Facebook to Australians: Will block news sharing if government passes proposed law

Facebook Inc said it will block news sharing on its platforms in Australia if the government goes ahead with a law to force it, and Alphabet Inc`s Google, to pay local media outlets for featuring their content on its platforms.

The matter is being watched closely around the world as it represents the biggest challenge so far to the way the U.S. tech giants use news on some of the world`s biggest websites.

WHAT DOES THE PROPOSED LEGISLATION SAY?

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• The draft law states that Australian news outlets can negotiate individually or collectively with Facebook and Google over payment for content used on the tech firms` sites. Other tech firms may be added if they are deemed big enough.
• If the parties cannot reach an agreement, an arbitrator will decide whose offer is more reasonable. If Facebook or Google break any resulting agreements, they can be fined up to A$10 million ($7.4 million) in civil penalties.
• The draft also requires tech firms give media outlets notice when they change search algorithms in a way affecting the order in which content appears. They must also share their use of consumer data extracted from news content on their sites.
• The Australian Competition and Consumer Commission began investigating "big tech" in 2017 and sought feedback on the draft until Aug. 28. It now hopes to work with government and industry to redraft the law before it goes before parliament.
• While internet and media companies have battled in other jurisdictions - notably in Germany over copyright of news snippets and other items published by Google - Australia`s proposal represents the most expansive reform.

WHY WAS THE LAW PROPOSED?

• In recent years, traditional media companies operating in Australia have suffered huge hits to income streams, such as subscriptions and advertising. For every A$100 spent on online advertising in Australia, excluding classifieds, nearly a third goes to Google and Facebook, the competition regulator has said.
• Last year, the regulator published a report stating news outlets lacked bargaining power when negotiating with digital firms over compensation for content posted on online platforms. It said this was a problem because those same publishers relied on Facebook and Google to reach many of their consumers.
• The government wanted the tech giants to abide by a voluntary code. Citing lack of progress in discussions, it decided earlier this year that legislation was necessary.

WHAT HAS THE RESPONSE BEEN?

• The local arm of News Corp is a vocal supporter of the legislation. It partly blamed the tech companies for the closure of dozens of mastheads earlier this year.
• Facebook and Google said they help connect media outlets with consumers, boosting their subscriptions and enabling them to charge advertisers more. Facebook said in the first five months of 2020 it sent 2.3 billion "clicks" worth about A$200 million to Australian news websites via articles appearing on Facebook users` pages. Google has said it would pay for content, though no major media organisation has agreed to its terms.
• Australia has previously engaged in lengthy battles with major corporations. In 2012, the then centre-left government became the first in the world to prohibit cigarette companies from using designs on their packaging to attract consumers. Tobacco companies mounted legal challenges but the courts ultimately upheld the law.

($1 = 1.3501 Australian dollars)