how reels undercuts facebook's standoff with australia

Facebook vs Australia

Facebook is in a standoff with the Australian state. 

I know, what's new, they've been in some sort of row for years now, ever since Australia copied the UK and introduced legislation which would theoretically allow the Government to force the decryption of end-to-end encrypted messages.

When it comes to tech policy, I've actually found the Australian federal government one of the most interesting sources of policy in the field. I think that it is not a coincidence that the Australian federal government is led by complete idiots.

The nation's approach has basically been, again and again, to just completely ignore technical experts and introduce the most "common sense" form of populist legislation imaginable.

It's not… good? Like, most of the time, the legislation which comes out is technically incoherent, practically unmanageable, and self-defeating as to the stated goals. 

But boy is it interesting. One of the problems with technology regulation is that "that would be bad", "that would be bad for tech" and "that would be bad for tech companies" are often treated as interchangeable pieces of advice. 

One solution is to build up your technical expertise so that you can distinguish between those different types of advice, learning from the experts where they are helpful while dismissing their input when it is self-serving.

Another solution – the Australian federal solution – is to ignore the experts entirely and throw yourself over the waterfall in a barrel. Maybe you'll be fine! Maybe you won't be! Either way, everyone watching will have a grand old time, and we'll probably learn something in the process.

Which brings us to the current standoff.

The current standoff

Facebook and Google have been bad for the news industry. Much of this is because the internet, in general, has been bad for the news industry. Some of this is because an oligopoly around digital advertising, in particular, is bad for the news industry. And a bit of this is because specific product decisions at these two companies are specifically bad for the news industry.

As a result, the news industry in Australia has managed to convince the federal government that Facebook and Google should be paying more money to the news industry.

The result is a piece of legislation which basically says "if you are Facebook or Google, and you use copyrighted material from the news industry, you must pay them an amount they collectively decide on. And also you must consult with them when you make those specific product decisions which might be bad for them, and give them a warning."

There's more to it, it's big complex legislation which is the result of a very successful capture of the Australian regulatory state by, basically, the Murdoch press. But that's sort of the kernel of it.

Unsurprisingly, Google and Facebook – but particularly Facebook – do not like this regulation. Facebook in particular has warned that it may end up simply blocking Australians from sharing news on the site if the law passes

It isn't just Facebook and Google complaining, though. A lot of subject matter experts have weighed in themselves, warning Australia that this is a bad fight to pick.

The core problem is that one of the big ways that Facebook and Google have been bad for the news industry has been by becoming indispensable to the news industry. Putting fights about fairness, moral duty and societal health to one side, the problem the industry has is that two companies control a significant chunk of all the incoming traffic – and so incoming revenue – to news websites. 

Any fight over revenue split thus starts from the position that, as we have seen again and again, Facebook and Google can do without news sites far more than news sites can do without Facebook and Google.=

That's a dynamic which is hard to unpick, even with the power of a regulator behind you. You tell Facebook and Google to pay for news on their sites, and they say "fine we won't have news on our sites", and you say… oh dear? You say, if you're France, "no we are also going to force you to have news on your sites", but that increasingly becomes impractical.

It's all about power

But one thing I have liked about the Australian approach, as I so frequently do, is the fact that completely ignoring the experts does at least highlight some of the problems with the expert advice. 

In this case, for instance, a lot of the advice has focused on those power dynamics. That's important, because they are the basic turf on which this battle is fought, but they're also not a particularly pleasant one for the companies involved.

Facebook can't really release a public lobbying document which says "this is a bad law because don't they know we're more powerful than them and will simply render it impractical to enforce", after all.

So the company has to come up with more appealing arguments to fairness and morality, at least when it speaks in public. And those arguments have, I think, been less convincing.

Start with the company's blogpost this week, threatening to pull out of Australia. The killer line is this: "we are left with a choice of either removing news entirely or accepting a system that lets publishers charge us for as much content as they want at a price with no clear limits."

That's a compelling case. Facebook's point is that if the Australian news companies want to charge it per (say) headline on Facebook, while also retaining the ability to post their own headlines on Facebook… the company is signing a blank cheque. I can see why it would be against that!

Except.

Grab your phone, open Instagram, click add to Your Story, and flick over to Reels. You'll see a little musical note. Click that, and you can search for almost any song you like, and add it to your Reel. 

It's a feature lifted wholesale from TikTok, of course, but that's not important here; what is important is that it's a feature for which Facebook has, almost certainly, negotiated a small fee per stream to be paid back to the labels. 

In other words, Facebook has signed a blank cheque in order to allow excerpts of music be posted on Instagram, in the same month that the company has threatened to pull out of Australia over a blank cheque to allow excerpts of news be posted on Facebook.

That's what I mean when I say this story is, completely and entirely, about the power dynamics between the two lobbies. Facebook needed music licenses to compete with TikTok; Facebook (thinks it) doesn't need news licenses to compete with… well, anyone. So it signs an unprecedented deal with major labels for the former, and fights an unprecedented regulation pushed by major publishers for the latter, in the same summer.

At the same time, that approach does mean I'm genuinely curious about where things will go from here. (And thank you again to the Australian government for engineering a situation where my curiosity can be indulged). 

I think there's a chance that Facebook really will be forced to pull News from the company's Australian market, because this government has a history of winning games of chicken with US tech companies. (To be clear, in this context "pulling news" probably means "removing all rich formatting around news URLs, rendering them bland links"). I think in the short term, that will hurt Australian publishers, as their links become less compelling to click on, and fade compared to other content on the site.

I do sort of wonder what happens next, though. The company is already in the throes of a battle with misinformation – and not "fake news", but home-grown misinformation, native to the Qanon and antivaxx groups which have proliferated during lockdown. Does that stuff fill the gap? Is that a success for Facebook? 

What about the possibility of a "power-user" exodus? Yes, most people don't use Facebook as a newswire. But if those that do spend their time elsewhere, do their friends and family follow?

Or perhaps Facebook thrives, and the Australian news media suffers, but then rebuilds itself as a smaller, leaner sector without dependency on social clicks. Is that really the best option for Facebook? Turning a powerful supplicant into a weaker free agent could be the beginning of a period of pain for the social network.

Thankfully, I'm not in the position of giving advice. My stance here is very much at the back of the crowd with a tub of popcorn. But I've been surprised to see the crowd come down quite so heavily on Facebook's side in this one, when the guaranteed winner of this whole war looks likely to be stupidity itself.