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Holding Facebook and Google to account could be a great idea in theory, but the proposed code is based on false assumptions, writes Hal Crawford, former Australian head of news for MediaWorks.
A couple of weeks ago, the Australian government announced that it would make Facebook and Google pay news companies for the news content they “used to drive traffic to their sites.”
Treasurer Josh Frydenberg has ordered the Australian competition watchdog, the ACCC, to develop a mandatory code covering “value sharing and income distribution; transparency of classification algorithms; access to user data; presentation of news content; and the sanctions and penalties for non-compliance ”.
The Frydenberg deadline is July, which if you are a member of the ACCC staff could be quite intense. After all, the treasurer has confidently announced the media industry equivalent of squaring the circle and has given him just a couple of months to do so.
Unfortunately, the code, when it arrives, will be ineffective in fixing the media. For it to work, the underlying assumptions would have to be correct. Despite the burning hope of almost everyone, they are not.
The Australian code will have an impact on New Zealand, not because it shows the way to “hold digital giants accountable”, but because it will rule out an apparently promising media advantage. If it is based on any kind of reality, the money paid by Google and Facebook to news companies will be minimal. If not based on reality, the mandatory code will collapse under a legal review.
What is correct
However, I don’t want to start with the mistakes in the ACCC and the government’s position. Here’s the right thing about the thinking behind the code: Google, Facebook, and other global companies are not contributing enough to the public portfolio and community life of places where they do business. Both companies have taken steps to support the news locally, but these good initiatives are still not enough to balance the books.
The poor contribution makes it feel good that the government is chasing the two giants on the news front. After all, news is vital to our societies and is becoming financially impossible to create. But just because making the big guys pay for the news feels good, it doesn’t do well.
The reasons advanced for payment are incorrect.
The treasurer, announcing the code in The Australian-owned News Corp, wrote: “It is only fair that search engines and social media giants pay for the original content of the news they use to drive traffic to their sites.”
This position echoes the opinion of News Corp Australia chief Michael Miller: “We are competing with companies that don’t create content, don’t have journalists, but continue to take our content and don’t pay for it.”
The world view behind these two statements has the media and digital platforms in the same type of league, conducting the same type of business. In this alternate reality, digital kids are winning because they are stealing a lot of content. The treasurer’s statement even describes Facebook and Google as “sites,” which puts them in the same stadium as theaustralian.com.au and any other news website. They use “content” to generate “traffic,” which they then monetize with advertising.
This is how a news person looks at digital. I know this because I am one, and I’ve spent a lot of time thinking that way. But this is not how Facebook and Google work. They are not explicitly and explicitly content companies and have been enriched not by focusing on traffic but by subordinating everything to user utility. They are coding companies with an obsession with generalization. They are swimming in the oceans of traffic because through the development of their products and services they have not focused on traffic. In this way, they are the opposites of most digital media.
In Treasurer News Corp’s article, he notes that most of the money spent on online advertising in Australia goes to Facebook and Google, and that the market has grown eightfold since 2005. This is mentioned by way of evidence supporting the code. required. But what it does is remind us that both companies created the market they dominate.
Like cell life in Earth’s early history, digital giants have created the conditions in which they thrive.
In terms of income, they have achieved this by having very good advertising products. Advertising-funded media companies often publicly forget that they are half-advertising companies and prefer to focus on the news they are making. They don’t have the engineering muscle of coding companies, and when it comes to innovating in digital advertising, they’ve fallen behind. There are a few things the old media do even better, such as providing environmental legitimacy, “blocked” campaigns through digital / broadcast advertising, and outdoor advertising, but for most advertisers, price, accuracy, and ease of use of the advertising products of the digital giants are superior.
News is not a source of income for anyone
News is an important part of the products and services of digital giants. It is timely, mostly accurate, and, most importantly, “authentic.” But the news does not make Google or Facebook make a lot of money directly: the Google News interface is not marketed and the news represents only 4% of the content of Facebook feeds. Both companies are willing to walk away from the news. Google did this in Spain, where 2014 legislation required that it pay news agencies to use its content on Google News. He turned off the service and still has a good business there.
Facebook’s ability to get away from news traffic and still make big profits was demonstrated in 2018 when Mark Zuckerberg and his engineers modified the main feed algorithm to favor content from friends and family. News editors still talk about those dark times, but Facebook didn’t skip a beat. At the time, Zuckerberg emphasized that Facebook was about “personal connections.” There may be a faction within Facebook that would prefer the social media company to completely disassociate itself from the news.
Google first
Google indexes news content in general search because that’s what a search engine is. It is a search index. If I had to pay site owners to do that index, it wouldn’t exist, and that’s a deal that all content creators for the past 25 years have embraced. You can choose not to participate in Google if you want to, and if you don’t want to, Google will not bill you for the traffic it sends you.
News publishers don’t get a revenue cut from ads on Google results pages where links to their content appear. It is difficult to see how such a payment could be legally justified. For that to make sense, there would have to be a fundamental difference between the media and any other type of content creator. When does a blog become a news publication?
There is also the issue of existing law. Excerpts, excerpts and summaries are not covered by copyright in most countries at this time, I think because as societies we value freedom of information. So on what basis does Google pay news companies, assuming you can identify them, for the ads it has sold on the index pages it has created?
So Facebook
The situation of the giant of social networks is similar to that of Google. Rather than creating index pages, it allows users to post content that is then displayed to other users. Part of that content is links to news. The “participation” of the media on Facebook is often even more explicit, because in order to be included in the various Facebook news products, the media have to publish their own stories. They do so because they highly value the traffic of the social media giant. For many media outlets, Facebook is the largest single audience source.
Should Facebook pay the media for news links posted by individuals? On what basis? If you can answer that question, how do you distinguish news from all other content?
What about equity?
Strangely, I think what the news industry is criticizing, deep down, is the fact that you can’t have general information. It feels unfair that Google and Facebook can do such profitable business thanks to all these facts that others have discovered. Shouldn’t we move forward to prevent this from happening by granting ownership of news to news creators, and not just the form of the words and the video, but also the information itself?
The problem with this view is that, when you follow it, having someone who owns and controls information is incompatible with a free society.
Therefore, we are left with this big problem: the very expensive and necessary task of gathering true information about what is happening in our societies has become not only economically unattractive but impossible. As much as we’d like to find someone to blame for this situation, pointing to two chubby digital newcomers and howling like a group of hounds won’t work.
The answer
A good workaround would be to stop trying to find a direct and unequal exchange of value between the media and platforms and instead increase the tax on digital giants directly. That will take a lot of energy, but it has the benefit of clarity. It is a response to a very new situation, a situation in which global tax laws have allowed these companies to contribute very little locally despite generating a lot of revenue at the expense of New Zealanders and Australians.
When we have raised the tax, the real debate begins: how should we best use public money to ensure the continued discovery of daily truths?
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