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Facebook’s Petty Unfriending of Australia

by | Feb 23, 2021 | New, News

I would rather die of passion than of boredom.

— Vincent van Gogh

Facebook shocked the world last week with an abrupt ban of all news content for an entire continent. Like many things the platform has done, its action was clumsy: In the process of banning news sites in Australia, Facebook managed to turn the lights out on women’s shelters, nonprofits, charities, and public health information pages, and by this week it had already announced plans to reverse course—soon, temporarily.

The immediate impacts have been that Facebook’s core product is less interesting, less traffic is flowing from it to publishers, and an unusually broad coalition of society is angry with Facebook. Keep in mind that, according to some local polling, Facebook was already the most distrusted brand in Australia.

On one level, the story appears simple: Facebook doesn’t like a new law that will cost it money. Rather than pay, it walked away, hoping other countries will think twice before doing anything similar.

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James Slezak (@jslez) is founder and chief executive of Swayable. He is currently in Sydney.

On a deeper level, this moment brings to a head a set of fundamental, conflicting visions over the role of national governments versus global corporations, and what it will take to preserve a vibrant ecosystem of internet services, including a sustainable place for journalism within it.

The bill at the center of the conflict is Australia’s News Media and Digital Platforms Mandatory Bargaining Code. Almost certain to be passed, especially after Facebook’s stunt, its broad support across the political spectrum has been shored up by perceptions of an impertinent Facebook testing the nation’s resolve. Once enacted, it requires market-dominating digital platforms to negotiate revenue-sharing deals for news content they distribute.

In its public comments, Facebook insists the far-flung locals have “fundamentally misunderstood” the internet. Don’t they realize that free link sharing is how the web works, and that media companies benefit from it?

Ignorance of these basic facts would indeed be surprising from a nation whose technological contributions include Wi-Fi, Google Maps, and possibly Bitcoin, and whose fourth biggest export is higher education. A cursory glance at the insightful 623-page report from the Australian Competition and Consumer Commission that prompted the legislation should make anyone question this interpretation.

In fact, the law does not restrict the sharing of links on typical webpages or apps—only market-dominating ones. That does not just mean “big.” It means so giant and unrestrained by competition that they become industry gatekeepers, or “unavoidable trading partners” to news businesses.

Out of an estimated 30 trillion pages on the internet, that applies to those of only two companies: Facebook and Google. You can create a search engine or social platform tomorrow and grow it bigger than the GDP of entire nation-states, and it would still have no obligations. Twitter, Snap, Spotify, Amazon, and Apple can link to anything they want, and nobody can ask them to pay anything. What they can’t do (if they want to avoid the law’s provisions) is capture control of the local market.

Opponents have raised questions about how clear this line is, and who will determine it. But the regulator makes the determination obvious: Facebook holds more than 50 percent of the display advertising market in Australia, while its nearest competitors don’t even reach 5 percent. That is as bright and clear as lines get.

For platforms that cross the line, the law does not tax or fine. It subjects them to oversight over deals they strike with news producers, which includes compulsory arbitration. The arbitrator makes sure deals reflect an outcome that would be expected from an evenly matched negotiation, rather than allowing the gatekeeper to exploit its position with a “take it or leave it” offer. Bargaining frameworks like this are familiar to Australians in other contexts, such as between trade unions and employers, and industry ombudsmen play a much more active role defending consumer rights in the country. The result is a marketplace that is noticeably less afflicted by scams and injustices than the typical US experience—and voters that expect their governments to keep overly rapacious commercial forces in check.

There are lots of reasons to dislike the proposed law, and indeed better solutions are possible. The most obvious is to break up Facebook and restore competition. Under a more active US antitrust regime, Facebook might be separated into a set of businesses, like other monopolies before it. Each would be large and successful in its own right. Such moves have often created wealth for all parties, but they diminish the power of CEOs, who can be expected to fight them.

In this case, Facebook has no independent board; CEO Mark Zuckerberg cannot be overruled by anyone. Its Oversight Board, overhyped as a “Supreme Court,” lacks any standing or enforcement power on issues like this. In the absence of US action, that means countries like Australia are left with an unrestrained foreign monopolist with power over a market whose competitive structure the public has a compelling interest in.

Facebook claims this law will “threaten the open internet,” but in reality, it does little more than one saying you can’t drive a 50-ton truck down a highway without extra inspections and tolls. In fact, if small media businesses were cars, Facebook’s revenue would make it a colossal vehicle, more massive than the Empire State Building. The political consensus in Australia recognizes that systems are unlikely to serve the public interest if they ignore such immense power imbalances.

Some commentators, including Tim Berners-Lee, have said the code undermines a fundamental web principle of linking freely. It’s true that it would regulate a business activity, distributing content, that is mostly done using a core web mechanism, linking. But describing this as a restriction on linking has it backwards. It’s the commercial acts that are being regulated, not the web mechanism. Countless laws could be described as restricting what websites may link to, including many copyright, privacy and fraud regulations. Nobody claims laws banning links to a phishing page make the web unworkable, because we all recognize it’s the fraud that’s being regulated, not the linking.

Besides which, these web principles are a means to an end. The overriding goal has always been to foster a vibrant, flourishing ecosystem of content and services. When an individual company amasses monopolistic control, its freedoms conflict with the higher-level goal for the ecosystem.

Interestingly, paying for links does actually appear to have been contemplated in the web’s defining protocols anyhow. Most people are familiar with HTTP Error 404: “Page Not Found,” but since the beginning there has also been an Error 402: “Payment Required.” This has been in the standards Berners-Lee authored for over 20 years, and it remains there today, albeit largely unused. The need for a way to exchange value between content creators and audiences has long been recognized as a key element of a truly vibrant online ecosystem. Getting it right has remained an unsolved problem.

Facebook appears to have hoped that by exposing the law’s inadequacies, many of which are real, it could force a backdown or at least limit the likelihood that other countries would follow Australia. But despite its gatekeeper role, Facebook doesn’t make content or headlines. The exact aspect of its operating model that puts it in conflict with the media industry in the first place now leaves it with no control over the narrative. And right now, the narrative in Australia is that the company arrogantly picked a fight with democracy and lost.

At this point, the stakes could not be higher for Facebook. If it backs down from its ban and complies with the new law, it demonstrates that the model is workable, undermining all its protestations to date. India and other growth markets can be expected to draw obvious conclusions.

If the ban stays in effect, as it is at time of publication, Facebook will need Australia and its media industry to hurt, and for users to shrug it off and continue engaging on the platform.

On the other hand, if it causes users to spend less time on Facebook, seeking out news directly from publishers, it will be a disaster for Facebook and a tectonic shift in favor of the media industry. The aftershocks would be felt around the world.

Charles Firth, publisher of Australia’s top satirical news site, The Chaser, put it this way: “It’s like getting cut off by your heroin dealer. Painful at first, but ultimately it’s in your interests.” For Australian users and advertisers, early signs are that the habit has not been impossible to kick. On the day of the ban, at least one major ad buyer instructed his team to snap up any front-page ad inventory from media sites they could get their hands on, anticipating price jumps. And anecdotally, ordinary Facebook users are reporting having one less reason to open the app. No doubt Zuckerberg had these stats in front of him when he decided to reverse the ban.

Perhaps most tellingly, just two days into the Facebook news ban, for the first time, the most downloaded app in Australia’s Apple app store was the publishing platform of the country’s national broadcaster, ABC News.

The next four were all owned by Facebook.

WIRED Opinion publishes articles by outside contributors representing a wide range of viewpoints. Read more opinions here, and see our submission guidelines here. Submit an op-ed at opinion@wired.com.

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