Facebook would rather cut news content then share revenue with media

The US tech giant Facebook on Monday rejected a call from the Australian government to pay media companies for using their content, saying there is no significant commercial benefit from having news on its platform. Facebook further suggested it would rather cut news content from its platform

The government had ordered the Australian Competition and Consumer Commission (ACCC) to develop a mandatory code of conduct for Facebook and Google that will force the tech giants to pay media companies for using their content.

It said in a submission to Australia's competition watchdog that news represents a "very small fraction" of the content in an average user's news feed.

"If there were no news content available on Facebook in Australia, we are confident the impact on Facebook's community metrics and revenues in Australia would not be significant," it said in a thinly veiled threat to boycott local news companies.

"Given the social value and benefit to news publishers, we would strongly prefer to continue enabling news publishers' content to be available on our platform," it said.

In an effort being closely watched around the world, Australia is set to unveil plans to force Facebook and Google to share advertising revenue they earn from news featured in their services.

The initiative has been strongly pushed by Australia's two biggest media companies, Rupert Murdoch's News Corp and Nine Entertainment.

They argue that the crisis roiling the news industry worldwide is mainly because of Google, Facebook and other large tech firms capturing the vast majority of online advertising revenues, without fairly compensating media companies for advertisements placed against news content.

The loss of advertising dollars that previously flowed to newspapers has forced cutbacks and bankruptcies across the sector, a process exacerbated by the economic downturn caused by the coronavirus pandemic.

In Australia, News Corp, Nine and other media have both announced major cuts in editorial staff, with more than 170 newsrooms and newspapers suspended or shuttered in recent years.

Australia's competition regulator, the ACCC, has estimated that Google and Facebook together earn some Aus$6 billion (US$4 billion) a year from advertising in the country.

Leading news publishers have demanded the two companies pay at least 10 percent of that money each year to local news organisations.

Google last month rejected the demand, saying it made barely Aus$10 million a year from news-linked advertising.

The two companies' positions bode ill for negotiations the ACCC hopes to pursue between the tech firms and Australian media companies over a mandatory "code of conduct" governing issues such as revenue sharing, curbing disinformation, data sharing and protecting user privacy.

The ACCC has until the end of July to draw up the final code, which the government has said it will quickly implement.