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Facebook's Australia news blackout: a shock four years in the making

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Byron Kaye
·4 min read
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By Byron Kaye

SYDNEY, Feb 19 (Reuters) - Australian Treasurer JoshFrydenberg was as shocked as anyone when he learned thatFacebook Inc had blocked news content from its website inhis country at 5:30 a.m. on Thursday.

He had been in direct contact with Facebook CEO MarkZuckerberg and, he thought, was making progress toward anaccommodation over proposed rules that would force the techtitan to pay publishers to link to their news.

Yet this was a shock four years in the making - a potentialglobal turning point for regulation of big social mediacompanies that began with Australia's complex, provincialpolitics in 2017.

The fight between the world's largest social media companyand the 13th-largest economy is the result of a bill, scheduledfor debate next week in Australia's Senate, that was foisted onFrydenberg and his boss at the time.

Then-prime minister Malcolm Turnbull wanted to relax mediamerger-and-acquisition laws to let Australian news outlets likeRupert Murdoch's News Corp scale up and survive arevenue crash as advertisers took their business to internetheavyweights like Facebook and Alphabet Inc's Google.

Turnbull's conservative government needed support fromoutspoken independent Nick Xenophon, who held the balance ofpower in the Senate. He made the government promise an inquiryinto "internet giants such as Google and Facebook".

This week's blowup "is something I'd be very happy to takeresponsibility for," said Xenophon, now a private sector lawyer.

"If there is a viable rival to Facebook in years to come,its genesis will be the event that occurred in Australia on the18th of February," he told Reuters. "Facebook has exposed thelevel of its market power. It's behaving like a monopoly."

Turnbull's treasurer, Scott Morrison, honoured the Xenophondeal by tasking the antitrust regulator with examining Googleand Facebook to "fully understand their influence in Australia".

The Australian Competition and Consumer Commission's (ACCC)inquiry ground on, Morrison became prime minister and Frydenbergbecame his treasurer. Meanwhile, Facebook's image in Australiaas a harmless online gathering spot was marred by revelations itsold third-party marketers the personal data of millions ofpeople to target in the 2016 U.S. election.

CONCILIATION VS BOMBSHELL

When the ACCC delivered its report in mid-2019, Frydenbergcalled out Facebook's $5 billion fine for the election-relatedprivacy breaches, saying it and Google "need to be held toaccount and their activities need to be more transparent".

He left it to Australian media and Big Tech to thrash out aframework to negotiate the price of links that draw clicks - andadvertising dollars - to their platforms. When that failed theACCC stepped in, saying it would appoint an arbitrator to setfees in the event of stalemate, a model suggested by News Corp.

The tech titans responded last September with threats tocancel their services in the country if the bargaining code tookeffect. They repeated the threats in January.

With parliamentary votes looming, Prime Minister Morrisonrevealed that Microsoft Corp CEO Satya Nadella hadoffered its search engine Bing if Google's disappeared.Frydenberg said he was talking with Zuckerberg.

As the bill moved through and passed the lower house, Googlestruck deals with free-to-air network Seven West Media Ltdand rival Nine Entertainment Co Holdings,which also owns the Sydney Morning Herald and Melbourne's TheAge newspapers.

"None of these deals would be happening if we didn't havethe legislation before the parliament," Frydenberg said onWednesday. Then, in the early hours of Thursday morning Canberratime, News Corp announced a global deal with Google.

News Corp and Seven thanked Morrison, Frydenberg and ACCCcommissioner Rod Sims for forcing the issue. Murdoch's companysaid Xenophon was "instrumental in having Australia adopt aworld first, highly innovative policy approach".

As Google turned conciliatory and the bill looked set tobecome law next week, it was Facebook's turn.

Frydenberg was dressed for tennis on Thursday morning whenhe learned Facebook had taken a dramatically different approach- pulling the plug on Australia's news sites and, inadvertently,on many government disaster-information pages and otherpublic-service outlets.

Facebook said on Thursday that because the bill "does notprovide clear guidance on the definition of news content, wehave taken a broad definition in order to respect the law asdrafted."

Frydenberg cancelled his tennis game and arranged anothercall with Zuckerberg, and another the next day.

"We certainly weren't given any notice by Facebook," thetreasurer told reporters. But he said his half-hour call was"constructive".

"We'll hear from them in the coming days and we'll see if wecan find a pathway forward."

(Reporting by Byron Kaye; Editing by William Mallard)