Why Facebook Is Right to Pull the Plug on Australia
This isn’t about regulating Big Tech. It’s about fleecing foreigners for news that Australians no longer want to pay for.
Australia decided to put a price on news this week, and Facebook shocked the country by declining to buy a subscription. The Australian House of Representatives passed a new media law on Wednesday that would force Facebook and Google (and only Facebook and Google) to pay Australian media outlets for the privilege of linking to their news stories. Google is still talking terms. Facebook decided to pull the plug and will no longer allow Australian users to post news.
I’m with Facebook on this one. If Australians don’t want to pay for news about their own country, it’s hardly the responsibility of foreign companies to foot the bill for them. Government rhetoric around Australia’s new media bargaining code has consistently suggested that U.S. tech companies are reporting Australia’s news without paying for it. The reality is that platforms like Facebook and Google only show the free teasers that publishers use to draw traffic to their sites.
The Australian government has in effect put a price on publishers’ advertisements. Only instead of having publishers pay Facebook to link to their content, the law requires Facebook to pay the publishers. Facebook, understandably, doesn’t want to pay to host what are essentially advertisements for Australian newspapers and broadcasters. Facebook itself carries paid advertisements, but it doesn’t place ads directly on the news snippets people post on its site. It’s the news publishers who primarily benefit from getting people to share links on Facebook. That’s why publishers are so desperate to get you to share their news.
The massive decline in newspaper (and, to a lesser extent, broadcast television) advertising revenue since the turn of the millennium is obviously linked to the rise of the internet, and Google and Facebook do dominate online advertising. It is true that social networks have been the big winners of the internet era, while most (though not all) newspapers have been among the losers. But there have been many other losers as well. Newspapers aren’t the only companies that have failed to adapt to the new online world. The logic that Facebook and Google should subsidize the news is no better than the logic that they should subsidize all the losers of the move online.
There is one crucial difference between news and all other commodities: We need serious news coverage to support meaningful democracies. As the Washington Post says on its masthead, “Democracy dies in darkness.” And in Australia, the government subsidizes the news—to the tune of a billion dollars a year for state broadcasters ABC and SBS. It also effectively subsidizes commercial broadcasters by allowing them to broadcast for free in exchange for the provision of public interest programming like news. What it doesn’t do is subsidize newspapers.
Nor would newspapers be the only beneficiaries of Australia’s new media bargaining code. It also applies to commercial broadcasters, online-only outfits, and even the two state media providers. While the struggling newspapers have been the poster children for Australia’s war on Big Tech, many of these other media outlets are doing quite well. And if television sees problems on the horizon, the challenge isn’t declining ad revenue but the rise of subscription-based streaming services—another industry that the Australian government is keen to regulate.
Unsurprisingly, there is near unanimity among Australian news outlets and commentators that Australian Prime Minister Scott Morrison is right to take on Big Tech. It is populism on steroids. The notion that the media bargaining code is all about bailing out the local properties of Rupert Murdoch’s global media empire News Corp., widespread in the international media, is as outdated as it is simplistic. Of course News Corp. mastheads have long pushed for Big Tech to pay for their snippets but so have all other major media outlets in Australia, including the state broadcasters. And the misperception that News Corp. dominates Australia’s media landscape is decades out of date. News Corp. papers run second in circulation behind those owned by Nine Entertainment (which merged with Fairfax Media in 2018), only broadcasts on cable and satellite in Australia, and has no presence on local radio.
Reacting to Facebook’s blanket ban on Australian news, Morrison said Australia would “not be intimidated by this act of bullying by Big Tech,” but the real bully in this debate is a petulant national government that doesn’t want to accept the reality that a foreign firm might simply choose to exit its market rather than pay an egregiously targeted new tax. Morrison is now trying to assemble an international coalition to force Facebook to cover—and pay for—the news. He may win. But this time, the one undermining democracy is not an unaccountable multinational corporation. It’s an elected government that sees more votes in fleecing foreigners than in taxing its own people to pay for the news that is essential to their own good governance.