Google threatens to withdraw search from Australia and Facebook to remove news posts. These are not idle threats. Is propping up old media with grants gouged from Google good public policy? It delivers cash for Rupert Murdoch but does it serve consumers? Kim Wingerei reports.
It’s hard to pinpoint the exact moment when the decline of old media started. Was it the founding of an online search company, Backrub, by a couple of software engineers in 1998? Or when NewsCorp sold MySpace for $US35 million in 2011, writing off an investment of $US580 million. Or maybe the seminal moment was the public listing of Facebook in 2012 for a seemingly ridiculous valuation of $US90 billion?
Backrub was renamed Google, Myspace became dead space and Facebook now has a market capitalisation of $US720 billion. No wonder the former giants of media in Australia are aggrieved – News Corp and Nine that is. Since 2012, the two dominant media companies, Nine Media (formerly Fairfax) and the newspaper arm of News Corp, have lost billions of dollars in market value.
The old media are now tiny by comparison; the market value of News Corp and Nine at $14.8bn and $4.1bn vis-a-vis Google and Facebook at $1.62 trillion and $964bn respectively.
And what do most corporations do when the value of their business is in steep decline and profits are down? When the “hidden hand of the market” is actually working? Run to the Government for help, of course. Nine and News complained to the ACCC that these big, bad global companies had stolen their advertising revenue! “All we want to do is provide quality journalism and we can no longer afford to,” they cried.
Internet’s founder, US officials slap down News and Nine’s crusade on Google
That Facebook and Google have too much power is clear. However, the proposed legislation being debated in Parliament does nothing to protect consumers from the search and social media giants. Nor does it serve the lofty purpose of supporting quality journalism.
All it is designed to do, is to direct a small fraction of the money earned by the Internet giants to old media.
The legislation doesn’t tackle the critical issue of of how the social media platforms, in particular Facebook, continue to distribute fake news and hate speech, how it continues to be a platform for misinformation and wild conspiracy theories and how it generally turbo-charges the polarisation of public debate. All in the mistaken name of free speech.
Nor does the legislation tackle Google’s search dominance.
These companies pose a global challenge so there are limits to what Australia can do. (Although we could start by taxing them properly.) Google’s threat to leave the local market is real, and that would hurt consumers and small independent media immeasurably more than it would hurt News and Nine. Facebook threatening not to accept links to news content will primarily hurt online independent media such as this site, as well as consumers.
And this is the strange paradox. Google drives traffic to the news sites such as this website, which is free. However it also drives traffic to the paywalled websites of News and Nine.
Elsewhere, the US has launched anti-trust actions against Google and Facebook, claiming both companies have used their market power to curb competition. These cases will take many years to resolve. By way of comparison, the Federal Trade Commission’s cases against Microsoft’s dominance over the PC industry took nine years from the first investigation in 1992, to when it was ultimately settled in 2001.
The European Union has been more effective in their actions against market dominance, at least in a fiscal sense. Google has been fined almost $US10 billion in various cases over the past five years. Yet little has changed as Google remains totally dominant in search.
Facebook has also faced scrutiny and has been fined over its privacy breaches – most notably after the Cambridge Analytica scandal in 2016. Cambridge obtained without consent the personal data of millions of Facebook users, primarily for political advertising purposes. But Facebook’s behaviour hasn’t changed much either.
And as ignorant Parliamentarians, Rod Sims of the ACCC and mainstream media executives huff and puff, the stark reality is that Australia cannot curb their market power merely by punitive financial means. They are just too big, too wealthy and frankly, they don’t give a damn.
But there are other options.
Licensing
The Internet is, in effect, a broadcasting platform. To broadcast TV and radio in Australia (and most other countries) you need a licence. Licenses cost money and come with conditions around what the owners can and cannot do, regulated by the Australian Communications and Media Authority (ACMA). The rules cover content, advertising and state that news and stories must be presented in a balanced way. ACMA is a forum for complaints, regulate gambling and gaming sites and the rules also impose restrictions on foreign ownership.
As a sovereign nation we have a right and an obligation to regulate media. It can’t be a “one size fits all” approach, but in light of the overwhelming power of online media giants, it seems an obvious starting point that companies that operate search engines and publish online in Australia should have a license and abide by the rules under penalty of forfeiting that licence.
Publishing
The licensing of search engines would be breaking new ground, but the licensing of social media platforms is relatively straightforward. Facebook, Instagram, Twitter and the rest are publishers, however much they deny the fact. Publishing used to be the domain of established writers and journalists working for organisations. But now everybody can be, or pretend to be, either of those things by sharing their words, videos, podcasts or pictures online.
The social media platforms cannot claim content neutrality and should therefore be subject to most of the same laws and regulations as other publishers, including defamation and minimum standards of truth and proof.
Know thy source
Social media postings have taken over from letters to the editor as the primary means for the general public to make their voices heard. Reputable newspapers do not publish letters without knowing who they are written by – and this publication is no different. There are always reasons for stories to be attributed to an anonymous writer, but the publisher must still know who the writer is.
Social media should be compelled to do the same, demanding ID checks the way a bank or government agency does in return for services or participation. If MrPotatoHead or MsQanonRules doesn’t have an ID, tough luck. This, of course, can only work if current privacy practices are turned on their head, giving users confidence and protection.
Privacy
One of the most egregious aspects of social media is that they have been allowed to get away with flouting privacy principles. We, the consumers, gave them that right by saying yes to using their platform for free in return for access to personal data, including our usage history. And now we pay the price as our collective data has become someone else’s asset.
Social media must be compelled to guard our data in the same way banks guard our money, and our ID must be stored entirely separate from our meta- and usage-data. Any identifiable data cannot be shared and our data sold without express consent. Currently consent is basically assumed unless one has opted out, if that option is even available.
These measures are not trivial, will take time to implement and will also meet with plenty of resistance from Google, Facebook et al. And it will cost them to implement. Whether it will cost them more or less than what the cost of sharing a portion of their advertising revenues, is anybody’s guess. But this is a better use of their money than simply giving it to the old and failing media behemoths.
Meanwhile, Google’s dramatic threat to leave Australia is real. It would be a last resort though. The platforms are immensely profitable in Australia so court actions would come first.
Kim Wingerei is a businessman turned writer and commentator. He is passionate about free speech, human rights, democracy and the politics of change. Originally from Norway, Kim has lived in Australia for 30 years. Author of ‘Why Democracy is Broken – A Blueprint for Change’.