The Australian government has recently begun to work on a new media law that would force Google and Facebook to pay Australian publishers for news content. The legislation was passed in the Australian House of Representatives on February 17. In response, the two tech giants of the digital economy have adopted completely different strategies.
Google has agreed to pay a "substantial fee" to Rupert Murdoch's News Corp for access to news content. News Corp properties that will join Google News Showcase include the Wall Street Journal, Barron's, MarketWatch and the New York Post; The Times, The Sunday Times, andThe Sun in the UK; The Australian, news.com.au, Sky News, and multiple metropolitan and local titles in Australia. The agreement will have "a positive impact on journalism around the globe as we have firmly established that there should be a premium for premium journalism," News Corp Chief Executive Officer Robert Thomson said in a statement.
Earlier, Australian officials had been optimistic that Google and Facebook were close to striking significant commercial deals to pay Australian media for news content. Josh Frydenberg, Australia's Treasurer, said talks with Facebook CEO Mark Zuckerberg and Sundar Pichai, chief executive of Alphabet and its subsidiary Google had made "significant progress" in resolving the globally watched impasse. The tech giants have threatened to partially pull out of Australian services if the country passed the law.
However, Australian officials clearly underestimated the tech giants' resolve. Facebook, which has strongly opposed Australia's new media law, has taken a hardline approach. The company announced on February 17 that Australian users will no longer be able to read or share news content on the platform, while Australian news media accounts will be barred from posting or sharing any content on Facebook pages. Facebook said the new media law left it "facing a stark choice: attempt to comply with a law that ignores the realities of this relationship, or stop allowing news content on our services in Australia". "With a heavy heart, we are choosing the latter," Facebook added.
The effects of Facebook's blocking tactics were immediate, and on February 18, Australians were surprised to find that their Facebook account pages were no longer accessible, and they suddenly lost access to trusted and authoritative sources. The Facebook pages of key government agencies such as the police, emergency services, health, and weather departments were also inaccessible. Australia's Environment Minister Sussan Ley confirmed the government's Bureau of Meteorology's page "has been impacted by the sudden Facebook news content restrictions". The Western Australia fire department's Facebook page was also wiped clean as the state braced for "catastrophic fire danger" conditions. Western Australian MP Madeleine King described the situation as "Incredible. Unbelievable. Unacceptable" and there were mounting calls for Facebook to quickly fix the situation. The Facebook page of the Australian Capital Territory Government Department of Health was also affected. "The ACT Health Facebook page in particular is an important channel for distributing information about the Covid-19 situation and we have contacted Facebook to rectify the situation," a spokesperson said. Australia's Communications Minister Paul Fletcher said that Facebook needs to carefully consider what this means for its reputation and standing.
Researchers at ANBOUND see the Facebook-Canberra "clash" as more than a conflict of ordinary commercial interests. Rather, it is a crucial battle over rules for charging for information in the digital economy. In the era of the digital economy and information age, it is a crucial battle between tech giants and sovereign state, which provides a perfect example of development and rule-making in the information age and has many significant benchmarking implications.
First, a peripheral country that is not a major market can be ignored and sacrificed in the rule making of the digital economy. Australia, with a population of just 25 million people, is not a major market for Facebook, and news are not a major driver of the company's revenue. It should be noted that Facebook has struck deals with UK media companies to pay for certain news content. However, as the Australian government prepares to introduce a new media law, Facebook has strongly opposed it and took on the Australian government when the disagreement became irreconcilable.
Second, Facebook wants issues such as paying for news to be resolved by the market, not by governments deciding and legislating. According to some analysts, an important reason why Facebook is so concerned about the upcoming media regulations in Australia, a non-major market, is that Australia is trying to set precedents and rules. Other countries, including Canada and the European Union, are likely to follow Canberra's lead once it is successful in forcing the tech giant to comply. Facebook does not want to see that happen, nor does it want the government to step in and tell Facebook that it has to pay for news content, or even let a government-appointed arbitrator decide the price. If Facebook wants to put a stop to all of this, then a "counterstrike"is the only option.
Third, Facebook's blocking of information sharing and browsing rights of Australian accounts demonstrates the "supranational power" of the social media giants who control traffic in the traffic economy. When the conventional sovereign states have conflicts with them because of the interests, it is entirely possible for the tech giants to block information in the relevant countries. As in the previous "retail investor revolution" in the U.S. stock market, Wall Street institutions and trading platforms had taken measures to "disconnect" retail investors, which became a market-shaking blocking move. The forcibly banning of American retail investors, however, is nothing compared with Facebook's banning of the entire population and institutions of a sovereign country. We believe this show of strength by Facebook will shock many countries and cause them to rethink what it means to rely on tech giants in the age of traffic, and what the potential risks are.
Fourth, Facebook's "battle" with Canberra highlights the importance of establishing rules in the digital economy. In fact, the rules in the digital economy have already begun to be established. The United States, the European Union, China, India, and Russia have begun to establish their own rules in various digital fields, including digital resources, digital economy, digital privacy protection, digital sovereignty and security, and digital law, according to their respective situations and needs. Due to the lack of universally accepted international rules in the digital field now, the digital economic rules of various countries are of great significance in creating rules and bargaining chips. As long as globalization exists in the digital age, the game of rules and integration among countries will be inevitable in the future.
In our opinion, banning Australia is not the ultimate goal of Facebook, and Australia, as a sovereign state, is unlikely to be able to completely subvert its legislative process. Most likely, some kind of cooperation will be reached after each side makes some concessions. If the current situation continues, it will be interesting to see how the two tech giants, Google and Facebook, have gone down two completely different paths in their battle with the Australian government. The outcome is bound to be different, but it remains to be seen who will come out on top. The impulsive Australian government needs to recognize that sovereign states do not cope in the conventional way when it comes to "supranational power".
What can China learn from the game between digital giants and the Australian government? Chan Kung, founder of ANBOUND, offers an insight. According to Chan Kung, digital giants have a supranational status because of the internet, so the regulation and laws for digital giants must also be supranational. Australia may not know enough about the digital economy to make these provisions and try to legislate separately. In fact, countries around the world hold the same attitude and stance towards digital giants, especially the European Union and China. This attitude and stance actually transcend ideology and national attributes. If one has an understanding of the digital economy, one should realize that all countries need to legislate against digital giants. In other words, when it comes to the digital giants, China can actually synchronize and find common ground with the world. If China, like the rest of the world, takes ideological and political issues too seriously, it may therefore miss the opportunity to co-ordinate digital economy policies and laws with the rest of the world. Since China and the rest of the world can work together on the issue of climate change, they should be able to do the same on the issue of the digital economy.
Final analysis conclusion:
The era of the digital economy means a completely different environment for countries, enterprises, and individuals to survive and thrive. The Facebook-Australia "quasi-war" provides an excellent case study on how sovereign states can deal with digital giants that control traffic. There is an opportunity for China to co-ordinate digital economy policies and laws with the rest of the world in the face of "supranational" digital giants.
