On September 1, Facebook threatened to block Australians from sharing new stories on the social media platform if the new proposal will force them to pay for it.
Paying the publishers
The threat is the company's response to an Australian law that would force Facebook and Google to negotiate fees with the news companies whose stories appear on their respective platforms. The fines will be millions of dollars if the companies fail to comply.
However, Facebook said that it would stop allowing publishers and people in Australia from sharing local and international news on Facebook and Instagram if the government proposal becomes law, as reported by The DailyMail.
According to an expert, Facebook wanted to kill off Australia's initiative to stop the law from spreading to other countries where the financial impact would be more severe.
The social media giant says that it faces unlimited costs if the move becomes law in Australia. The company is now fighting a battle to stop the proposal from becoming law.
Meanwhile, the Australian government dismissed Facebook's threat and vowed that it would not respond to coercion.
Google has also expressed their dismay against the new law with pop-ups saying that the way Australians use Google is at risk, but has not threatened to cut off their services like Facebook, as reported by The Guardian.
Australia's proposal is targeting stories that appear in Google searches and the news feed on social media platforms like Facebook and Instagram, without any profit going to the businesses that produce the news.
Australia says that what they are doing is a fundamental bargaining power imbalance, which means that news websites are unfairly deprived of advertising revenue siphoned off by Facebook and Google.
In 2019, local advertisers paid Facebook Australia $674 million or £ 370 million. According to regulators, Facebook and Google benefit financially from showing the news stories.
Both companies also boost their status as news providers in Australia and collect user data, which is used to improve their services.
Facebook also profits from the "like" and "share" buttons on other websites, which allow its servers to track the activities of its users and send them tailored ads.
Aside from paying the content, the measures would also force transparency around the closely guarded algorithms that tech firms use to rank content.
The code will require Facebook and Google to give publishers 28 days notice of any algorithm changes that are likely to have a significant impact on their traffic.
The initiative is being watched around the globe as media companies worldwide face financial struggles, made worse by the current coronavirus pandemic.
Facebook's threat
In a statement, Facebook's Australia and New Zealand managing director Will Easton said that the proposed overhaul misunderstand the dynamics of the internet, as reported by BBC.
Easton said that the proposed law would force Facebook to pay news organizations for content that the publishers voluntarily place on platforms and at a price that ignores the financial value that platforms bring publishers.
The managing director also said that assuming that the draft code becomes a law, they will reluctantly stop allowing publishers and people in Australia from sharing local and international news on Facebook and Instagram.
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