Facebook's decision on Thursday to prevent users in Australia from posting links to news content surprised the world. With compliance with a new Australian law forcing Google and Facebook to negotiate with media companies over some of the revenues from advertising on the platforms, each has taken a completely different direction.
While its advertising competitor Google cut contracts with the country's media giants, Facebook decided to play hardball – blocking messages entirely – and sending out a warning to other countries that may be thinking of similar laws.
Proponents of the new code say this is a necessary step in addressing the growing imbalances in the digital ad market: around 70 percent of Australia's $ 6.8 billion per year online ad market is currently owned by Google and Facebook cornered. Google threatened to leave Australia because of the law before it refused, but Facebook is on hold. According to the social media giant, news is only a small part of what appears in users' feeds, and publishers largely reap the benefits of gaining access to the Facebook audience. Around 70 percent of Australians use the platform.
Foreign Policy spoke to Lisa Davies, editor of the Sydney Morning Herald, Australia's most widely read newspaper. It's also part of Nine Entertainment, a media group that was instrumental in enforcing the new laws. She talked about the surprising move and wider implications of the government's new media code.
Foreign policy: How shocked were you when you woke up on Thursday to find that Facebook had blocked your page?
Lisa Davies: Pretty shocked! And I don't see an extremely positive response. I can't see people thinking it's a smart move by Facebook.
However, we firmly believe that this was the wrong call and Facebook's mistakes led to it. What I said in my public comments is, where are the consumers? You are faced with a world where it is much more difficult for readers to access quality journalism that is unbiased and fearless. Instead, they have exponentially increased the opportunity for misinformation, conspiracy theories, and false news. That's all you can see – and I think that's really dangerous.
And what happened today was a PR disaster for them. They also removed a whole bunch of really important public websites like health department, fire, and emergency medical services, even the Bureau of Meteorology. I think it's one thing to keep people from reading the Sydney Morning Herald – it's another thing to keep them from going to their local fire department.
FP: According to Facebook, the current system ultimately benefits publishers: media companies benefit more from Facebook than Facebook does from media companies. Was that your newspaper's experience?
LD: I think it's pretty clear when the flow of advertising has gone in the direction of the big tech companies in the past decade. But it's our content that these people want to promote, that the playing field is turned strongly against us.
Media around the world continue to grapple with digital change – those gold flows that supported the media business no longer exist. The business models in which we strive to deliver high quality, independent news from the Sydney Morning Herald have become increasingly difficult.
Our company has gone through a period of stability over the past four years, but before that it has been cost cutting year after year to stay one step ahead of the flow of advertising money that just doesn't support our journalism anymore. So something had to be done.
FP: How has the move affected the traffic to your sites?
LD: I don't think this will be extremely detrimental to our traffic. Over the past four years we've focused on a much more focused subscriber model. And we certainly didn't notice a drop today [after switching to Facebook]. In fact, a lot of readers flocked to the site to read about which is great.
FP: What happens next? Should we expect an ascent?
LD: It will be really interesting to see how it goes. The language of our Prime Minister and also the Treasurer is still very solid – they have said that they believe that what they are doing is the right course. Our treasurer spoke to Mark Zuckerberg. You had these conversations.
That Facebook is doing what they did seems pretty final to me, and I think time will tell. The code is now governed by law, but if they don't have advertising revenue from messages they don't have to share it. What this means for their bottom line and reputation is up to them. From our point of view, this is of course disappointing.
Like so many hybrid print and digital companies, we believe that we naturally have our paying subscribers. You are our focus. But we need people who are constantly exposed to our content, and Facebook has always been one of those platforms where people are exposed to us. But I think people will continue to want trustworthy media companies to pursue issues and hold democracy accountable. Hopefully it proves even more that you are getting what you pay for. You don't pay for anything on Facebook. Maybe it forces people to do this calculation.
FP: How will that affect how Australians view Facebook?
LD: I'm far from deciding what the actions of a global tech giant mean, but from what I've seen, the public's reaction has not been good for them.
I think the time people spend on this platform will be significantly reduced. Without different content between the cat videos and the birthdays, they may go elsewhere.