The new rules, strongly backed by Rupert Murdoch’s News Corp Australia, would force Facebook and Google to give news outlets a bigger cut of digital advertising revenue. It is the most aggressive effort yet by any country to curb Silicon Valley’s power over the news business.
The social media giant is threatening to make it impossible for users in Australia to share local and international news content on both Facebook and Instagram if the government passes regulations to alter the financial arrangement between publishers and online platforms.
In a post Facebook said, Australia had left Facebook with no choices, removing news entirely or accepting a system that lets publishers charge us for as much content as they want at a price with no clear limits.
It also said that, assuming this draft code becomes law, we will reluctantly stop allowing publishers and people in Australia from sharing local and international news on Facebook and Instagram.
Facebook’s head of global news partnership, Campbell Brown said in an interview “We tried to make this work. We proposed our version of something workable, unfortunately there are so many things in this proposed legislation that just make it untenable.”
The new regulations are untenable, they would force the social network to enter into revenue-sharing agreements with publishers in which the final term would be decided by independent arbitrators and Facebook would have no recourse to back out of the deals.
News organizations around the world have long chafed at Facebook’s and Goggle’s takeover of the digital ad industry.
The two company’s account for more tan half of the annual digital ad spending in the US and more than 70 percent in Australia. That has left publishers scarping for smaller pieces of the pie, even as their content reaches larger and larger audiences.
Australia’s new legislations goes further by establishing a panel of arbitrators who would determine the price that Facebook and Google must pay publishers.
The platforms would have no recourse to exit the agreements, and they could face fines as steep as 10 percent of their overall revenue in Australia for each offense.
Mark Thompson, the outgoing chief executive of the New York Times, is similarly wary of Australia’s move.
He told Reuters that, “My own view is the more we can get the major platforms to work bilaterally and voluntarily to help support journalism at every level, the better it will be. The more it becomes part of a long, extended, regulatory and political process, the less likely it is to help in time and the more likely you are to get different kinds of adverse consequences.”
Australia’s effort is an overall win for the news industry is still very much up for debate.
Many news industries veterans believe that harsh regulations are counterproductive and could ultimately undermine publishers ability to benefit from the distribution offered by platforms like Facebook and Goggle.