Feb 24, 2021

Could Australia’s antitrust enforcement break the way the web works?

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A proposed law would require Facebook and Google to pay publishers for news content that appears on their sites. Tech giants have very different reactions to it.

A proposed law in Australia would require Facebook and Google to pay publishers for news content that appears on their sites. In response, Facebook briefly pulled all links to news content in Australia last week, restoring them Monday. Google opposed the law but has negotiated deals with individual publishers. And Microsoft, pushing its search engine Bing, surprisingly welcomed the proposal, even saying Europe should adopt something similar.

But fundamentally, paying for links is the opposite of how the web has always worked. I spoke with Tom Merritt, the host of the “Daily Tech News Show” podcast. He told me this is all about antitrust. The following is an edited transcript of our conversation.

A headshot of Tom Merritt, host of the "Daily Tech News Show" podcast.
Tom Merritt (Photo courtesy of Merritt)

Tom Merritt: The real problem here is there is a power imbalance. In fact, it’s in the Australian code. If there is a significant bargaining power imbalance, that qualifies you for this new code. And that’s what all the governments are trying to deal with. It is an antitrust issue. It’s just different countries taking different approaches to try to figure this out and responding to different pressures. But it’s all about power imbalance. It’s all about Facebook and Google in particular, in this case, having a predominant market position that makes it hard to get them to do anything.

Molly Wood: So potentially, this is a law that identifies the right problem but comes up with a solution that changes everything about the way that the World Wide Web works?

Merritt: It certainly identifies the problem that everybody agrees is a problem. Whether it fixes that problem or is the right approach, we’ll leave that as an exercise for the listener, I guess.

Wood: While Facebook has said, “OK, no more news for you,” Google has said, “Let’s make a deal.” Microsoft has said, “We are all in on this plan. Bring on the Bing.” What is Microsoft doing here?

Merritt: Yeah, it was really interesting to me to see Brad Smith, their lawyer, come out on this side because Brad Smith has a history of speaking up for causes that make Microsoft look good. It does feel like Microsoft is playing their advantage here of “Guess what happens if Google doesn’t get to operate in Australia: More traffic for Bing because we don’t qualify under this platform.” And so it does feel very self-serving and has a whiff of the old Microsoft to it, rather than the new kinder, gentler one.

Wood: I feel like we’re going to see various countries come up with various versions of their way to try to rein in these tech giants. And does that just keep pointing back to the fundamental problem that so far the U.S., where these companies are housed, has not dealt with, which is that they’re monopolies?

Merritt: Yeah. We usually see that these kinds of things take so long for the forces to marshal and work their way through courts and legislative appeals, that by the time they’re determined, the conditions on the ground have changed. This will continue to be fought. Facebook and Google will dig in. Slow progress will be made with things like the Australian law, and by the time it all gets worked out, TikTok will be the problem, and/or something else that we haven’t even heard of yet.

Related links: More insight from Molly Wood

For what it’s worth, Facebook and Google have long denied that they abuse their monopoly status.

More on what’s happening in France this week. Reuters reported Tuesday that French antitrust investigators say Google has not been negotiating in good faith with news publishers there over copyright concerns. One of the things about the way Google displays news that has news outlets especially upset, is that it displays little snippets in search results, which publishers complained was violating their copyrights. Earlier this month, Google agreed to pay 121 publishers $76 million over a three-year period. Apparently, according to Reuters, it’s totally different publishers who have complained that Google didn’t meet its obligations in negotiating with them.

It’s worth noting here again that while there are legitimate concerns about the approach that Australia is taking in terms of paying for links — as in the guy who essentially invented the World Wide Web, Tim Berners-Lee, said such a move would make the internet as we know it “unworkable” — it is coming not just because Facebook and Google sort of happen to make more money on digital advertising than newspapers and TV stations and such do. It’s because of Australia’s Competition and Consumer Commission — kind of like their Federal Trade Commission — has determined that the giants are doing what Tom Merritt said and abusing their dominant positions to manipulate the digital ad market to their advantage and effectively set the prices. And also, to exploit their users by sucking up all their data, which they then promise advertisers will lead to way more clicks and use that huge treasure trove of data as basically a weapon against any other competition.

And they have these news publishers over a barrel because almost all their traffic relies on search results from Google or links on Facebook. Oh, and by the way, they’re so big and important in the digital ad industry that they effectively make all the technology that’s used to buy and sell and deploy and place those ads. The commission’s report is 623 pages long. It came out in 2019, but it makes clear that it’s not like Australia just woke up one day and decided to break the web for no reason.

And not for nothing, but Facebook is being sued right now in the U.S. since 2018, in fact, for allegedly lying about how many people would potentially see digital ads. Documents made public in that lawsuit last week suggest that one employee told executives that the ad revenue Facebook was making off this metric was revenue the company never should have made because it was “based on wrong data.” Facebook changed the metric in 2019, after the lawsuit was filed, but has said the allegations in that suit are without merit. But, you know, if they’re the only game in town and they’re fudging the numbers, what are you going to do, right?

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The team

Molly Wood Host
Michael Lipkin Senior Producer
Stephanie Hughes Producer
Jesus Alvarado Assistant Producer