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The case against the ACCC forcing Google and Facebook to pay for news
Jul
Google and Facebook have threatened to restrict or remove news services for Australian users in response to the Australian Competition and Consumer Commission’s draft news media bargaining code.
This week on Facebook announced If the code comes into effect, the company will no longer allow publishers and users to share local and international news on its Australian Facebook and Instagram profiles.
Google also has he made implied threats limit its Australian news services – potentially by removing Google News in Australia, as it did in Spain in 2014.
The case for a code centre is based on two points. First, that Australian media is in critical danger of going bankrupt because of Google and Facebook’s dominance of the digital advertising market.
Second, Google and Facebook are Godzilla-like entities that dominate the market and resist any attempts at regulation – especially any that might set an international precedent.
It’s true that regulation has a role to play in addressing the anti-competitive aspects of the digital advertising industry, but I have my doubts about the ACCC’s code. It would allow commercial news companies to negotiate with Google and Facebook to be paid for Australian news content placed on their platforms.
But I don’t think it will work (which I say reluctantly, since both Google and Facebook have a lot of explaining to do). I also don’t think the code is fair – and there’s a better way to solve the problem.
Read more: Australia is the first in the world to plan to force Facebook and Google to pay for news (but ABC and SBS don’t stand a chance)
Misunderstandings about how social media messaging works
Facebook for years tinker with its algorithm prioritize posts from users’ personal connections, which CEO Mark Zuckerberg has described as a preference for digital living room above the digital city square.
Essentially, your Facebook News Feed (the main channel where you discover fresh content) isn’t really a News Feed. Instead, it’s personalized content from the people you’ve interacted with the most or most recently.
If a news article appears in your feed, it was probably shared by one of your contacts. You may either be following the company’s Facebook page, or the company may have paid to advertise (amplify) the content.
The news you see on Facebook depends on many factors and algorithmic decisions. The process is elaborate and very different from the way news is presented on a publication’s website or in a newspaper.
The ACCC’s attempt to ensure media companies are “fairly” rewarded for the value of Australian news on social media is problematic because accurately assigning a value to that content is far from straightforward.
It is worth noting that the main point of resistance to the ACCC Code is the requirement for Google and Facebook to provide 28 days’ notice of algorithmic changes that will impact traffic to news links or the rankings of paid news links.
Snapshot
The Cloudy Business of Digital Advertising
Commercial news is currently financed largely through advertising based on audience size and demographics rather than solely on content (excluding subscription models).
Traditionally, however, audiences have been targeted based on the content of the message. For example, wedding dress ads would be placed in bridal magazines. In such scenarios, the content itself is valuable to advertisers because it attracts their specific audience.
In digital advertising, however, the content of the message is often secondary or even irrelevant to generating advertising revenue. Advertisements are targeted directly to recipients based on the user’s profile, recorded behaviors, characteristics, and preferences. The page on which the ad appears may be a factor, but one of many.
It’s called programmatic advertising. When you visit the site, an automatic “bidding war” immediately begins, in which your user profile is compared with potential advertisers. The winner gets the ad space – and this is determined by several factors, including the price offered and the likelihood of the ad being clicked.
All this happens in the time it takes for the website to load (approx. 200 milliseconds).
The ACCC Code proposes that publishers be paid based on the negotiated value of the news content, but the value of news to online advertisers is not so much derived from its content as from its target audience.
Hence, the dispute between the ACCC, Google and Facebook is both confusing and unclear.
Evaluation of the value of the message
The ACCC Code also connects the ways in which digital news content and social media users are socially and commercially valued. In explaining the need for the Code, the ACCC states:
While there is an imbalance of bargaining power in other areas, the imbalance of bargaining power between media companies and major digital platforms is being addressed because a robust and independent media landscape is indispensable for a properly functioning democracy.
This “public sphere” ideal is the rationale for treating news content as essential enough to force digital giants to subsidize it. Fine, but the ACCC’s “professional standards test” that news companies must pass to qualify for the fee sets a low bar.
It fails to take into account essential aspects of public interest journalism, such as concentration of ownership or editorial diversity – a sensitive issue in the Australian news environment.
In addition, the code states that ABC and SBS cannot claim compensation (but can still utilize information about algorithms and data). This is based on the idea that commercial news media are more vulnerable than public broadcasters, due to the loss of advertising revenue to Google and Facebook.
With that, the argument has changed: the value of news is not just democratic, it is also commercial.
Rod McGuirk/AP
There is another way
Google and Facebook appear to prefer to take drastic measures rather than be forced to pay for news or provide news companies with information about algorithm changes and user data. Both companies To have taken over They bring more value to Australian news businesses than they receive.
Perhaps the way forward is regulate programmatic advertising. In particular, we should examine the elaborate web of companies that discreetly exchange data profiles and advertising space. And this industry is dominated by, guess who, Google and Facebook.
Reform in this area could facilitate address the issues around advertising revenue and market position that the Code aims to address.
The next ACCC vehicle to leave the route is review and report in the advertising technology industry that takes these issues into account.
Hopefully, it will suggest approaches to regulating the digital advertising market. This seems like a better option than the compensation that is currently being sought.
Read more: How the shady world of the data industry is robbing us of our freedom
