Facebook rejects Australia's call to share advertising revenue with media

Facebook has rejected the calls from the Australian government to share advertising revenue with news companies saying news represents a “very small fraction” of average user’s feed. The social media giant also issued a veiled threat to boycott local news companies, emphasising that there would no significant impact on Facebook's community metrics and revenues in Australia without news content.

Australia's competition regulator, the ACCC, had said in a report that organisations like Google and Facebook are more than mere distributors or pure intermediaries in the supply of news in Australia. It noted that they increasingly perform similar functions as media businesses like selecting, curating and ranking content.

ACCC Chair Rod Sims had said that Australian law does not prohibit a business from possessing significant market power or using its efficiencies or skills to ‘out-compete’ its rivals. Sims added that the governments, however, should stay ahead of the game and act to protect consumers and businesses through regulation when their dominant position is at risk of creating competitive or consumer harm.

“Our digital platforms inquiry highlighted the acute need to address the imbalance in bargaining position between news media and particular digital platforms, and that is what the code will do,” said Sims in a statement.

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Draft mandatory code

The ACCC has been working on drafting mandatory code that will address bargaining power imbalances between Australia’s news media businesses and Google and Facebook. It had proposed that a new or existing regulatory authority should be given the task of investigating, monitoring and reporting on how large digital platforms rank and display advertisements and news content.

The competition watchdog had estimated that Google and Facebook together earn around $4 billion every year from advertising. Leading news publishers demanded that the two tech giants should pay at least 10 per cent of the news advertising revenue to local new organisations but Google rejected it saying it barely collects $7 million a year from news-linked advertising.

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