Facebook to lift the ban on Australian news and pay local media companies

Facebook said on Tuesday that it would lift a controversial ban on Australian news and pay local media companies for content, following a final gasp agreement on pending landmark legislation.

Australian Treasurer Josh Frydenberg announced a face-saving compromise that will see Google and Facebook throw tens of millions of dollars into the struggling local news sector.

In return, US digital companies will currently avoid being subject to mandatory payments that could cost them much more and create what they see as an alarming global precedent.

Just hours after the compromise was revealed, Facebook announced its first proposed deal with an Australian media company, Seven West, and is said to be doing commercial business with other local news organizations.

The company is expected to use the content to launch a dedicated news product in Australia later this year.

“As a result of these changes, we can now work to increase our investment in journalism of general interest and restore news on Facebook for Australians in the coming days,” said Will Easton, CEO of Facebook Australia.

The social media movement sparked global outrage last week by blowing up news for its Australian users in protest of the proposed legislation and inadvertently blocking a series of non-news Facebook pages linked to everything from charities to emergency services.

Prime Minister Scott Morrison angrily accused Facebook of making a decision to “unfriendly” Australia.

Google has already brokered multi-million dollar deals with local media companies, including the two largest: Rupert Murdoch’s News Corp and Nine Entertainment.

Commentators described the 11-hour amendments – which came when Parliament looks set to pass the law this week – as “a reasonable compromise”.

“Everyone can walk away and say, ‘Yes, we have what we want,'” Rob Nicholls, a professor of business at the University of New South Wales, told AFP.

Both companies now have another two months to reach further agreements that would avert binding arbitration.

Precedent setting

The technology companies had strongly opposed the legislation from the beginning and feared that it would threaten their business models.

In particular, the companies opposed rules that made negotiations with media companies mandatory and gave an independent Australian judge the right to impose a monetary settlement.

This process will now be avoided if companies are considered to have made a “significant contribution” to the Australian news industry through unspecified “commercial agreements”.

“We are now facing the strange possibility that the mandatory code for news media can be adopted by Parliament and it applies to absolutely no one,” said Marcus Strom, head of the Media Entertainment and Arts Alliance, a trade union.

“It will only sit in the cashier’s box as a threat to the conduct of digital companies.”

Google was also keen to avoid setting a precedent for platforms to pay someone for links, something that could render their flagship search engine unusable.

Facebook – which is much less dependent on news content – had originally said that being forced to pay for news was simply not worth it and turned off content.

“There is no doubt that Australia has been a proxy fight for the world,” said Frydenberg.

Critics of the law say it punishes innovative companies and amounts to a money laundering by fighting but politically linked traditional media.

Thousands of journalistic jobs and a lot of news have been lost in Australia alone in the last decade when the sector saw advertising revenue flow to the digital players.

For every $ 100 that Australian advertisers spend today, $ 49 goes to Google and $ 24 to Facebook, according to the country’s competition watchdog.

Technical insiders see the legislation being pushed, especially by Rupert Murdoch’s News Corp, which dominates the local media landscape and has close ties with Australia’s Conservative government.

A new provision in the law gives Facebook and Google more room for discretionary assessment of who they are about, and what amounts are involved.

“We have reached an agreement that allows us to support the publishers we choose, including small and local publishers,” said Facebook Vice President of Global News Partnership Campbell Brown.

Facebook and Google may still face the prospect of having to replicate business with media around the world, as the EU, Canada and other jurisdictions move to regulate the sector.

Since the growth around the turn of the century, Google and Facebook have been largely unregulated and have grown into two of the world’s largest and most profitable companies.

But a series of scandals over misinformation, privacy breaches, data breaches and their virtual monopoly on online advertising have sparked the watchdogs’ attention.