Australia has become the main front in the fight between tech giants and content providers, with Facebook and Google reacting to proposed legislation designed to target them. How the differences are resolved are expected to have significant effects on countries throughout the world, as other governments grapple with the issue of declining revenue for journalism.
Those revenue losses are real. In the United States, for example, the rise of the internet corresponded to a steady decline of local newspapers (circulation of daily papers in the early 1990s was around 62 million; by 2000, as the internet was still gaining popularity and news websites were fairly bare-bones, the number had dropped to about 59.4 million. By 2018 they were down to 28.5 million and were dropping precipitously. The declining distribution has slashed both advertising and subscription revenue, with some newspapers raising their daily prices, others distributing their paper for free in order to boost their official circulation (and thus charge more to advertisers) and some papers using both techniques simultaneously, providing a sample weekday paper to different homes once or twice per week. Despite these efforts, many newspapers have closed while others have laid off staff.
The Australian government’s Australian Competition and Consumer Commission (ACCC) conducted an official analysis and determined that some tech giants which operated effectively as monopolies in their respective fields possessed inordinate power over the news providers, and are seeking to correct the discrepancy.
Of particular concern is advertising revenue. Google and Facebook alike provide headlines and short summaries of stories from various news sites. While this should not be an issue if people wish to be informed, reality has produced different results. Instead of reading the stories, a large number of news consumers are reading the headlines and the summaries and assuming they have absorbed all relevant information. While this is undeniably the fault of the reader, the fact remains that the ad revenue for the stories is being received by Google and Facebook in exchange for posting the summaries of content but not the actual content providers… no click-through, no revenue.
So far, Facebook and Google have taken different approaches to the proposed legislation. While both are lobbying against its adoption, Google has negotiated revenue payments to many of the largest Australian newspaper, radio and television companies like News Corp and Nine Entertainment, seeking to eliminate the perceived need for the legislation. Facebook, on the other hand, has decided to pull all news content from its platforms in Australia… no news, no revenue to news agencies.
Should the legislation, through enactment or simple threat, lead to a revitalization of the Australian journalism industry, it is to be expected that other countries will follow suit. Meanwhile, the loss of private content may result in state-sponsored content being used to fill the void, which would lead to its own set of problems. Moreover, Google’s parent company Alphabet is facing complaints from non-news websites over similar concerns, such as from dictionary sites from which the Google engine presents sought definitions without requiring a pass-through to the source. Should the legislation be successful, it may set a precedent; that alone may be inspiring Alphabet to make deals while Facebook is drawing a line in the sand.