Facebook threatens to pull news from Australia if new law passes

Facebook said Monday that it will block users in Australia from sharing news on Facebook and Instagram if a controversial law forcing tech giants like Facebook and rival Google to pay publishers to distribute portions of their content passes this fall.

Why it matters: This is Facebook's last-ditch effort to stop the law's enactment, which it says will harm publishers more than itself. The tech giant contends that the Australian law's broad payment terms are likely to end up requiring Facebook to overpay for a relatively modest amount of content, and the social network is also wary of setting a broad precedent.

Catch up quick: Regulators in Australia released a draft code of conduct on July 31 for a one-month consultation period that ended last Friday. The final legislation is expected to be introduced to Parliament "shortly after conclusion of this consultation process," the Australian Competition & Consumer Commission says.

• The consultation process has been ugly, and has featured a lot of testy statements back and forth from Google, Facebook and Australian lawmakers.

In an interview with Axios, Facebook's VP of global news partnerships Campbell Brown says that the company's product and engineering teams will spend the next few months building systems that will allow them to comply with the law by restricting news content from being shared on its platforms.

• "We are looking at a number of things," Brown said. "A lot of this is in the [law's] code. We're trying to abide by how it's written."
• "In some cases, it addresses publishers specifically. So we're looking at how we can look at publishers referenced in the code, what content of theirs is shared and go from there."

Driving the news: In a blog post Monday, Will Eason, Facebook's managing director for Australia & New Zealand, writes that the legislation "misunderstands the dynamics of the internet and will do damage to the very news organizations the government is trying to protect."

• Easton argues that regulators' solution to helping publishers build sustainable businesses online "is counterproductive" because Australian competition regulators wrongly presume that Facebook benefits most in its relationship with publishers, when, he argues, "in fact the reverse is true."
• "News represents a fraction of what people see in their News Feed and is not a significant source of revenue for us," he writes. He argues news being available on Facebook helps publishers expand their ad reach and sell more subscriptions.
• "Over the first five months of 2020 we sent 2.3 billion clicks from Facebook’s News Feed back to Australian news websites at no charge — additional traffic worth an estimated $200 million to Australian publishers."

Between the lines: A source confirmed to Axios last week that the company likely won't be launching its new Facebook News Tab in Australia for the foreseeable future because of the battle Facebook is fighting with Australian regulators.

• The News Tab, which Facebook is expanding globally, is a venue for Facebook to pay select publishers for their work. Payout contracts vary depending on the size and scope of the publisher, and nothing stops Facebook from changing the payout structure over time.

The big picture: If Australia adopts the law and it becomes a model for others around the world, publishers hope the approach would provide a significant boost to the news industry, especially local news, as it faces financial decline.

Yes, but: History shows that tech giants don't take well to this type of law, and would rather pull out of a country altogether than be forced to pay publishers on terms set by lawmakers.

• Spain passed a similar measure in 2014 that ultimately caused Google News to leave the country.
• France is considering a related law, one that would require Google to pay publishers for featuring "snippets," or small previews of their content, in search. Like Australia, France has ordered tech firms to negotiate with publishers or face being regulated.
• The EU passed a sweeping copyright law in 2019 that would require its member countries to adopt rules that would force tech giants to pay publishers. Google has threatened to pull Google News from the EU if member states comply.

What's next: The law is part of a larger global effort to tilt the scales in favor of content creators and away from tech companies as the pandemic continues to eat at the advertising market, putting thousands of local and national media companies out of business.

• But Brown says she doesn't see this type of action extending elsewhere.
• "Australia is an outlier," she says. "This doesn't in any way impact how we think about news or our commitment to news."

Go deeper: Australia orders tech to pay media firms for access to content