Media blackout: why Facebook cut news in Australia

It was billed as a battle between Facebook and Australia, as the world’s largest social network stripped all news of his platform to protest a new law forcing him to pay publishers.

But at the heart of the drama was also a high-stakes negotiation with a familiar figure – Rupert Murdoch – according to several Facebook executives, one of whom said the press empire tried to hold “a knife to them.” throat”.

Everyone has now moved away from the abyss. Australia adopted its law, but with concessions that give Facebook more leeway to negotiate with publishers, including Murdoch’s News Corp. Facebook users around the country are seeing news on their feeds again.

But the larger question remains unresolved. The negotiations in Australia set a precedent for politicians and news editors around the world to reassess their own relationships with Facebook and also with Google, the other company targeted before the new law.

“It probably weakens Facebook’s hand [in the longer term]Said Josh Pasek, associate professor of communications, media and political science at the University of Michigan. “The point that was reached was that it was clear that Facebook had the capacity to play a public service role.”

Meanwhile, Big Tech remains ambivalent about the value of the news to its business. “We do not take or request content for which we have been asked to pay a potentially exorbitant price”, wrote Nick Clegg, Facebook’s vice president of global affairs, this week.

For Facebook, the concessions it obtained in Australia restored some bargaining power with the most powerful publisher in the world, which owns two-thirds of the Australian news market as well as the Times and Sun in the United Kingdom. and the New York Post and Wall Street. Journal in the United States, among others.

Negotiations between the two sides date back to at least December 2017, when Murdoch and Robert Thomson, CEO of News Corp, welcomed Mark Zuckerberg, Sheryl Sandberg and a few dozen other Facebook executives to their New York headquarters for a day. half of the talks, a dinner at the Four Seasons and a visit to Fox News.

Facebook became the first Big Tech company to strike a deal with News Corp two years later, when it began making large payments to feature its journalism in its Facebook News Tab, along with a dozen other media outlets. Americans. Appearing together to kick off the partnership, Thomson praised Zuckerberg’s “Damascene digital moment”.

Yet in 18 months, the flourishing relationship seems to have frayed. While agreeing to the deal with Zuckerberg in America, News Corp was mounting an all-out campaign for regulation in Australia, cradle of the Murdoch Empire.

Also in the UK, as Facebook began negotiating deals to roll out its overseas news service last year, News Corp has held firm, demanding payments far higher than any other publisher, according to one person. close to discussions.

When payment requests were made to Facebook in Australia, reaching hundreds of millions of dollars over a three-year period, according to a person involved, the social media platform decided it had no other choice than to take a stand. What another leader equated to a “hold-up” demonstrated just how impossible the underlying law was for Facebook to accept.

Former British Deputy Prime Minister Nick Clegg, now Facebook’s vice president of global affairs, with Facebook founder Mark Zuckerberg © AFP via Getty Images

“Facebook would have been forced to pay potentially unlimited amounts of money to multinational media conglomerates,” Clegg wrote in his blog.

Faced with similar pressure, Google decided to strike a deal with News Corp, not just for Australia, but worldwide, in an attempt to end the specter of further negotiations. Facebook, on the other hand, will eventually have to return to the table with News Corp, or reiterate its decision to pull out of Australia. News Corps has publicly stated that the value of news in Australia to Google and Facebook is A $ 1 billion ($ 772 million) per year.

Facebook declined to comment on News Corp. negotiations.

An executive at One News Corp has strongly denied that the demands he made were untenable, noting that he reached the outline of a deal with Facebook before the power outage, and that negotiations have since resumed.

A News Corp spokesperson said: “Mark Zuckerberg and [News Corp chief executive] Robert Thomson has enjoyed a positive and productive relationship for several years, and it continues to this day. ”

But the battle has destabilized other publishers, and payment demands elsewhere are likely to increase.

In a letter from Lord Rothermere published in the Financial Times, the executive chairman of the Daily Mail and the General Trust, questioned whether Google and News Corp were now locked into an “unholy alliance” that could “result in unfair competition unless its terms are made public.” The Financial Times has made trade deals with Facebook and Google.

Facebook said it would increase spending, pledging $ 1 billion to publishers over the next three years. By comparison, he pledged the same amount to help with California’s housing crisis in 2019 and generated $ 85 billion in revenue in 2020.

But his main dilemma remains the same. The company insists that news has “negligible” direct value to its business and only accounts for 4% of the content of its feeds and that it is the publishers who reap the rewards, with the traffic to their sites. “Many users say they would like to see even less topical and political contentClegg said.

It has been difficult to quantify how much news drives engagement on Facebook’s platforms, although news audiences are another segment the company can sell to its advertisers.

Big Tech’s general approach so far has been to give money to news publishers as part of a public affairs exercise, to improve reputation and ward off the threat of greater regulation. .

But most of Facebook’s interactions with the news industry have disappointed editors, from a video initiative it launched several years ago to its decision to reduce the amount of news in its News Feed. in 2018.

“Each of the tools they put in place turned out to be pretty much an economic disaster and a series of broken promises,” said Emily Bell, journalism professor at Columbia University.

Zuckerberg himself is unsure whether or not he wants to support news as a public service. “The point is, he changes his mind all the time,” said a person familiar with the thinking of the CEO, who added that factions inside the company were constantly debating its social obligations.

In the meantime, Facebook is making progress with an international rollout of its news tab, which should be launched soon in France, Germany and other European countries.

On Thursday, Facebook announced deals with small publishers Private Media, Schwartz Media and Solstice Media in Australia, while others are in negotiation.

But its progress will likely be offset by calls for politicians in Canada, the UK and the EU to give their publishers more power in their negotiations with Big Tech.

UK Culture Secretary Oliver Dowden held a meeting with Clegg on Thursday, in which he said he shared his concerns with Facebook that his news blackout appeared to put “his results in the dark.” “above the public interest” and warned that avoided in the future. “Recent events have reinforced my opinion that we don’t have well-functioning digital markets,” said Dowden.

“[The outcome in Australia] could easily encourage other countries to do the same, ”Pasek said. “Countries know they are going to be able to strike a deal that is at least as good as Australia’s, if not better.”

He suggested that Facebook could try to get ahead of regulation by pushing “blanket” initiatives into the space, in the hope that lawmakers no longer feel the need to act. “Goal number one [for Facebook] is to prevent this game from being played everywhere and to avoid being heavily regulated. “

Additional reporting by Jasmine Cameron-Chileshe and Tim Bradshaw in London

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