[ad_1]
Facebook Inc has issued a warning to global regulators by taking a tough stance against Australia’s plan to force it to pay media companies for stories.
The Australian government has drafted legislation to force the US tech giant and Google to compensate publishers for the value their stories create for platforms. Facebook launched a grenade on Tuesday seeking to empty the proposed law.
If approved, the company will prevent Australians and publishers from sharing news on Facebook and Instagram, an unprecedented step.
The stage is now set for a fierce battle after the Australian government said it would not give in to “coercion or heavy-handed threats”.
The showdown has turned one of Facebook’s most distant markets, with a population of 25 million, into a test case as watchdogs around the world turn their own power against digital giants.
“This is a microcosm for other markets and what can happen when Facebook defends its turf,” said Dan Ives, an analyst at Wedbush Securities in New York. The company has come out “throwing punches,” he said.
Traditional media companies have long complained that digital platforms exploit their content without due compensation. The Australian government has said it is trying to level the playing field as once dominant publishers lose ad revenue to Google and Facebook.
In May, for example, Rupert Murdoch’s News Corp announced plans to cut jobs and shut down or stop printing more than 100 local and regional newspapers in Australia.
The Australian draft law, which needs approval in parliament, calls for an arbitration panel to decide how much Alphabet Inc’s Facebook and Google should pay publishers if the two parties cannot agree.
‘Line in the sand’
By backtracking in Australia, Facebook is telling other European regulators what to expect in disputes over the platform’s news use, said Rob Nicholls, an associate professor at the University of New South Wales school of business in Sydney. At the very least, Facebook wants to force a change in the legislation, or even delay its introduction, he said.
“If you draw a line in the sand here, you’ve effectively provided that benchmark for negotiations,” Nicholls said.
The chairman of Australia’s competition watchdog, Rod Sims, said in an interview in July that he knows a number of overseas counterparts who are considering taking measures similar to those in Australia. Facebook’s explosive intervention follows recent advances by publishers in Europe against digital platforms.
Receive the news
In April, France’s antitrust regulator ordered Google to pay media companies to show excerpts of articles. Last October, Facebook introduced a separate news section, paying some publishers whose stories appear. Last week, the company said it plans to expand the news section to other markets globally.
Facebook said in a blog post on Monday that Australia’s legislation is based on the erroneous assumption that it benefits more from its relationship with publishers. “The opposite is true,” Facebook said. Google also opposes the law, saying in an open letter that it would “put the free services it uses in Australia at risk.”
Nine Entertainment Co, publisher of the Sydney Morning Herald, called Facebook’s response to the proposed law “bizarre.”
“It is a demonstration of Facebook’s use of its monopoly power without acknowledging the importance of trustworthy news content to balance the fake news that proliferates on its platform,” Nine said in a statement.
Read: Facebook is giving grants to small businesses in South Africa
[ad_2]
