Facebook Inc has flashed a warning to global regulators by taking a hardball stance against Australia\u2019s plan to force it to pay media companies for stories.<\/p>\n
The Australian government has drafted legislation to force the US tech giant and Google to compensate publishers for the value their stories generate for the platforms. Facebook lobbed a grenade on Tuesday seeking to hollow out the proposed law.<\/p>\n
If it passes, the company will block Australians and publishers from sharing news on Facebook and Instagram, an unprecedented step.<\/p>\n
The scene is now set for an acrimonious battle after the Australian government said it won\u2019t buckle to \u201ccoercion or heavy-handed threats.\u201d<\/p>\n
The standoff has turned one of Facebook\u2019s most distant markets, with a population of 25 million, into a test case as watchdogs around the world turn their own power against digital behemoths.<\/p>\n
\u201cThis is a microcosm for other markets and what may happen as Facebook defends its turf,\u201d said Dan Ives, an analyst at Wedbush Securities in New York. The company has come out \u201cthrowing punches,\u201d he said.<\/p>\n
Traditional media companies have long complained their content is being exploited by digital platforms without due compensation. The Australian government has said it\u2019s trying to level the playing field as once-dominant publishers lose advertising revenue to Google and Facebook.<\/p>\n
In May, for example, Rupert Murdoch\u2019s News Corp announced plans to cut jobs and close or stop printing more than 100 local and regional newspapers in Australia.<\/p>\n
The draft Australian law, which needs approval in parliament, calls for an arbitration panel to decide how much Facebook and Alphabet Inc\u2019s Google must pay publishers if the two sides can\u2019t agree.
\n\u2018Line in the Sand\u2019<\/p>\n
By pushing back in Australia, Facebook is telling other European regulators what to expect in disputes over the platform\u2019s use of news, said Rob Nicholls, an associate professor at the business school of the University of New South Wales in Sydney. At the very least, Facebook wants to force a change in the legislation, or even delay its introduction, he said.<\/p>\n
\u201cIf you draw a line in the sand here, you\u2019ve effectively provided that benchmark for negotiations,\u201d Nicholls said.<\/p>\n
The chairman of Australia\u2019s competition watchdog, Rod Sims, said in an interview in July that he knows of several counterparts overseas who are considering taking similar steps to Australia\u2019s. Facebook\u2019s explosive intervention follows recent gains by publishers in Europe against digital platforms.<\/p>\n
Getting the News<\/strong><\/p>\n In April, France\u2019s antitrust regulator ordered Google to pay media companies to display snippets of articles. Last October, Facebook introduced a separate news section, paying some publishers whose stories are featured. Last week, the company said it plans to expand the news section to other markets globally.<\/p>\n Facebook said in a blog post Monday that Australia\u2019s legislation is based on the flawed assumption that it benefits most from its relationship with publishers. \u201cThe reverse is true,\u201d Facebook said. Google also opposes the law, saying in an open letter it would \u201cput the free services you use at risk in Australia.\u201d<\/p>\n Nine Entertainment Co, publisher of the Sydney Morning Herald, called Facebook\u2019s response to the proposed law \u201cstrange.\u201d<\/p>\n \u201cIt is a demonstration of Facebook\u2019s use of its monopoly power while failing to recognize the importance of reliable news content to balance the fake news that proliferates on their platform,\u201d Nine said in a statement.<\/p>\n
\n