Chicago Booth School of Business, making the code law risks doing serious harm to Australian consumers while shovelling money to large media companies like Nine Entertainment and News Corp Australia.

Faced with the prospect of having to divulge key intellectual property, it would not be surprising if Google and Facebook simply prefer not to be in the Australian market. Millions of Australians using Google, YouTube and Facebook will lose out.

Media revenue sinking

Between 2002 and 2018, consulting firm AlphaBeta estimates total annual revenue for Australian newspapers fell from A$4.4 billion to A$3.0 billion. Almost all of this was due to lost classified advertising revenue, worth A$1.5 billion in 2002 but just A$200 million in 2018.

“That’s Google’s fault,” you might cry.

Actually no. The vast bulk of lost classified advertising revenue was due to online “pure-plays” such as Seek, Domain and Carsales. Google and Facebook took basically none of this revenue.




Read more:
Billions lost, boards to blame: Colleen Ryan on the rise and fall of Fairfax


The media companies were sitting on a gold mine of classified advertising. Then there was massive technological disruption due to the internet and smart phones.

That, as they say in the classics, is show business.

It doesn’t justify making companies who happened to succeed in an adjacent space at the same time fork over a chunk of their revenues.

But aren’t tech companies ‘stealing’ content?

If big tech companies were somehow allowing you and me free access to content we would otherwise have to pay for, there might be a case to answer.

That would be like Google Maps not only giving you directions to a restaurant but the means to also avoid paying for your meal.

But using a search engine does not allow you to get free meals, nor to get around a news organisation’s pay wall.




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


In fact, having their content pop up in search results, or shared on social media, helps Australian media companies to attract readers and sell subscriptions – something that now accounts for roughly half the revenues of some leading players such as The Australian.

All you get for “free” is a snippet of a line or two from the search.

For instance, when I searched for news about recently deceased US Supreme Court Justice Ruth Bader Ginsburg, I got this:

If you can figure out the full content of the article from that snippet, you should be using your superpowers for other, more lucrative purposes.

Beware the politics

There is a very real risk this misguided code will end up becoming law.

An overzealous regulator has proposed something that stands to benefit the big media companies, who are – not surprisingly – strongly for it.

Those same media companies have huge influence over public perceptions and the fate of politicians. It will be a brave elected representative who pushes back on the proposed code and draft legislation.

But if politicians were serious about resolving the real issue at stake in all of this, they would act more directly.

Like newspapers all around the world, Australian media and journalists are under pressure – and one thing most people agree on is that high-quality news and journalism is critical to a well-functioning democracy.




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


Whatever the market forces that have slashed the funding of such journalism, there is a strong case for government intervention. But if the Australian government wants to subsidise high-quality journalism, it should do it itself.

With the 10-year bond rate less than 1%, it would cost the government just A$18 million a year to fund the interest bill on A$2 billion of media subsidies a year. That’s 72 cents per Australian a year.

And all without driving away the hugely valuable services of companies like Google and Facebook that Australian consumers love.The Conversation

Richard Holden, Professor of Economics, UNSW

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



Shutterstock

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.

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).




Read more:
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.




Read more:
Media companies can now be held responsible for your dodgy comments on social media


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.

The ACCC is suing Google for misleading millions. But calling it out is easier than fixing it



Shutterstock

Katharine Kemp, UNSW

Australia’s consumer watchdog is suing Google for allegedly misleading millions of people after it started tracking them on non-Google apps and websites in 2016.

The Australian Competition and Consumer Commission (ACCC) says Google’s pop-up notification about this move didn’t let users make an informed choice about the increased tracking of their activities.

Google uses some of this data in its targeted advertising business. It can also collect sensitive information about us from third-party websites and apps which it may use in its non-advertising businesses.

The ACCC isn’t the first to claim Google hasn’t been straight about how it uses our data, nor is this the first time it has sued Google.

But even if Google gave us the whole story, what can we actually do about growing surveillance?




Read more:
Every step you take: why Google’s plan to buy Fitbit has the ACCC’s pulse racing


Google tracks your activities beyond Google

While it would take a separate article to list all the ways Google tracks your activities online and offline, the ACCC is concerned about two of the company’s data practices in particular.

First, Google has been collecting data about what you do on websites that may not seem related to Google at all. This is combined with other data collected by Google’s own services including YouTube, Gmail, Google Maps and Chrome.

The reason Google can do this is that third-party websites and apps also use Google’s services, such as ad serving or Google Analytics.

Their agreements with Google allow it to embed its technology into the websites and apps and send your activity information back to Google, without alerting you.

Second, the ACCC is concerned Google has combined its own extensive Google account holder datasets with personal data collected by ad tech company DoubleClick, which Google acquired in 2007.
This is despite Google initially claiming it wouldn’t do this without users opting in.

The data Google collects, and how it’s used

Google’s technologies are embedded in millions of third-party websites (and likely many of the ones you use).

So it’s well placed to collect data about your online activities, including research you might do on intimate topics such as depression, miscarriage, abortion, diabetes, weight loss, heart disease, divorce, erectile dysfunction and so on.

Google can then combine this data with the information it already has about you from its own services, such as where you live, what you buy, where you go and who you associate with.

Google says it doesn’t use users’ health data or other “sensitive” data for its targeted advertising business. But it does not promise it won’t collect such sensitive data, keep it, combine it with data about our other activities or use it for non-advertising business purposes.

For example, Google has made moves to enter various health services markets. And there’s speculation it may start supplying health products and life insurance in future.

Further, unless you have changed the “ad personalisation” settings in your Google account, Google can use data from third-party sites which it does not classify as “sensitive” to target you with ads. This data could include whether you’re searching for baby clothes, travel insurance, retirement living, or a house in a specific suburb.

But even if you have opted out of personalised ads, Google’s privacy policy doesn’t say it will stop collecting and retaining the data itself.

Online search for 'depression'.
Google has access to enough information to build highly detailed profiles of users, covering different aspects of their lives.
Shutterstock

What was misleading?

The ACCC claims Google’s 2016 notification about its increased tracking was misleading. The notice led with the benign headline, “Some new features for your Google Account”, followed by:

We’ve introduced some optional features for your account, giving you more control over the data Google collects and how it’s used, while allowing Google to show you more relevant ads.

The statements further down in the notification were arguably unclear about what Google actually planned to change. The ACCC says the notification was misleading because:

Consumers could not have properly understood the changes Google was making nor how their data would be used and so did not – and could not – give informed consent.

It claims Google also misled consumers by stating in its privacy policy that it would not reduce users’ rights under the policy without their explicit consent, but then did exactly that.




Read more:
94% of Australians do not read all privacy policies that apply to them – and that’s rational behaviour


Privacy concerns warrant legal backing

In this case, the ACCC’s issue is that Google didn’t give consumers the real story about its plan to vastly increase personal data collection and use this information for commercial purposes. The ACCC’s action against Google should be a warning to all companies that currently fudge their privacy terms.

But what if Google had been transparent and the pop-up box instead said: “we are going to start collecting your personal data whenever you use third-party websites or apps that use Google technologies”?

Given the millions of websites using Google technologies, is it even possible for consumers to avoid this?

In Germany, the Federal Cartel Office last year found Facebook had abused its dominance by insisting on collecting users’ personal data via embedded technologies on non-Facebook websites and apps.

It argued Facebook’s market power gave it the ability to impose these practices on users, even against their wishes.

Australia does not have an “abuse of dominance law” to address single-firm exploitative conduct, such as raising prices or imposing intrusive privacy terms. Facebook currently collects data about Facebook users – and even non-users – from third-party websites and apps in Australia, without alerting us.

Facebook logo with multiple 'dislike' buttons.
Facebook has also come under fire for tracking its users’ activities on non-Facebook websites.
Shutterstock

The ACCC may succeed in proving misleading conduct by Google. And it might obtain a substantial fine against Google – potentially up to 10% of Google’s turnover in Australia.

But to stop tech giants from doing whatever they like with our data, we’ll need to consider a broader law against unfair practices.




Read more:
Australia’s privacy watchdog is taking Facebook to court. It’s a good start


The Conversation


Katharine Kemp, Senior Lecturer, Faculty of Law, UNSW, and Academic Lead, UNSW Grand Challenge on Trust, UNSW

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