The Facebook-Australia Fight Is a Preview of Big Tech Battles to Come

Perhaps we’ll never know if Facebook’s surprise decision to cut Australians off from all news sources on its platform was a carefully planned strategic move, or the result of a tantrum in Menlo Park. Either way, Australia woke up to a unilaterally imposed news blackout on Facebook last week that raises important policy questions about democracy, corporate power and access to information. There had been no prior warning from Facebook, no tests—just an algorithmic change.

Not only were News Corp., ABC and other mainstream Australian media shuttered on Facebook’s News Feed, so were services that might not consider themselves to be news: the national meteorological service, the Hobart women’s shelter, Queensland’s public health service (during a pandemic, no less), numerous academic blogs, and even The Betoota Advocate, an Australian satirical website. After an immediate uproar, Facebook has since restored many of them to its platform.

The backdrop to this extraordinary action is a proposed law in Australia, the News Media Bargaining Code, that seeks to force Big Tech platforms to pay publishers for news content.

Colleagues in Australia tell me that public opinion is supportive of the new measure. There’s certainly a problem to be solved. Traditional news outlets’ revenue has tanked over the past 10 years as advertisers have been drawn to the low-cost and high-precision microtargeting of the major online advertising services of Google and Facebook. Whereas roughly 50 percent of U.S. newsroom jobs have been lost since 2008, Facebook’s revenues have grown tenfold since 2013, from nearly $8 billion to $87 billion. Local news has suffered particularly badly.

So why not demand some kind of redress to flow back in the other direction? Make the platforms share some of their gains with the news media. Good for free speech, good for the fourth estate, and good for democracy.

Although the Australian government and Facebook reached a settlement Tuesday, there’s a broader policy problem here, even more concerning than what’s happened to news revenues. The power of a small number of tech platforms is now so great that when they take unilateral action of this kind, millions of people are affected. The gamble that Facebook took is that the Australian government would buckle—that this tech giant could simply force a policy U-turn. Whether or not you agree with Facebook’s stance, the more important issue is one of legitimacy. Who do you want making policy: your elected government, or an unelected, unaccountable tech company?

Who do you want making policy: your elected government, or an unelected, unaccountable tech company?

Big Tech has this power, of course, because of its immense market share. But how have we gotten to a stage where two companies, Apple and Google, control 99.97 percent of mobile operating systems, or where one company, Google, enjoys 95 percent of the Australian search market? While this has all happened in such a short time, lawmakers in the European Union, the United States and further afield are clearly preparing for action, whether through anti-trust inquiries, investigations into legal competition, or efforts to regulate what the British government calls “online harms.”

In Australia, Facebook may have believed that popular opinion would be with it, and not the government. How much has changed in less than a decade. In 2012, Big Tech “went dark” to protest a now mostly forgotten copyright law proposal against piracy in the European Union, and people took to the streets to oppose the law; 25,000 people turned out despite freezing weather in Germany. That was then. Now, the cheeky start-up tech companies, which disrupted traditional media and stuck it to the man, have become the establishment, with revenues higher than the GDP of most countries. What’s more, they are willing and able to face down democratically elected governments on policy issues. Now, the anger is firmly against Facebook, for giving Australia a shocking example of its power.

Facebook has gone out on a limb here. In contrast, Google, which has also publicly shared concerns about the News Media Bargaining Code, has adopted a more pragmatic approach. Initially, it also dabbled with the blackout idea, running what it called “an experiment” where a small percentage of Australian users were denied news sources in response to search requests. People went crazy. Google stopped. It now appears to have accepted that some form of payment for news is inevitable and has decided to control the process rather than putting itself at the mercy of regulators. The search giant has been negotiating deals with News Corp. and other news titles in France and Brazil. Shrewdly, Google also cut deals with smaller, regional titles, such as InQueensland and InDaily, which covers South Australia, so that it is not just the biggest international news conglomerates that benefit.

The perverse outcome of Facebook’s shock action is that, with both sides of the Australian Senate suddenly united in their fury against the social media behemoth, the law will end up approved rapidly, despite having some shortcomings. The tech giants have some fair points, which have been lost in their heavy-handed response. For one, the proposed law’s definition of what is a news service may be overly broad. It may also be onerous for platforms to notify publishers of major algorithmic changes, as the law demands. The law would also introduce a new arbitration system in Australia to negotiate the commercial arrangements between tech platforms and news publishers. Similar to the salary arbitration system in Major League Baseball in the U.S., it sounds a lot like a sealed bid auction, with the arbitrator picking either the platform or the publisher’s proffered price.

As with so much of tech policy in the past two decades, there’s no handbook and no precedent in how to deal with the issue of news revenue online and the power of Facebook and Google. Regulators, citizens and the companies themselves have to make it up as they go along, frequently stumbling along the way. At some point, we have to face up to the challenge of establishing norms for governing data and the market power of tech companies, which will be exceedingly difficult. The power, resources and lobbying might of Big Tech are awesome. The risks—to free speech, access to information and knowledge—are large.

And there are others, too. Without a world-leading U.S. tech industry, the risks would increase of Chinese supremacy over technology, from infrastructure, through standards, up to apps and platforms themselves. What happens if the U.S. actually takes major steps to break up all these tech giants, and the only ones left in the world are Chinese?

Emily Taylor is the CEO of Oxford Information Labs, and an associate fellow with the International Security Program at Chatham House. She is also the editor of the Journal of Cyber Policy, a research associate at the Oxford Internet Institute, and an affiliate professor at the Dirpolis Institute at the Sant’Anna School of Advanced Studies in Pisa. She has written for The Guardian, Wired, Ars Technica, the New Statesman and Slate. Follow her on Twitter @etaylaw. Her guest column will appear each Tuesday.