Facebook announced this week that, should the code be made law, it would no longer allow users and publishers to share local and global news on the Australian Facebook and Instagram websites.
Google has also made implicit threats that it will limit its Australian News Services – possibly by removing Google News from Australia as it did in Spain, in 2014.
The arguments in favor of the code are based on two main points. The first is that Australian media outlets face a serious threat of bankruptcy due to the dominance of Google and Facebook in the digital advertising industry.
Second, Google and Facebook dominate the market like Godzilla and will resist any regulatory attempt – particularly one that could establish an international precedent.
The AC code is not up to scratch. It’s true that regulation plays a part in combating the anti-competitive elements of the digital advertising sector, but I do have my doubts. The code would allow commercial news companies to negotiate with Google and Facebook to get paid for Australian content that is included on their platforms.
However, it will not work. (I say this reluctantly because both Google and Facebook have much to answer for ). I wouldn’t say I like the code either – there are better ways to solve the issue.
Read more: In a world first, Australia plans to force Facebook and Google to pay for news (but ABC and SBS miss out)
Misunderstanding how news works on social media
Facebook’s algorithm has been tweaked for years to prioritize posts by users with personal connections. Mark Zuckerberg, the chief executive, described this as a preference for the virtual lounge over the town square.
Facebook News Feed, the main feed where you find new content on Facebook, is not really a news feed. It features personalized content from the people you are most connected to or who have been most recent.
A friend of yours likely shared the news item. You may also be following the Facebook page of the company, or they may have paid for advertising (boost).
Facebook’s algorithmic decisions and factors determine which news stories you see. This is a complex process that is vastly different from how news is displayed on a publication’s website or in a paper.
It isn’t easy to attribute value to social media content accurately.
The AC code requires Google and Facebook to give 28 days’ notice before making algorithmic changes that will impact either the referral traffic for news or the ranking behind paywalls.
Shutterstock is a great resource for finding images that reflect your online activities and those of your friends. Shutterstock
Digital advertising is a murky business.
Today, commercial news is largely funded by advertising based on demographics and audience numbers rather than just content (excluding subscription models).
In the past, audiences were targeted based on news content. Ads for wedding gowns, for example, would be placed in bridal magazines. Advertisers value the content in such situations because it targets their target audience.
Digital advertising is a different story. The news content can be secondary, or even irrelevant, to generating revenue. Ads are targeted directly at their target audience based on user profiles of recorded characteristics, behaviors, and preferences. The page where the ad appears can be one factor.
This is a programmatic advertisement. A “bidding battle” is automatically conducted when you visit a website. Your user profile is matched with potential advertisers. The winning ad is determined by a number of factors, including the price offered and the likelihood that the ad will be clicked.
All of this occurs in the time that it takes to load a website (about 200 milliseconds).
The AC code proposes that publishers are remunerated based on the value of a news story. However, the value for online advertisers comes not so much from the news itself as it does from the audience.
The brawl that has broken out between the PC and Google, as well as Facebook, is confusing.
News value assessment
The ACCC code also includes the social and commercial value of digital news content, as well as social media users. The ACCC explains the need for a code by stating:
Although there are other areas where bargaining power is imbalanced, it is the imbalance of bargaining between news media and major digital platforms that is being addressed. A strong and independent media environment is vital to a functioning democracy.
The “public sphere,” or the ideal of a free press, is what makes news important enough for digital giants like Google and Facebook to pay for it. The ACCC’s “professional standard test” that news companies must pass in order to be remunerated is a low bar.
The report does not consider important aspects of Australian journalism, such as newsroom diversification or concentration of ownership.
The code also states that ABC and SBS cannot claim compensation (but they can still gain from the information about algorithms and the data). The code is based on a belief that commercial media are more vulnerable to Google and Facebook due to the advertising revenue they lose.
This has led to a new argument: news is no longer just democratic but also commercial.
ACCC chair Rod Sims stated that the competition body was looking for a model to address power imbalances on digital platforms without’reducing the availability of Australian News on Google and Facebook.’ Rod McGuirk/AP
There is another way.
Both companies have claimed that they provide greater value to Australian news businesses than what they receive. And both claim that they offer more value to Australian media businesses than what they get.
Regulation of programmatic advertising may be the best way to go. We should examine the network of companies that trade advertising space and data profiles discretely. Guess who dominates this industry? Google and Facebook.