Why Google caved to Australia, and Facebook didn’t

Illustration: Alex Castro / The Verge

On February 16th, I wrote that Australia’s News Media Bargaining Code threatened to splinter the internet. On February 17th, the splintering arrived: Google cut a deal with News Corp. that will ensure its services continue to be provided in Australia, and Facebook walked away from the bargaining table and began preventing people from sharing news links from Australian publishers around the world.

I think Facebook basically did the right thing, and Google basically did the wrong thing, even though Google had a much tougher call to make. Today, let’s talk about why the tech giants made the decisions that they did, why Australia’s shakedown is rotten, and what’s likely to happen next. (If you didn’t read my piece on the subject, it offers a lot of useful context for what follows.)

In development for three years, the bargaining code is intended to give Australia’s heavily concentrated media industry more leverage as publishers seek direct payment from Google and Facebook for the right to display links to their work. It does this by forcing the platforms into binding arbitration with publishers who bring cases, and puts the decision for how much the platform has to pay the publishers into the hands of the arbiter. Each side throws out a number, and the arbiter picks the one they think is most fair.

By design, the arbitration process favors the publisher. Also by design, it encourages platforms to avoid the process altogether by signing one-off deals with individual publishers in hopes that they can get better terms that way.

I. Google

Over the past few days, Google has been signing deals with the biggest publishers in Australia for exactly this reason. Seven West Media got a deal, Nine Entertainment got a deal, and on Wednesday, one of the country’s biggest conglomerates — Rupert Murdoch’s News Corp. — got its deal. In exchange for an undisclosed sum, Google will feature News Corp. articles in its News Showcase product in Australia and beyond.

“Among the News Corp publications joining Google News Showcase will be the Wall Street Journal, Barron’s, MarketWatch, and the New York Post; in the UK: the Times and the Sunday Times; and the Sun; and in Australia a range of news platforms, including the Australian, news.com.au, Sky News, and multiple metropolitan and local titles,” the company told me in a statement.

As announced, the deals pertain to Google News Showcase, a tab within Google News that contains licensed content from official partners. But the people I’ve spoken with are operating under the assumption that if there’s a deal between Google and a big publisher in Australia, that publisher either can’t or won’t be dragged to arbitration for showing links and snippets of text in search results.

Search, of course, is what Google cares about the most, which explains why the company caved. Removing links to news stories from Google would break the search engine in Australia, opening it up to rivals. And so the company signed a bunch of deals under duress.

(It’s worth mentioning that any Australian publisher aggrieved by an unfair exchange of value with Google here could opt out of search results at any time by adding one line of HTML to their website. But almost none of them do because traffic from Google drives significant advertising and subscription revenue to them.)

With its moves today, Google has now invited every other country to pursue a similar protection racket. Parliament members in Canada and the European Union have already endorsed measures similar to Australia’s. And a basic tenet of the open web — that hyperlinks can be freely displayed on any website — just took a body blow.

I’d feel better about this if publishers said a single word about how much of their new Google revenue they planned to spend on journalists’ salaries or news gathering.

They didn’t, though, and why would they? Australia’s bargaining code doesn’t say one word about requiring that any of this money be spent on journalism, either.

II. Facebook

Unlike Google, Facebook’s core service doesn’t rely heavily on news articles. The company estimates that only about 4 percent of posts on the network are works of journalism. It is not all that hard to imagine opening up Facebook and scrolling for a few minutes, never to see a link to a news article at all — and in fact, millions of people do this every day.

And so it is perhaps less surprising that when Google blinked at Australia’s demand, Facebook walked away. Here’s William Easton, Facebook’s managing director for Australia and New Zealand:

While the government has made some changes, the proposed law fundamentally fails to understand how our services work.

Unfortunately, this means people and news organisations in Australia are now restricted from posting news links and sharing or viewing Australian and international news content on Facebook. Globally, posting and sharing news links from Australian publishers is also restricted. To do this, we are using a combination of technologies to restrict news content and we will have processes to review any content that was inadvertently removed.

And just like that, news articles originating in Australia disappeared from Facebook.

Easton says that in the past year, Facebook sent more than 5 billion clicks to Australian publishers, whose value he estimated at AU$407 million. If the current situation holds, Facebook will send those same publishers zero clicks — a move that, I imagine, may force publishers to recalibrate in their minds the relative value that Facebook and publishers provide one another.

Of course, many critics were apoplectic that Facebook had taken this move, calling it a vile act of censorship, unchecked greed, and destruction of the public sphere.

Certainly the execution of the ban left something to be desired.

Rather than building a blacklist of news sites to restrict, Facebook tried using its machine learning systems to identify news publishers, and the systems went predictably haywire. There were reports that government and emergency pages, nonprofit groups, and the Bureau of Meteorology could no longer share. Given how long the possibility of restricting links has loomed, you’d think Facebook would have better prepared for it to arrive.

And while I don’t want to make light of these mistakes, to the extent that they teach Facebook’s user base to seek their news elsewhere, they can serve a noble purpose. I don’t know a single journalist who feels comfortable with social networks being anyone’s primary source of news, particularly after years of daily reporting on the misinformation and conspiracy theories that so often thrive on them. And so it is more than a little strange to see so many people insisting that Facebook is obligated to share publishers’ content, on whatever terms those publishers set.

Some, like OneZero’s Will Oremus, have noted that removing high-quality news sources from Facebook will likely mean a boost for lower-quality blog posts, memes, and other junk. That seems fair, and I do think it bears watching. But what if, in the meantime, Australians simply… visit websites? Subscribe to newsletters? Read… books? I realize I sound hopelessly naive here. But if this is the beginning of more people coming to understand the value in visiting trusted news sources directly, I think we’d all be better off. Publishers included!

In reality, though, I suspect the great Australian news outage of 2021 will be short-lived. Australia’s treasurer, a leading figure in the negotiations, said he spoke with Mark Zuckerberg today and that negotiations continue. (Fun fact from The New York Times: Australia’s treasurer was also “the best man at the wedding of Ryan Stokes, who is a son of Kerry Stokes, the billionaire owner of Seven West Media, one of the companies that have reached a deal with Google.”)

“We will continue to engage with the government on amendments to the law, with the aim of achieving a stable, fair path for both Facebook and publishers,” Facebook told me today when I asked for an update.

In the meantime, though, I’m glad Facebook called publishers’ bluffs.

III. What’s next

I wish Australia would take Facebook’s rejection as a sign it should rethink its approach to media regulation entirely. It could just tax companies based on their revenues, for example. It could earmark those revenues to support journalism — nonprofit public media, even, which has consistently been shown to have powerful civic benefits. Or it could pursue a bargaining code that requires big media conglomerates to create and support jobs in journalism, rather than simply accept tens of millions of dollars and spend them however they like — or just return it to shareholders.

In reality, though, none of that seems likely to happen. Google’s capitulation means that Australian crony capitalism is now likely to be exported worldwide. Legacy media outlets will become richer — and also more dependent on the tech giants that they excoriate daily for having too much power over them. All the while, the media industry will continue to consolidate, and it will be harder to get or keep a job in journalism.

A bargaining code that truly sought to level the playing field between the platforms and the public would take these realities into account. There is still time to amend it before Parliament takes a vote, and here’s hoping that lawmakers do — both in Australia and beyond it.


This column was co-published with Platformer, a daily newsletter about Big Tech and democracy.

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