By Jeff Horwitz and Sarah E. Needleman
Facebook Inc.'s battle with publishers and regulators around the
world over how the social-media giant handles news is far from
finished after striking an agreement this week with the Australian
government to pay for content.
The agreement Facebook reached Tuesday with Australia's
government to restore news content to its platform comes as
political leaders elsewhere have pledged to increase scrutiny on
tech giants, and as news outlets also plan to amp up pressure on
the company to cut deals. The matter also raises questions about
which publishers should get paid for news content and how much.
Facebook's deal with Australia gives it a path to avoid required
payments to publishers for news content, so long as the company
works toward reaching agreements with publishers on its own
accord.
"We appreciate the government has created flexibility to move
forward making deals with publishers, while giving us 30 days'
notice before a designation," said Campbell Brown, Facebook's vice
president of global news partnerships. If Facebook's negotiations
with individual Australian publishers fail to satisfy the
government, the company could reimpose its news ban rather than be
forced to comply with the new law's terms for setting payments.
"I am hopeful there will not be a need for that step," Ms. Brown
said.
The compromise as envisioned would be an alternative to the
voluntary payments that Facebook has made to "partner" news outlets
for its News Tab product for mobile users in the U.S. and other
countries.
The payments Facebook has made to date aren't overly costly for
the company, whose ad business drove it to a record $86 billion in
revenue last year. News content accounts for only 4% of what people
see in their main newsfeed, Facebook said when it announced that it
would remove news from the platform in Australia last week.
News publishers rely on the audience that Facebook and Alphabet
Inc.'s Google deliver. In the hours after Facebook's decision to
shut off news sharing in Australia, news publishers in the country
saw traffic from readers outside Australia decrease by about 20%,
data from analytics firm Chartbeat showed.
Roughly 36% of Americans get their news from Facebook, according
to a fall 2020 study from Pew Research, compared with 23% who get
it from Alphabet's YouTube and 15% from Twitter.
If Facebook were to have to pay for news content on a global
basis, the cost would be significant, said Cascend Securities
analyst Eric Ross. "Margins disappear when you have to all of a
sudden have to pay for things that were free," he said.
The brouhaha between Facebook and Australia's news providers
comes as it and Google face antitrust lawsuits in the U.S. and
regulatory scrutiny elsewhere. Australia and other countries
seeking payment for news content on behalf of publishers argue that
Facebook is abusing its market power by trying to minimize or avoid
such expenses. A 2019 Australian report deemed the large platforms
threatened upstart social-media companies as well as advertisers
and the news industry at large.
Both Facebook and Google say that their platforms help
journalism. As Facebook itself has noted, publishers world-wide
already seek to maximize the attention their work receives on
social media without any promise of compensation.
One U.S. news publisher said the Facebook dispute in Australia
suggested the social-media company has renewed interest in paying
publishers after being previously reluctant to do so.
"We're at a tipping point," said Maribel Perez Wadsworth,
publisher of USA Today, the flagship title of Gannett Co., the
largest newspaper chain in the U.S. "There is finally a much
greater appreciation of the value of credible journalism."
USA Today participates in the Facebook news tab offering in the
U.S. via a licensing agreement.
News Corp, owner of The Wall Street Journal, has a commercial
agreement to supply news through Facebook. Last week the company
reached a three-year deal with Google to license content from its
publication and produce new products for Google platforms.
Australia's efforts could prompt nontraditional media, such as
independent journalists who publish articles on writing platforms
like Medium, to demand payments, said Bernstein analyst Mark
Shmulik. "The concern is, what if we no longer draw a line at media
conglomerates? ... That's a pathway Facebook doesn't want to go
down," he said.
Earlier this month Australian officials talked with their
counterparts from Canada, Germany, France and Finland about those
countries making similar rules on tech platforms paying news
publishers, said Steven Guilbeault, Canada's minister in charge of
cultural policy, adding that the coalition of countries could
expand over time.
Mr. Guilbeault said he's encouraged by developments in
Australia, and intends to introduce measures this spring that have
the support of its global allies and relevant stakeholders. On
Monday Canadian Prime Minister Justin Trudeau spoke with his
Australian counterpart, Scott Morrison, about potential cooperation
in pursuing regulation of online platforms, according to a summary
of the conversation released by Mr. Trudeau's office.
"We need to find a solution that is sustainable for news
publishers, small and large, digital platforms, and for the health
of our democracy, " Mr. Guilbeault said.
The battle over payments to news outlets has simmered -- and at
times boiled over -- in Europe for more than a decade. A new
European Union copyright law passed in 2019 and the involvement of
antitrust regulators have given news media fresh leverage by, among
other things, creating new copyright control for press outlets over
the use of their publications on the internet by tech companies,
except in the case of very short extracts and hyperlinks.
In France, the only country that so far has so far implemented
the EU law, Google last November signed licensing agreements for
its News Showcase product with several publications, including Le
Monde. The agreements came after a French court reaffirmed an order
from the country's antitrust regulator that Google must
negotiate.
Google said it has signed News Showcase deals with more than 500
publications in a dozen countries, including Germany, the U.K. and
Australia. Google last October pledged $1 billion over three years
to such licensing deals, but declined to say Tuesday how much of
that amount has been spent.
"We have hundreds of partnerships with news publishers large and
small, making us one of the biggest funders of journalism," a
Google spokeswoman said.
Facebook said that publications' posting of their articles to
its platform constitutes a license under the French law, and
remains unchanged. The company currently only shows links, rather
than rich previews, when users post news articles from French
publications themselves, unless the publication has given Facebook
explicit permission.
A Facebook spokesman said the company is in talks in France and
Germany to launch its Facebook News product, which pays to license
articles from news outlets. The product launched last month in the
U.K. with articles from publications including the Guardian.
Facebook has previously said it provided hundreds of millions of
dollars to publications through its various tools for advertising
and subscriptions.
Sam Schechner and Paul Vieira contributed to this article.
Write to Jeff Horwitz at Jeff.Horwitz@wsj.com and Sarah E.
Needleman at sarah.needleman@wsj.com
(END) Dow Jones Newswires
February 23, 2021 20:22 ET (01:22 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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