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Australia’s failed Facebook experiment

By Jeremy Vargo February 23, 2021

Last week, Facebook announced that it was suspending all news from its platform in Australia. In an instant, all links from news outlets like the Sydney Morning Herald and ABC News were erased from Facebook feeds.

It was a fighting response to new legislation from the Australian Government. The new Media Bargaining Code will require websites that display news links to users to pay a negotiated fee to the news outlet every time a link from that outlet is displayed in a search result or social media feed. The legislation is an attempt by the Government to rebalance the funding equation for struggling news companies, returning some of advertising money the legacy media have lost to their global online rivals.

The legislation is an attempt by the Government to rebalance the funding equation for struggling news companies

Transparent, quality news is essential to a well-informed democracy, and equitable access to news is necessary to overcome the growing political, elitist, and populist divides we’re seeing across the western world. Misinformation has been thriving on social media, and trusted, well-funded news organisations are part of the recipe for establishing a shared set of facts in our public square.

While Google and Bing have now agreed to work out profit-sharing arrangements with Australian news organisations in line with the legislation, Facebook has put its foot down. Their argument is they are a fundamentally different business model than the search engines. Whereas Google uses the information created and collected by news businesses to improve the search results they offer to their own users, social media companies offer a platform where users can post links to whatever they like, and in turn offer exposure to that audience for advertisers. News organisations recognise the size and value of this audience, using official Facebook profiles to prodigiously post their own content to gain attention for their work.

Misinformation has been thriving on social media, and trusted, well-funded news organisations are part of the recipe for establishing a shared set of facts in our public square

Facebook’s global operation doesn’t have a positive track record for civic good. They siphoned away a huge portion of the local advertising revenue that was the lifeblood for the newspaper business while structuring their business model to avoid local tax, and dragging their feet when it comes to confronting the massive misinformation issues that have eventuated from this mass, unmediated social connection.

Facebook also has a history of radically shifting the goalposts for news organisations with destabilising consequences. As Facebook was building in popularity, they offered news outlets the ability to create verified profiles and build huge direct audiences for free. Then they changed the newsfeed algorithms dramatically in a way that limited this access, prioritised video content over links to text articles (which caused many newsrooms to cut huge numbers of experienced journalists in favour of video content creators), then deprioritised news content altogether in favour of photos and posts from people’s friends and family. Because of the size of Facebook, algorithm changes now have the power to fundamentally change the viability of newsroom operations.

However, just because advertisers have flocked to the better, more personalised advertising opportunities offered by the digital giants doesn’t mean that Facebook has a responsibility to return the revenue news organisations used to enjoy when they were the biggest content platform in town. News companies were slow to adapt to the online world, and have struggled to adapt their business model over the last 25 years.

Facebook’s global operation doesn’t have a positive track record for civic good.

The Australian Government, much like our own, has a responsibility to figure out how to regulate the destabilising influence of massive global companies on local economics, and an interest in making sure that high quality, independent journalism can survive. While some might argue that Facebook has a duty to be a good corporate citizen, this untenable stalemate is ultimately the fault of the policymakers who took the high-risk gamble that they could force one problem to pay for the other.

Facebook has called the Australian Government’s bluff at a time when information and high trust in the public health response is crucial, leaving politicians to hope that the public will blame Zuckerberg instead of asking the hard questions about what the Government plans to do next.

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