In February 2021, Facebook made the controversial decision to block news content from being shared on its platform in Australia. This drastic move came in response to proposed legislation in Australia that would force tech giants like Facebook and Google to pay news publishers for content. The proposed law, known as the News Media Bargaining Code, threatened to undermine Facebook’s business model and set a precedent for other countries looking to rein in the power of Big Tech. So why exactly did Facebook take such an extreme step to block news in Australia?
The News Media Bargaining Code
At the heart of this dispute was the News Media Bargaining Code. This was legislation proposed by the Australian government to address the power imbalance between news publishers and tech platforms. Here are some key points about the code:
- It would require Facebook and Google to negotiate payments to Australian news outlets for using their content.
- If no agreement could be reached, the issue would go to binding arbitration where a government-appointed panel would decide the price.
- It included penalties of up to 10% of Facebook’s annual turnover in Australia (billions of dollars) for non-compliance.
- The code was designed to support the ailing news industry by funneling money back to publishers.
Facebook argued the code was unworkable and claimed it had been left out of negotiations. However, the Australian government insisted the tech giants had been consulted during the drafting process. Ultimately, Facebook believed the legislation overreach by forcing it to pay for links to news articles shared willingly on its platform.
Protecting the Business Model
At the heart of Facebook’s decision were concerns that the code would undermine its business model. Facebook argued that news content is voluntary shared on its platform and provides minimal commercial value compared to the traffic Facebook drives to publishers. Here are some of Facebook’s key concerns:
- Paying for news links would set a precedent for other countries to pass similar laws.
- Negotiating pay deals with individual publishers would be logistically difficult given Facebook’s scale.
- Most news content is shared voluntarily by users, rather than posted by publishers.
- News content makes up only 4% of content in the Facebook News Feed.
Essentially, Facebook felt that compliance with the code would force it to choose between either paying potentially huge sums or removing news entirely. Since the former was an unacceptable business risk, Facebook chose the latter option in the hope it would force a rethink of the legislation.
The Move Backfired
Initially, Facebook’s dramatic move looked like it might work. The blocking of news sent shockwaves around Australia and focused global attention on the issue. However, public sentiment soon swung firmly against the social media giant.
Critics accused Facebook of threatening and bullying a sovereign nation. They pointed out the vital role Facebook News plays in driving traffic, engagement and subscription revenues for many news publishers. As a result, Facebook attracted negative publicity it could ill afford in the light of existing antitrust and anti-competition investigations in the US and elsewhere.
The PR damage soon forced Facebook to back down and begin negotiating deals with individual news organizations. Within a week, it had done deals with major players like News Corp in return for changes to the code. By mid-March, Facebook had signed letters of intent with multiple Australian publishers, effectively conceding defeat. However, the saga increased scrutiny of Big Tech’s dominance over online news distribution worldwide.
Impact on Publishers
For a time, the Facebook news ban cut off a major traffic source for many Australian publishers. Data from analytics companies showed traffic to major Australian news sites fell by 15-30% during the ban. However, as Chart 1 shows, top news sites saw their traffic recover quickly once the ban ended.
| News site | Traffic change during ban | Traffic recovery after ban lifted |
|---|---|---|
| ABC News | -25% | Returned to normal within 4 days |
| Sydney Morning Herald | -30% | Returned to normal within 5 days |
| The Guardian | -15% | Returned to normal within 3 days |
The blockade highlighted publishers’ reliance on tech giants for audience reach. Nonetheless, news groups leveraged public distrust of Facebook’s actions to strengthen their negotiating position around the code. Within a month of the blockade ending, Facebook had signed deals worth tens of millions of dollars per year with large Australian publishers.
Lasting Impact
While Facebook’s news blackout lasted only around a week, it has had an enduring impact in a number of ways:
- It increased scrutiny of Facebook’s power over news distribution worldwide.
- Other countries like Canada and the UK are now considering similar legislation.
- It forced Facebook to negotiate licensing deals with Australian publishers.
- It revealed vulnerabilities for news publishers relying heavily on Facebook for traffic.
- It highlighted the love-hate dynamic between news media and social platforms.
Although Facebook managed to water down the most punitive elements of the Australian code, the legislation remains in effect. This arguably sets a precedent for other nations wishing to force Big Tech to pay for news content. While Facebook won the battle to stop a forced feed of paid news in Australia, they almost certainly lost the wider war over fair payment for publishers worldwide.
Conclusion
Facebook’s temporary banning of news in Australia was an unprecedented display of power over the news industry. It came in response to proposed legislation forcing Facebook to pay publishers for content shared on its platform. While Facebook saw this as an existential threat, the PR backlash soon forced it to negotiate licensing deals with major publishers. Despite its brevity, the blockade highlighted Big Tech’s dominance over news distribution. It also set in motion a global push for platforms like Facebook and Google to fairly compensate news publishers for their content and traffic.