Facebook has dismissed the idea it should pay for Australian news content, telling regulators: “News publishers gain more from Facebook than we gain from news content.”
In its response to an Australian Competition and Consumer Commission (ACCC) consultation, the social media giant described news content as “highly substitutable” in commercial terms.
The company also hinted that it could choose to charge publishers to use its services, claiming “any value that we receive from publishers is outweighed by the significant costs and investment that we make in news relative to this direct and indirect value”.
Australian treasurer Josh Frydenberg announced in April that the nation would force Google and Facebook – dubbed the “Duopoly” because of their domination of the advertising market – to pay for news content.
Ordering the ACCC to develop a mandatory code between publishers and the tech giants, Frydenberg said that he believed Australia could succeed where others have failed, telling a press conference: “We won’t bow to their threats.”
Google’s response: value of news is ‘very small’ to us
On 31 May, Mel Silva, Google Australia’s managing director and vice president, published a blog dismissing the suggestion that tech platforms should be forced to pay publishers AU$600m or more a year, as well as challenging “inaccurate claims” about how much the company earns from news content.
She said that the value Google derives from news content in Australia is “very small”. She suggested that news publishers “are likely to derive far more cross-content benefit than they generate” for Google.
Silva said that Google Search accounted for 3.44bn visits to Australian news publishers in 2018. Using a Deloitte study from Europe, she estimated that this means “approximately AU$218m in value going to Australian publishers each year from Google traffic alone”.
Facebook’s response: ‘news content is highly substitutable’
Facebook’s formal response to the ACCC inquiry, dated 5 June, said that its news feed had generated around 2.3bn “organic” referrals to Australian news websites between January and May this year, estimating this to be worth AU$195.8m to the publishers.
Like Google, the tech giant sought to challenge figures and assertions made by publishers about the extent to which it benefits from news content.
Facebook said that in January 2018 it had changed its algorithms to prioritise posts from friends and family over public organisation content, including from news groups.
The company said it has seen an increase in “people engaging on our services” and increased revenues in the two years since.
It said: “If there were no news content available on Facebook in Australia, we are confident the impact on Facebook’s community metrics and revenues in Australia would not be significant, because news content is highly substitutable and most users do not come to Facebook with the intention of viewing news.
“But the absence of news on Facebook would mean publishers miss out on the commercial benefits of reaching a wide and diverse audience, and social value would be diminished because news would be harder to access for millions of Australians.”
Facebook also pointed out that the struggles of the news business pre-date Facebook. It said: “Already in 2005, two years before Facebook began running ads, senior media executives were noting that the news industry had been slow to react in the face of the internet.”
‘Any value that we receive from publishers is outweighed by the significant costs and investment that we make in news’
The company, headquartered in the US and led by Mark Zuckerberg, made clear in its submission that it would be prepared to retaliate against any aggressive moves by Australian regulators.
“Although it is our strong preference to continue driving value for the local news ecosystem by showing news content on Facebook, the inevitable consequence of poorly considered regulation in Australia is that we may be forced to reconsider and re-prioritise our investments in news here,” it said.
“Ill-considered regulation could result in consequences such as reduced innovation and investment, or that it may not be possible for new products and data offerings to be made available in or brought to Australia.
“It would not be a good outcome for Australian consumers if an unworkable mandatory code forces digital platforms to a situation that reduces Australians’ access to news online or interferes with innovation and investment that can sustainably support journalism in Australia.”
It also hinted that it could choose to charge publishers to use its services, telling the ACCC: “Facebook does not currently charge for any of the costs of providing the infrastructure for the free distribution, nor the data or research and development that we invest to innovate and identify new product solutions for publishers.
“While the Concepts Paper [which sets out the ACCC’s thinking] recognises the costs to publishers of producing news, it does not appear to acknowledge any of the costs to digital platforms.
“This will need to be remedied if the code seeks to explicitly recognise value and cost to both sides.
“From all of the data points that we see, any value that we receive from publishers is outweighed by the significant costs and investment that we make in news relative to this direct and indirect value.
“We do this because news has societal value for the people who use our services and the broader community, however, we do not agree that it only falls to one or a handful of private, internet-based companies to subsidise this public good above and beyond the investments that make sense for our business.”