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Facebook Stays, Everybody's Happy, but Nothing Has Changed

After some turmoil, Facebook won the war with the Australian Government as the necessary changes were made to the legislation that avoided them needing to change their business model.

Those subtleties are lost in the general press. What counts for the popular media is that they were able to spin some great stories around the fact that Australia stood up to the giants. That brought international attention, which boosted the ego of Australian Prime Minister Scott Morrison.

So everybody is happy, and nothing has changed. The digital giants remain as strong as ever.

As mentioned in previous analyses, the way that the Government has approached its battle with the digital giants has been flawed from the beginning.

True, its tough stand had made Google pay media companies well above what these companies would have been able to negotiate individually with Google, but the fundamentals of why these battles are taking place are still unchanged, and Facebook is also brought into the negotiation deal. However, there is no way that Facebook is going to pay any big money.

Google was prepared to pay these "premiums" to make sure that its business model would still survive. It is the company's advertising business model that it was keen to protect, and for that reason, it was prepared to pay off the news companies. On Facebook, all media companies benefit from distributing their articles on its platform based on the terms of these publishers.

So nothing fundamental has been solved by the Australian Government through its media code. It is now simply waiting for the next battle, and the regulator (ACCC) has also already foreshadowed that it will concentrate on that advertising business model. This will be a much tougher battle that Australia will not be able to win on its own. Google will use its full legal power with gigantic financial resources to defend its business.

It also shows that actions from individual governments are counterproductive. The French, who took a different approach, received only a fraction of the money for its media companies than Google has paid to Australian media, so how will that make the French feel? Only united action against global digital moguls will lead to structural changes, and I have mentioned some of such structural changes as proposed by the EU here.

In relation to Facebook, I totally agree with the company that the Government's action concerning how Facebook distributes news is out of all proportions and, as a matter of fact, totally wrong.

All news organizations around the world totally voluntarily distribute their news to whoever wants to use it. Facebook is not involved in this at all. Unlike Google, it doesn't abstract content, it doesn't create news snippets, and it does not distribute links.

All of this is up to the news companies who are providing their services via Facebook. It is totally up to them if they provide full articles, snippets, links, send users to paywalls, and so on.

All the information that Facebook blocked can indeed be obtained elsewhere. However, Facebook is such a well-known, integrated platform used by the majority of Australians that it will be the organizations that provide services on the platform and are now blocked who are the ones that suffer from this action.

Common sense has prevailed, and the Government has limited the media code to those digital companies that are actively making money from others' content. Unlike Google, the media code doesn't really affect their business model, so while they now will have to negotiate with publishers, very few, if any, will push for payments. There never was a general need for them to negotiate as there was, in fact, nothing to negotiate.

If the Government wanted to stick to its media code, it would also have to force Twitter, LinkedIn and others to the negotiation table as they also would have to pay for the same service that Facebook provides. You could even argue that telephone and postal services used to distribute news should fall under that code — of course, totally ridiculous.

It is also in the Government's interest that it can continue to use the Facebook platform to distribute its own news. Once again, there are other ways to do that, but the reach of Facebook is unsurpassed and as such, very valuable for the distribution of such information.

Do I let Facebook off the hook? Totally not. But if we want to get control over the digital media and avoid the damage that they are doing to our society, economy and democracy, we need to be far more strategic, and we will globally need to work together on those issues. Ultimately the platforms have to be treated as utilities. They should be made available on a neutral basis, with any organization being able to use the platform without going through gatekeepers such as Google and Facebook.

By Paul Budde, Managing Director of Paul Budde Communication – Paul is also a contributor of the Paul Budde Communication blog located here. Visit Page

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