Big tech in content biz is facing a pushback

Atanu Biswas | Updated on: Aug 05, 2022
Facebook’s tussle Down Under may be a turning point in the history of the digital world

Facebook’s tussle Down Under may be a turning point in the history of the digital world | Photo Credit: Dado Ruvic

Australia’s tussle with Facebook could lead to other countries preparing similar laws for content-sharing with news publishers

Yes, it was really on the cards. This July, the government hinted that it is mulling making big tech firms that are in the content business, such as Google, Meta, Microsoft, Apple, Twitter and Amazon, pay Indian newspapers as well as the digital news publishers a share of the revenue for using their original content.

Well, big tech’s business model might be going through a paradigm shift. On one side, new and stringent rules for digital news organisations, social media intermediaries, and OTT platforms are coming into place globally.

Then, there are new rules that expose Internet companies to financial and operational risks that they didn’t experience so far.

Australia’s bitter face-off with Facebook about 18 months ago was bound to reshape the future of the tech giant’s business structure. It all started with complaints from Australian news outlets about the digital giant’s damaging impact on their business model.

Consequently, the Australian parliament tried to pass a law called the ‘News Media and Digital Platforms Mandatory Bargaining Code’ that would force Facebook and Google to pay publishers if they host their content. Google’s mission statement has long been to organise the world’s information, and, despite the initial resistance, it agreed to multimillion-dollar contracts with some major Australian news outlets. In contrast, Facebook responded differently.

Facebook’s face-off

According to a Reuters Institute report, up to 40 per cent of Australians used Facebook for news between 2018 and 2020. Also, of total digital advertising in Australian media these days, a whopping 53 per cent goes to Google and 28 per cent to Facebook.

Facebook claimed that it generated around 5.1 billion free referrals to Australian publishers in 2020, estimated at around AU$407 million. Facebook, clearly, was unwilling to comply with the law. In fact, it banned Australian users from sharing or viewing such content on the platform.

As a result, Australians could not post news links on Facebook for a few days, and none could post links to Aussie news sources outside Australia. Simultaneously, Facebook reportedly removed posts from state health departments in a pandemic, fire and rescue services in a state that recently battled bushfires.

The then Australian prime minister Scott Morrison had called Facebook’s move to ban news content in Australia ‘arrogant’ and ‘disappointing’.

Facebook’s tussle Down Under may be a turning point in the history of the digital world that has redefined the relationships of the big tech companies to society. Given that news actually makes up only 4 per cent of Facebook posts, it was apparently an easy decision for Facebook to ban news content from Australia initially. However, the rest of the world keenly watched the face-off. Facebook knew that and may have gambled hugely in Australia. Some believe that Facebook’s action was based on the assumption that Australia won’t be able to live without it. But what if Australians could, or, if some ‘suitable’ alternatives could emerge out of this Aussie turmoil?

And what could happen if Facebook ultimately decided to stay out of Australia? Apparently, it has only 17 million users in Australia out of its 2.26 billion users. Countries such as India, Indonesia, Brazil, Mexico, and the Philippines are home to the most Facebook users outside the US. So, it’s a completely different ball game in India.

After a series of talks between Australia and Facebook, a deal was struck, and Facebook restored Australian news pages after Canberra offered four amendments to the proposed law. That, however, may not be the end of this war. Any tech giant can drop news sources again if it gets dissatisfied with the arbitrator’s commercial arrangements.

Microsoft had urged the US President Joe Biden to bring in similar legislation in the US. There were signs that the UK, Canada, and the European Union are enthused by the Australian law. In fact, European legislators may follow Australia’s lead in calling on major tech platforms to pay to display news articles. Google has already signed deals to pay more than 300 publishers in Germany, France, and other EU countries for using their content on its platform.

In May, the Canadian government proposed a law to bring about fairness in sharing of revenue between digital news publishers and social media platforms, including Google and Facebook.

All of these were inevitable. Facebook’s tussle Down Under might have set the ball rolling with various other nations eyeing a similar law. This could be a turning point for the business model of the tech giants. India’s approach will be keenly watched.

The die has been cast in Australia, and is set to have global ramifications.

The writer is Professor, Indian Statistical Institute, Kolkata

Published on August 05, 2022
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