Why Facebook’s clash with Australia is worth monitoring

Courtesy of Unsplash | There are far-reaching implications of Facebook’s recent clash with Australia.


Alexander Wolfe | Staff Columnist

Now that we’re beyond the initial 2021 spiral of news and it seems we’re in more normal times, outrageous current events are less obvious, but still easily found. Facebook became the first company in recent memory to attempt to use the power of its own brand to influence legislation.

While the idea of Facebook’s brand having the power to encourage positive action is laughable, 40% of Australians used Facebook as their primary news source between 2018 and 2020, according to a Reuters Institute report.

An Australian regulatory commission launched an inquiry into the impact of Google and Facebook on competition in media and advertising, and found that these companies collect A$81 (Australian Dollars) of every A$100 spent on digital advertising in Australian media.

Given this extreme level of sway, Facebook having control in the market is unsurprising, but how the company has elected to use its influence is worth noting. Facebook disabled news sharing for Australian users on Feb. 18, after a proposed law was introduced to the Australian legislature that would make tech companies compensate news outlets for hosting or sharing content.

Whereas Facebook might have responded by privately pressuring lawmakers through lobbying or dark money contributions, in this case, the social media giant elected to launch a pressure campaign designed to force Australian politicians to dismiss the proposal.

Key to the proposal was the power held by the Australian government in binding arbitration to determine compensation for content usage. In this way, the government could force Facebook to account for the positive benefits gained from its position as both a platform to view and share news media.

Facebook has been fighting the law for months before resorting to disabling the news sharing feature, negotiating with both Australian politicians and Rupert Murdoch, whose company News Corp. maintains a sizable share of traditional media in Australia.

An 11th hour deal was reached on Tuesday, with the proposal scheduled for a vote by the end of this week. Facebook will still be required to compensate media outlets whose content is shared on the platform, but Facebook will retain the right to determine compensation.

While Google avoided controversy entirely by negotiating private deals with individual publishers to dodge the more stringent penalties, Facebook’s heavy-handed approach is rather ominous. The concept of a massive transnational corporation threatening a sovereign state isn’t new: Philip Morris International — the largest tobacco conglomerate — sued Australia in 2011 after the passing of a law requiring plain packaging for cigarettes. While Australia won easily, Philip Morris had successfully negotiated settlements with Uruguay and Togo after threatening similar lawsuits.

Despite the dominating strength of elected governments — of whatever sort — in the world today, our lives are still greatly impacted by the products, services and platforms provided by private corporations.

A national government can ill-afford to adopt a conciliatory posture, but in profit-driven economies where government is devised as a hindrance of profit, corporations are incentivized to become large enough to negotiate with governments on equal footing.

International courts have traditionally allowed corporations to challenge foreign countries, but systemic consolidation has empowered the largest corporations to begin adopting state-like behaviors. Particularly at a moment when government is unpopular, legislators and regulators are facing corporations that are more emboldened than at any point in the past century.

The good news behind the Australian negotiations lies in both the outcome and the regulatory proposal itself. The outcome shows that Facebook could not completely stifle regulation, and the fact that Google simply chose to accept the new transaction cost belies a hope that perhaps there are more ways than congressional hearings to address technology conglomerates.

Furthermore, the world will now bear witness to an initial attempt at curbing the power of said conglomerates, and doing so in a way that preserves the rapidly changing media industry. An industry free from the mercy of changes in Facebook’s feed algorithm may rebound, providing a model for other nations to regulate social media and digital advertising platforms as well. Facebook and Google aren’t going anywhere, but spreading the wealth to more useful places may be an effective stop-gap measure for the time being.