Facebook’s dispute with Australia over the news is just the beginning

Facebook’s deal with Australia offers a way to avoid mandatory payments to publishers for news content, as long as the company works to reach agreements with publishers on its own.

“We appreciate that the government has created the flexibility to move forward by making deals with publishers, while giving us 30 days notice before an appointment,” said Campbell Brown, vice president of global news partnerships at Facebook. If Facebook’s negotiations with individual Australian publishers do not satisfy the government, the company can reimpose its news ban instead of being forced to comply with the terms of the new law to establish payments.

“I am hopeful that there is no need for this measure,” said Brown.

The pledge, as anticipated, would be an alternative to the voluntary payments that Facebook made to media “partners” of its News Tab product for mobile users in the United States and other countries.

The payments Facebook has made so far are not too expensive for the company, whose advertising business led to a record $ 86 billion in revenue last year. News content accounts for only 4% of what people see in their main news feed, Facebook said in an announcement that it would remove news from the platform in Australia last week.

News publishers rely on the public that Facebook and Alphabet Inc.’s

Google delivery. Hours after Facebook’s decision to stop sharing news in Australia, the country’s news editors saw readership traffic outside Australia drop by about 20%, data from analyst firm Chartbeat showed.

Approximately 36% of Americans get news from Facebook, according to a fall 2020 study by Pew Research, compared to 23% who get it from Alphabet’s YouTube and 15% from Twitter.

If Facebook had to pay for news content on a global basis, the cost would be significant, said Cascend Securities analyst Eric Ross. “The margins disappear when you suddenly have to pay for things that were free,” he said.

The confusion between Facebook and Australia’s news providers comes at a time when Google faces antitrust lawsuits in the U.S. and regulatory scrutiny elsewhere. Australia and other countries seeking payment for news content on behalf of publishers argue that Facebook is abusing its market power by trying to minimize or avoid such expenses. A 2019 Australian report found that large platforms threatened emerging social media companies, as well as advertisers and the news industry in general.

Both Facebook and Google say their platforms help journalism. As Facebook itself noted, publishers around the world are already looking to maximize the attention their work receives on social media, without any promise of compensation.

A United States news editor said the dispute with Facebook in Australia suggests that the social media company has renewed its interest in paying publishers after being reluctant to do so.

“We are at an inflection point,” said Maribel Perez Wadsworth, editor of USA Today, Gannett’s headline Co.

, the largest newspaper network in the United States “Finally, there is a much greater appreciation of the value of reliable journalism.”

USA Today participates in the Facebook news guide offering in the U.S. through a license agreement.

News Corp,

owner of The Wall Street Journal, has a commercial agreement to provide news via Facebook. Last week, the company struck a three-year deal with Google to license the content of its publication and produce new products for Google’s platforms.

Australia’s efforts may prompt nontraditional media, such as independent journalists who publish articles on writing platforms like Medium, to demand payment, said Bernstein analyst Mark Shmulik. “The concern is: what if we don’t draw another line in the media conglomerates? … This is a path that Facebook doesn’t want to take, ”he said.

Earlier this month, Australian officials spoke with their counterparts in Canada, Germany, France and Finland about these countries making similar rules on technology platforms that pay news publishers, said Steven Guilbeault, Canada’s minister in charge of cultural policy, adding that the coalition of countries can expand overtime.

Mr. Guilbeault said that he is excited about the events in Australia and plans to introduce measures this spring that are supported by his global allies and relevant stakeholders. On Monday, Canadian Prime Minister Justin Trudeau spoke to his Australian counterpart Scott Morrison about potential cooperation in pursuing regulation of online platforms, according to a summary of the conversation released by Trudeau’s office.

“We need to find a solution that is sustainable for news publishers, small and large digital platforms, and for the health of our democracy,” said Guilbeault.

The battle over payments to news outlets broke out – and sometimes overflowed – in Europe for more than a decade. A new European Union copyright law passed in 2019 and the involvement of antitrust regulators gave the media a new boost by, among other things, creating a new copyright control for media outlets over the use of their publications in Internet by technology companies, except for very short statements and hyperlinks.

In France, the only country that has so far implemented EU law, last November Google signed licensing agreements for its News Showcase product with several publications, including Le Monde. The deals came after a French court reaffirmed an order from the country’s antitrust regulator that Google should negotiate.

Google said it has signed News Showcase agreements with more than 500 publications in a dozen countries, including Germany, the United Kingdom and Australia. Last October, Google pledged $ 1 billion over three years for these licensing deals, but declined to say on Tuesday how much of that amount was spent.

“We have hundreds of partnerships with big and small news publishers, which makes us one of the biggest financiers of journalism,” said a Google spokeswoman.

Facebook said that publishing its articles on its platform constitutes a license under French law and remains unchanged. The company currently shows only links, rather than rich views, when users themselves post news articles from French publications, unless the publication has given explicit permission to Facebook.

A Facebook spokesman said the company is in talks in France and Germany to launch its Facebook News product, which it pays to license news vehicle articles. The product was launched last month in the UK with articles from publications including the Guardian.

Facebook has said it has provided hundreds of millions of dollars for publications through its various advertising tools and subscriptions.

—Sam Schechner and Paul Vieira contributed to this article.

Write to Jeff Horwitz at [email protected] and Sarah E. Needleman at [email protected]

Corrections and amplifications
Facebook generated record revenue of $ 86 billion last year. An earlier version of this article incorrectly said that Facebook generated $ 70.7 billion in revenue. (Corrected on February 23)