Digital Publishing Platforms
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“News content is highly substitutable”: Facebook rejects payments to publishers

“News does not drive significant long-term value,” Facebook stated, saying it could cut out news completely without any significant impact on its business.

Earlier this year, after the announcement of a mandatory code by Australia’s competition watchdog, publishers saw some hope that the new rules could finally force Google and Facebook to pay for news. 

The duopoly had earlier stated they were ‘disappointed’ by the government’s move to make them pay publishers, and today Facebook has come out swinging, categorically rejecting the proposal, and saying it could cut out news completely without any significant impact on its business.

Referring to its 2018 change in the newsfeed ranking algorithm to prioritise content from friends and family, Facebook said, “Notwithstanding this reduction in engagement with news content, the past two years have seen … increased revenues, suggesting both that news content is highly substitutable with other content for our users and that news does not drive significant long-term value for our business.”

It’s stance reminiscent of what Campbell Brown—Facebook’s global head of news partnerships—told publishers before: “We are not interested in talking to you about your traffic and referrals any more. That is the old world and there is no going back.”

Facebook reiterated that news represents “only a very small fraction of the content in the average Facebook users’ newsfeed” since it was primarily a service used to connect with family and friends, and if there were no news content available on Facebook, they were confident the impact on the company’s community metrics and revenues would not be significant.

The code needs to recognise that there is healthy, competitive rivalry in the relationship between digital platforms and news publishers, in that we compete for advertising revenue.

from Facebook’s submission to ACCC

Stating that “It is not healthy nor sustainable to expect that two private companies, Facebook and Google, are solely responsible for supporting a public good” and solving the challenges faced by the media industry, it said the revenue-sharing proposal would be forcing them to “subsidise a competitor” and “distort advertising markets, potentially leading to higher prices”.

The company said it had sent 2.3 billion clicks just to Australian news publishers in the five months from January to May 2020, estimating it to be worth $195.8 million to news organisations.

Alternatively, it contended, any benefit to Facebook is considerably less, and that too well exceeded by the platform’s investment in news.

Any value that we receive from publishers is outweighed by the significant costs and investment that we make in news. We do this because news has societal value for the people who use our services and the broader community.

from Facebook’s submission to ACCC

“We continue to ramp up our direct financial contributions to the news industry – not to make a profit – rather because we believe news is a public good and it plays an important social function,” the company said.

Incidentally, Facebook recorded double-digit growth in Australian advertising revenue last year, to the tune of $674 million. Google made $4.3 billion.

As an alternative suggestion, Facebook has proposed the creation of an “Digital News Council”, modeled on Australia’s Press Council, to manage the relationship between the media and tech organizations.