Shortcuts / 25 February 2021

Why Facebook Removed the News

Many Aussies got quite a shock when they woke up on 18 February to find no news content on their Facebook feeds. But less than a week later, following discussions with the federal government, Facebook announced it will be reversing its decision. It was the latest move in what has been a back-and-forth feud between the government and big tech over whether they should pay to have news on their platforms. So in this episode of Squiz Shortcuts, we cover the events leading up to Facebook’s decision, the push by the Australian government to protect Aussie media outlets, and where it’s all heading.

To start with, let’s take a closer look at Facebook in Oz… What’s its reach here?
We know Facebook is worth a lot ($US800 billion to be exact) and is the biggest social media platform with over 2.6 billion monthly active users. On average more than 11 million Australians use Facebook every day.

And how many actually use it to read news?
Most people use the platform to stay in contact with friends and family, but more than a third of Australians routinely use the platform to keep up with the news, according to a Nielsen study commissioned by Facebook.

But Google is no minnow either…
No it isn’t… About 19 million Aussies get online and Google – which means it has more than 94% market share of online search in Australia.

Remind me, why the push to protect media outlets in all this?
Digital platforms like Google and Facebook have undoubtedly shaken up how news outlets produce and disseminate news. And it’s no secret that traditional media companies have been bleeding print advertising revenue since the world moved online. Between 2002 and 2018 alone, newspaper revenues fell $1.4 billion, from $4.4 billion to $3 billion. And, 92% of the decline was from the loss of classifieds – that’s small advertisements categorised and placed in a newspaper. Meanwhile, online platforms like Google and Facebook continued to flourish – thanks to digital advertising dollars.

Okay, so that’s why the government got involved?
You got it. The Government undertook a review and pursued legislation to make Facebook and Google pay for the Aussie news content they host on their platforms. From the government’s perspective, news organisations are important institutions in our democracy, but the rise on online has seen the bleeding of ad revenues while on the other side, the tech companies are seeing us jump onto their platforms to find news and they are making big bucks for the content to be featured and by selling digital ads that we see while we’re there.

What do the tech giants have to say to that?
On their part, the tech giants argue that publishers benefit from the click-throughs for their site and that government regulation could destroy the principles of free and open internet. And it’s the debate that’s played out dramatically in the last couple of weeks.

So how did it all begin?
In April 2020, the ACCC – the competition regulator – was asked by Federal Treasurer Josh Frydenberg to develop a voluntary code of conduct that would cover the commercial dealings between tech giants and media outlets. But the ACCC said reaching a voluntary agreement would be “unlikely” which prompted the government to look at a mandatory code. That code is the legislation that sets out how the tech companies would be forced to pay for Aussie-produced news content featured on those platforms through a process that’s enshrined in law.

Facebook and Google wouldn’t have liked that…
Not at all. At the time, Google said it could pull its search engine from Australia (it later watered down those strong words) while Facebook threatened to pull Aussie news content from its news feed. And it did do that in mid-February just as the media bargaining code cleared the House of Representatives.

What does that mean?
The code passing through the House of Representatives basically clears the way for it to pass the Senate and become law. That would make the law the first of its kind and while Australia is a small market, the tech companies don’t want other countries around the globe getting any ideas… After all, we’re aren’t the only country with news publishers struggling for ad revenue.

Right. So then what happened?
Aussies woke up and logged in on 18 February and found no Aussie news in their Facebook feed. The media outlets also found their Facebook pages had been wiped.

Did Facebook try to negotiate at all before pulling the move?
Facebook had been in talks with publishers but the negotiations came to a halt due to concerns about penalties that could see the platforms fined up to 10% of revenue for non-compliance. And with the Morrison Government and Labor locked into passing the code through parliament, Facebook decided to make good on its threat to stop Aussies from seeing news on the platform and publishers from posting content. It was quite something… for Facebook’s part they said that the proposed code “fundamentally misunderstands”the relationship between the platform and publishers.

But the block by Facebook didn’t just capture news outlets…
No, it also impacted state government departments, support services, weather forecasts and public health organisations – the latter specifically received a fair bit of backlash given we are in the middle of a global pandemic. Seems they had a small algorithm problem. An apology came from Facebook though, and quickly it was really just the news publishers including the like of News Corp, Nine, the ABC, SBS and The Guardian that were unavailable. But Facebook said it wasn’t a huge issue for its users as news content makes up only 4% of sharing on the platform.

But that certainly wasn’t how officials saw it…
Communications Minister Paul Fletcher said Facebook’s ban removed “authoritative” news sources from its services, calling into question the credibility of other non-mainstream news that were unscathed by the ban. Meanwhile, PM Scott Morrison said Facebook’s moves were “as arrogant as they were disappointing”, adding the government won’t pull back on the legislation as he talks to world leaders to recruit support.

And isn’t there concern over misinformation?
Yeah, that’s still a big issue. The ban gathered wide condemnation by public health experts and the government for restricting access to information in the middle of a pandemic. Facebook has since vowed to address the spread of misinformation in Australia, signing an industry code alongside Twitter, Google, Microsoft, TikTok and Redbubble that will see more pop-up warnings about fake news, as well as systems to report misinformation.

So at this point there is no news on Facebook… How did that impact media outlets?
According to web analytics company Chartbeat, in the hours following the ban traffic to Australian news websites tumbled by about 13% from within Australia and 30% from overseas. Traffic from Facebook directly to news sites fell from 21% before the ban to less than 2% by midday AEDT on Thursday. It also found that audiences, overall, had not shifted to new platforms.

How did the government respond to the ban?
The federal government pulled all its paid advertising campaigns for the COVID-19 vaccine from Facebook. Health Minister Greg Hunt said the budgeted funds for Facebook ads would be reallocated. All of this happened in a flurry and it meant that our Treasurer who manages the code and Mark Zuckerberg have become quite well-acquainted.

And how’s that expected to impact Facebook?
According to the ABC, the government spent $42 million on digital advertising in 2019-20. The ACCC has reported around one quarter of all advertising expenditure in Australia goes to Facebook, so the move could cost Facebook millions.

So have the Australian government and Facebook since come to an agreement?
Of sorts… Aussie news will be back on the social media platform with the government agreeing to make amendments to the proposed media bargaining laws.

And those amendments are…
First, the government won’t apply the code if the tech company can demonstrate they have signed deals with media outlets to pay them for content. And second, the tech companies will have more time to do deals with news providers before the government gets involved. So the general gist is the tech companies want to do deals without the threat of government regulation directing them in how to do it. And it seems that this legislation going through the parliament has given Google and Facebook a bit of a hurry along…

What sort of deals have been done?
Google has agreed to multi-million dollar deals with Australian publishers, including a more than $30 million annual payment to Nine Entertainment Co over the next 5 years. They have also done deals with Seven West Media, News Corp and the Guardian.

And what about Facebook?
The first deal it’s done with Aussie media was announced after it confirmed a deal had been done with the government on changing the legislation. That was with Seven West Media, and negotiations are said to be underway with News Corp and Nine Entertainment.

I feel like there will be more to this story…
And you’d be right about that. As we write this, the legislation is yet to be passed through the parliament and we’ve been around too long to know that you never take that for granted… But after a tumultuous couple of weeks, it does look like Australia will have the world’s first code in place that will make Facebook and Google pay for news.

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