In fact it was foreshadowed by Facebook itself, who told the government last year that this was exactly what it was going to do if it proceeded with the code in its current form. A number of publishers even told the government to pay heed to Facebook’s warning as far back as September.

Facebook CEO Mark Zuckerberg.

Facebook CEO Mark Zuckerberg.Credit:AP

In that context, the reaction from local news outlets pretending that this was some unforeseen circumstance and effectively labelling Facebook an enemy of the state isn’t just self-serving, it’s incoherent.

To better understand why, it’s worth taking a few steps back to understand exactly how we got here. News publishers have been arguing for years that tech companies, including Facebook and Google, are stealing revenue by hosting links on their platforms and displaying ads alongside those links. The tech companies say that people visit their sites for a range of reasons, not just news, and that they actually help news publishers by sending traffic their way.

It’s this tension that the media code is trying to resolve. Media companies want the tech giants to pay them money to make up for what they claim is lost advertising revenue.

But who’s right? Are news companies losing revenue because audiences are spending all their time on Facebook, with the intention to read and share news, or are they benefiting because people who otherwise wouldn’t read the news are stumbling across it in their feeds and then being sent to their websites?

Australians have been blocked from seeing or sharing news content on Facebook.

Australians have been blocked from seeing or sharing news content on Facebook.Credit:Istock

It turns out the recent escalation has actually helped clarify the situation. If Facebook thought news was really fundamental to its product, it would have paid a bit of money to news publishers, as proposed. Instead, it shrugged and said, if you’re saying we can only host news if we pay then no worries, we just won’t host news.


If news publishers thought they were, in aggregate, losing more from being on Facebook than benefiting they would be celebrating the decision by the company to ban news. The entire premise of their argument rests on this idea that Facebook steals their content and makes money off it. So shouldn’t it be a victory that they’ve stopped doing that?

The fact that they’re scrambling rather than celebrating suggests their bluff has been called and they are actually much more reliant on Facebook and the steady stream of traffic it sends their way than they wanted to admit.

But this isn’t actually surprising, or new. It only feels that way because of how successful news publishers have been in framing this debate, and portraying Facebook and Google as entities they’ve been forced to rely on. In reality most news companies completely restructured their entire organisational strategy to cater to Facebook and Google because they thought it was the cheapest and most efficient way to get clicks.

The internet, and then social media, disrupted the traditional news media business model.

The internet, and then social media, disrupted the traditional news media business model.Credit:Getty Images

When the internet, and then social media, disrupted the traditional news media business model, publishers had a range of options available to them. Some became more heavily reliant on subscriptions, calculating that a smaller, more targeted audience that was willing to pay a premium for high-quality content was a more sustainable long-term solution given how fickle the internet could be.

Others wanted to ride the algorithmic wave. Their strategy revolved around creating vast quantities of content for a mass audience and pushing it into people’s faces on social media. They hired audience editors to identify what stories worked best on what platform. They bought tools that identified which stories published by their competitors were trending so they could write their own versions. They hired SEO experts to optimise to ensure their stories were at the top of Google’s search results. They hired social media producers to create videos, images and headlines designed to exploit Facebook’s news feed algorithm.

Both of these strategies are equally legitimate, and both have their own risks. But it’s pretty clear one is much more heavily reliant on the decisions and imperatives of foreign-based tech companies driven by their own self-interest.

As time went on the online ecosystem became more crowded.

As time went on the online ecosystem became more crowded.Credit:iStock

For many years that wasn’t a problem. But as time went on the online ecosystem became more crowded, online advertising became less lucrative, the digital platforms started de-prioritising news in their algorithms, and news publishers were still financially struggling. So, rather than try and pivot again to yet another business model, they lobbied the government and pushed for the proposed code.


Of course, the services offered by companies like Facebook and Google are very popular, and are used by millions of Australians. No one is suggesting that publishers should ignore them or boycott them (though ironically a boycott was actually proposed by News Corp in its submission to the draft code). But at the same time, no one forced publishers to become this reliant on them. Some media companies in Australia have said that 75 per cent of their traction comes from social media and search engine referrals. Being that reliant on a revenue stream that you have no control over is a short-sighted way to run a business, and shouldn’t be the basis upon which public policy is formed. But that’s the bedrock of the media code, and ultimately why it’s a poor solution to the big questions of how our media and tech industry operates.

So what’s the alternative? Companies like Facebook and Google are extremely powerful and effectively operate as monopolies. They’re certainly not the good guys in this debate. Even though Facebook’s decision to turn off news in Australia was foreshadowed and preventable, it’s not a positive result for publishers or the wider community.

Companies like Facebook and Google are extremely powerful and effectively operate as monopolies.

Companies like Facebook and Google are extremely powerful and effectively operate as monopolies.Credit:Rob Homer

There’s no question the monopoly power of these companies needs to be tackled, but that’s not something Australia can do on its own. But if we’re actually worried about that – the structural imbalance between local news companies and global tech giants – then there are much better steps than a bargaining code that would deliver a temporary sugar-hit for local news publishers who are rueing their failed commercial strategies.


A turnover tax, such as that proposed by a number of EU states, would help force tax-avoidant tech giants to pay their fair share. Instead of using loopholes to avoid paying corporate tax in Australia, they could be required to pay up based on the revenue their earn in the country. That money could then be used by the government to support journalism in a way that is fairer and more transparent than a series of privately negotiated bargains between media and tech companies.

New financial penalties for companies that act as a vehicle for misinformation, particularly material that is likely to radicalise or incite violence, are another way to force platforms like Facebook to limit the social harm they can cause.

These are just a couple of proposals that would help achieve what those advocating for the current code claim they want to achieve: reining in the power of big tech, supporting local news publishers, and improving the quality of content available online.

Osman Faruqi is a journalist and the editor of Schwartz Media’s daily news podcast 7am.

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