The world would be better off if the social media giant followed through on its bid to resist an Australian antitrust law.
If you’re trying to fight the impression that you’re over-mighty and bullying, it’s probably best not to behave like you’ve got the Death Star at your disposal.
So what’s Facebook Inc. doing in threatening to stop users in Australia from sharing news stories on the site and on Instagram? Taking such a step would have deprived local media businesses of A$200 million ($148 million) over the five months through May, according to Facebook’s estimate. Still, it’s “the only way to protect against an outcome that defies logic,” the company said in a statement Tuesday.
The trigger is a proposed law to enhance the power of news organizations in negotiations with Silicon Valley. Under the plan by Australia’s antitrust authorities, news companies would be allowed to bargain as a group with social media and search platforms over the price they’d be paid for their content, rather than individually.
The idea would be to redress the power imbalance between old media — whose three main local businesses made an aggregate $3.5 billion of pretax losses over the past five years — and Facebook and Google owner Alphabet Inc., which made about $235 billion in profits. If local news organizations were wanting a demonstration of the platforms’ overweening power, Tuesday’s statement from Facebook — which roughly boils down to “nice news industry you’ve got there… awful shame if something happened to it” — could scarcely be bettered.
In truth, though, the world and Facebook would be much better if it followed through on its threat — both in Australia, and globally. The bargain that news organizations have struck with Silicon Valley in their search for traffic is an abusive relationship that benefits nobody. (Full disclosure: Bloomberg Opinion also gets most of its traffic from social media and search. You may be reading this article via a referral from Google or Facebook.)
For one thing, it’s not traffic that drives profitability for news companies, but revenue — and the two measures have been growing further and further apart for decades. Before the rise of the internet, newspapers typically made about three-quarters of their revenue from advertising. Circulation — subscriptions and news-stand sales — accounted for the remainder.
That’s changed drastically as media buyers have migrated to Facebook and Google, whose data-rich, targeted product is far more attractive than the sort of display advertising they once bought in the pages of newspapers.
It’s that switch, far more than what’s happening with circulation, that’s driving the woes of the media industry. In Australia, newspapers’ print and digital circulation revenue will fall by about A$320 million in the decade through to 2023, according to a study by PricewaterhouseCoopers. Advertising will slump by A$1.43 billion, to the point that that it will account for barely more than half of the total.
Counting too heavily on a dwindling pool of advertising dollars and the traffic that drives them is merely staving off the inevitable. The media businesses doing best are those that have been able to boost circulation revenue by attracting a base of loyal subscribers, such as the New York Times and Financial Times.
The greater benefit of removing news from Facebook’s feed, though, wouldn’t be to media companies but to society as a whole.
Once upon a time, Facebook was a benign platform for sharing baby photographs and catching up with far-flung relatives. By the admission of its own executives, it’s now been used to incite violence, spread viral misinformation and wage cyberwar. The publisher who benefits most from the feed (in terms of the metrics that matter to them — likes, shares and clicks) isn’t a media company that’s investing in public-interest journalism, but right-wing agitator Ben Shapiro:
Facebook’s current incarnation as the world’s most powerful and least regulated media company has certainly been a profitable one, but power without responsibility has always been a dangerous mix. One of its main rivals, Bytedance Inc.-owned TikTok, is being carved up precisely because of worries that social media businesses have too much control of user data and influence on the public debate.
The world is better off when media companies are trusted rather than feared. In trying to publicly bully a government into changing planned legislation in its favor, Facebook seems to have forgotten that lesson.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.