News media’s dependency on big tech: should we be worried?

Australia’s News Media Bargaining Code (NMBC) and Facebook’s initial reaction to the law gave new grounds for debate about the level of power held by big tech in the media industry. This op-ed looks at what has happened and discusses the power relations and dependency dynamics of big tech, governments and news media. For Europe, the Australian case raises the question of whether it needs to worry about social media blocking access to news content.

Why did Australia decide to pass the NMBC?

On 17 February 2021 the Australian government passed the NMBC, designed to have large platforms pay for hosting (local) news content and to address the bargaining power imbalance between digital platforms and Australian news businesses, especially Facebook and Google. The law seeks to enable fairer negotiation circumstances by forcing digital platforms to enter negotiations with news producers for sharing ad revenues from content that appears on their platforms. While the law received strong support in the Australian Parliament, it was staunchly fought especially by Facebook’s and Google’s lobbying force. Despite open letters by both large companies pushing for amendments of the law, Google started entering negotiations with news organisations as of February 2021. Facebook however carried out its threat to block news content of news publishers for users worldwide overnight after the passing of the law on 17 February 2021 without any amendments. Facebook blocked not only news articles, but also important government, political and emergency sources. Consequently, Australians were not only curtailed from accessing information about current affairs but also from important health information, such as on the COVID 19 pandemic. As reported by The Guardian, in response, Australia’s prime minister Scott Morrison wrote in a post on Facebook that its move “confirms the concerns that an increasing number of countries are expressing about the behaviour of big tech companies who think they are bigger than governments and that the rules should not apply to them”. Yet, afraid of misinformation spreading through social media without credible sources posting on the platforms, Facebook and the Australian government reached an agreement and eventually last-minute amendments were introduced and enacted on 25 February 2021.

Why did Facebook’s decision to leave have such an impact on the news media?

The motivation for passing this law was primarily to fix the power imbalance between news media and digital platforms. More specifically, the goal was to address the negotiation power imbalance between news media organisations and major digital platforms as a “strong and independent media landscape is essential to a well-functioning democracy”. 1 Instead, the course of events reinforces big tech’s power in its relationship with the news media and the government. Therefore, the final version of the law received substantial criticism from Facebook, Google, Australian academics, and journalists alike.

In a public statement, Facebook said that “the proposed law fundamentally misunderstands the relationship between our platform and publishers” as it’s the publishers who choose to share their stories on social media or make them available to be shared by others because they get value from doing so. Further, Facebook pointed to its enormous impact on the news media, which is based on a deeply interwoven dependency. In fact, I observe a three-fold dependency:

1. News media are dependent on Google and Facebook for news distribution, at least to a certain degree. Although news media are diversifying their distribution strategies, a change in Facebook’s algorithm in 2018 to prioritise content from friends and family (instead of news content) impacted the news media in amending their strategies to distribute and reach audiences. Additionally, Google’s system of “search engine optimisation” determines how journalists write articles to reach a broader audience and appear in search results. Likely, this kind of dependency would similarly outplay in Europe, as a recent report that examined Germany’s media landscape (“Google the Media Patron”) highlighted. The risk of Google becoming an “infrastructural monopoly” is accentuated as “whoever sets the conditions for producing, disseminating and marketing information also has considerable leverage when it comes to content”. In short, news media are reliant on Google’s and Facebook’s digital infrastructure for most steps in the news production cycle, from researching data to distributing news and reaching audiences.
2. As academic and journalist Jeff Jarvis puts it, “in every attempt to take power away from the platforms, it only gives them more”. He adds that the Australian law gave “Google the power to decide which news organisations should get money and which shouldn’t” thereby reinstating existing negotiation power imbalances. The NMBC requires the stakeholders to agree on a dollar price of the news content distributed by the platforms, pay that revenue to registered news publishers, and agree to final offer arbitration in case of dispute between the platforms and the publisher on the value of the news content. Due to the costs and opaqueness of the process involved, it is likely big tech picks fewer yet larger outlets. As researchers Leaver and Meese argued elsewhere, small and regional media outlets are the “clear losers”. The NMBC empowered Rupert Murdoch’s media empire and smaller outlets would probably “not see a dollar”. Facebook’s Nick Clegg also found fault with the original draft of the Australian law, as “Facebook would have been forced to pay potentially unlimited amounts of money to multinational media conglomerates (…) without even so much as a guarantee that it is used to pay for journalism, let alone smaller publishers''. In a concentrated media landscape like Australia, small and regional news media may not get to negotiate with big tech due to the costs and opaqueness of the process. Small news outlets will lose in competition against Rupert Murdoch’s news empire and will, thus, not benefit from the original objective of passing the law. Instead, Google’s and Facebook’s power is again reinstated.
3. The role of big tech in funding and investing into newsrooms is a central topic of debate due to an increasing financial dependency of news media, like a study analysing Google’s impact on the German news media landscape, stressed. Also, Professor Borchardt pointed to this in the 2021 MozFest event organised by the AI, Media and Democracy Lab and emphasised that “almost every institution is linked to or funded by Google or Facebook, thus making the news media hugely dependent”. Facebook reportedly invested US$ 600 million to the news industry since 2018 and plans to invest at least US$ 1 billion more over the next three years. Although Facebook claims that it does not only pass deals with large media outlets, but also with local and regional publishers, there are serious concerns about the growing power of big tech companies and their power in the news industry. News media are risking a strategic need to rely on Google and Facebook for financial survival.

Should Europe worry?

Governments worldwide have increasingly taken note that voluntary self-regulation and co-regulation efforts are not effective in curtailing big tech’s power. Australia’s attempt to regulate the power imbalance and protect news media’s economic independence reveals the complexity at hand. The extent to which the NMBC can in fact change and enforce power balances is ambiguous, due to the controversial benefits for small and regional outlets. It was not the first time that regulatory approaches by national governments against big tech were to the detriment of news media and the public, as Google protesting the Spanish copyright law (2020, p. 13) and blocking Google News in Spain, as well as YouTube blocking videos in Germany, due to a dispute with GEMA (government-mandated author rights organisation), reveal. Demands for levelling the playing field, enabling fairer negotiation conditions and facilitating competition and economic independence become louder. The EU lawmaker is currently working on and negotiating the Digital Services Act (DSA), the Digital Market Act (DMA) and the Democracy Action Plan (DAP), which aim at meeting those demands. Despite promising potential, the outcome remains unclear in large part due to big tech’s lobbying impact in Brussels.

Considering the power play in Australia and in the midst of EU lawmakers negotiating stricter regulations for big tech, Europeans should question: what would happen if Facebook and Google shut off access to EU-based news media? To avoid a similar situation as in Australia, where news media concentration is amplified and free information flows and news consumption are impeded due to existing dependency strings, Europeans should focus regulatory and policy efforts on creating counterbalancing powers. To do so, the news media’s dependency on big tech must be broken up by supportive government policies to enhance opportunities for diverse media funding and innovation as well as to reform rules in order to avoid new forms of media concentration. Hence, Europeans should learn from the Australian case and direct policies on enhancing media independence, media innovation and put laws in place that facilitate a diverse media landscape to counter big tech’s dominant power.