UK Markets closed
  • FTSE 100

    +81.64 (+1.04%)
  • FTSE 250

    -21.23 (-0.10%)
  • AIM

    +1.03 (+0.12%)

    -0.0042 (-0.37%)

    -0.0173 (-1.4106%)

    -249.42 (-1.27%)
  • CMC Crypto 200

    -1.43 (-0.27%)
  • S&P 500

    -43.28 (-1.04%)
  • DOW

    -127.93 (-0.38%)

    -2.65 (-3.49%)

    -53.10 (-2.75%)
  • NIKKEI 225

    +107.41 (+0.39%)

    -297.89 (-1.36%)
  • DAX

    -32.76 (-0.21%)
  • CAC 40

    +67.67 (+0.94%)

Facebook faces global reckoning after backing down in Australia

Facebook CEO Mark Zuckerberg
Facebook CEO Mark Zuckerberg

It was a battle that gripped the world, pitting one of the world's most powerful men against an entire nation.

This morning, Mark Zuckerberg's stand-off with Australia ended after Facebook finally agreed to restore news content to its all users in the country.

It came after intense negotiations in which Australia agreed to amend world-first legislation forcing the tech giant and Google to pay local publishers for content.

But while Facebook may publicly claim the result as a victory, the tech giant has been left with a bloody nose.

Critics have widely called Facebook's strong-arm tactics as undemocratic. Julian Knight, chair of the Digital Select Committee, said the tech giant was “crass and deeply irresponsible”.

”This action - this bully boy action - that they've undertaken in Australia will I think ignite a desire to go further amongst legislators around the world,” he said.

News sharing on Facebook was switched off in the nation last week in opposition to the proposed law, which aims to set up a "fairer" negotiations between the tech giants and publishers over the value of news content.

In doing so, Facebook switched off the main news source for almost one in five Australians. It also disabled - accidentally, the company says-- a raft of government Facebook pages carrying public health advice on the coronavirus, warnings from the weather bureau and even the site of a children’s hospital.

Its decision to rapidly remove all fact-checked articles from the platform in the middle of a pandemic was a strange public relations tactic. Perhaps, as Jason Kint, chief executive of media trade association Digital Content Next, suggests, it was a shrewd move to show the world’s governments what might happen if they pushed the social network too far.

“They wanted to cause outrage,” says Jason Kint. “I think they knew they were going to be bound by the law and thought ‘what can we do to try to create another debate?’”

But rather than being put off by Facebook, Kint believes other governments will follow Australia in an attempt to support news publishers, saying regulators are consistently “finding that there is an imbalance in bargaining between two tech platforms and the rest of the industry”.

Australia's Media Bargaining Code
Australia's Media Bargaining Code

Canada has already vowed to become the second country to ask Facebook and Google to pay for its news. This weekend, Health Secretary Matt Hancock suggested that he was in support of forcing Facebook to pay for news.

"I have very strong views on this,” Hancock said when asked about the furore in an interview with Times Radio. “All I can say is I'm a great admirer of Australia and Canada. This is a very important matter and one that I have no doubt the Culture Secretary will be looking at very closely."

Culture Secretary Oliver Dowden has asked to meet executives at the company to ask why it has begun removing news from the country.

Analysts at Enders hinted that there might be more content bans to come, claiming on Monday that they believed Google and Facebook’s responses to the Australian legislation were “broadly predictable” and therefore “tech and publishing have signalled their rationale and techniques for any future showdowns including in more prominent markets, such as the UK”.

Facebook Australia ban key dates
Facebook Australia ban key dates

“Other countries will follow suit once the Bargaining Code [the new Australian law] is in place,” says Tama Leaver, a professor of internet studies at Curtin University, Perth.

The US, the home of Silicon Valley, seems open to radical changes even if it impacts what has become one of its most valuable industries. In a number of antitrust hearings aimed at Facebook and Google in late 2020 politicians repeatedly pointed to the way in which Google and Facebook had yanked publishers dwindling advertising revenue from under their feet. They noted that often some of the most important journalism: local and public service, were the most impacted.

Big Tech rival Microsoft has come out in favour of Australia’s proposals, saying it would apply them to its Bing search engine. It has agreed to work with Europe's press publishers to develop an arbitration system ensuring that news organisations are paid fairly when articles are featured on Google and Facebook, a system that could look similar to Australia’s.

Earlier this month Microsoft president Brad Smith endorsed the Australian law and urged the US government to do the same. "The United States should not object to a creative Australian proposal that strengthens democracy by requiring tech companies to support a free press. It should copy it instead," he said.

Not all believe Australia’s approach is the right one. Sir Tim Berners Lee, the father of the world wide web, has warned that Australian politicians that charging Facebook for sharing links could “undermine the fundamental principle of the ability to link freely on the web”, claiming that “if this precedent were followed elsewhere it could make the web unworkable around the world”.

The British technologist says that he supports the rights of publishers and content creators to be “properly rewarded for their work” and the issue no doubt needs addressing in Australia and the rest of the world. But link charges, he argues, are not the way to do it.

But Sir Tim's fears of a splinternet might be overblown, says Professor Leaver.

“This isn't a splinternet, it is a day of reckoning where the biggest tech companies are going to have to start paying to support the media ecology they’ve largely utilised parasitically over the last decade,” he says.

“If Facebook and Google are going to have a sustainable source of content for people to find and share on their platforms, it looks inevitable they’ll have to pay a small cost for it relative to its annual profit.”

Facebook and Google have already agreed deals with several publishers in the US, UK and France to pay for news. Having been left on the back foot in Australia, they may now be attempting to get ahead of the rest of the world.