Facebook threatens to block news in Australia if regulations are enacted
The social media giant is threatening to make it impossible for users in Australia to share local and international news content on both Facebook and Instagram if the government passes new regulations altering the financial arrangement between publishers and online platforms.
The new rules, strongly backed by Rupert Murdoch's News Corp Australia, would force Facebook and Google into giving news outlets a bigger cut of digital advertising revenue.
It would force the social network to enter into revenue-sharing agreements with publishers where the final terms would be decided by independent arbitrators and Facebook would have no recourse to back out of the deal.
The two companies account for more than half of the annual digital ad spending in the U.S., and more than 70 percent in Australia.
That has left publishers scraping for smaller pieces of the pie, even as their content reaches larger and larger audiences.
Australia's new legislation goes further by establishing a panel of arbitrators who would determine the price that Facebook and Google must pay publishers. The platforms would have no recourse to exit the agreement, and could face fines as steep as 10 percent of their overall revenue in Australia for each offense.
While news accounts for a relatively small part of Facebook and Google's overall revenue, the ability to access and share news is seen as part of the appeal of the platforms. Facebook's decision to deprive users of the ability to share news could thus have larger effects on its reputation, especially if other countries were to follow suit.
For Murdoch's News Corp, which started in Australia and controls the majority of the nation's news industry, the legislation is a clear win.
Many news industry veterans believe that harsh regulations are counterproductive, and could ultimately undermine publishers' ability to benefit from the distribution offered by platforms like Facebook and Google.
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