The Rundown
Top technology stories this week
Outside of a few offices somewhere in Menlo Park, nobody expected a struggle between two tussling powers to erupt in such a spectacular fashion as this week closed out.
One of these powers governs a technologically advanced, multicultural state that isn't quite a monarchy or republic, and of course, the other is Australia. Facebook has called the Australian government's bluff on news payments and left the ball in Parliament's court: a sudden, decisive show of defiance that appears calculated to put Australia on the back foot and cause other circling aggressors to falter in their resolve.
If you've missed the story, here's the context. The Australian government has been planning to legislate a media bargaining code that requires companies like Facebook and Google to pay news organizations for the stories they link to on their platforms. The bill is a mess, and it's not specific — you could interpret it as requiring Google to pay a writer for linking to their Substack in search results, according to those who have read the text. It's also a near certainty that Australia's most famous homegrown Emperor Palpatine cosplayer, Rupert Murdoch, ordered it up himself.
The pitch is that this is compensation for the value aggregators derive from news organizations when those aggregators surface links to their content, and if you're scratching your head right now... well, you should be.
Google has insisted for some time that it would pull Search from the country if this went ahead, only to fold and make its own alternative to demonstrate that no legislation is necessary for it to pay to link to others.
Facebook has taken the opposite approach and announced that it would immediately block news links from being seen or shared in the country. It didn't even wait for the legislation to pass. It was especially notable for the unexpected display of power executed with understated certainty — not the cartoon villain we're accustomed to. This is Facebook taking Australia at its word when it says the law as drafted will be legislated and proceeding accordingly. Facebook says it will interpret the bill generously to provide it with the proper respect, and we'll return to this. The company was happy to excise the source of the conflict without blinking.
Facebook is entirely backable in its position. It's a weird feeling. It's rare for many of us to find ourselves agreeing with Mark Zuckerberg's public positions. While Facebook benefits from defending this position, I suspect the motives are not ulterior so much as naturally aligned.
To suggest that one should pay to link to content is absurd. If you claimed you were going to reverse the flow of value in a monetary system so that you are considered a beneficiary when you spend, and your plan for enacting that is to declare that this is the case, nobody would take you seriously, and the conservative Liberal Party government responsible for this idea would consider you its ideological enemy. But they'd at least be right to laugh. Links might represent a comparatively insignificant store of value, but the direction that value flows in is just as inherent to their function as it is with money.
Our leaders are like playing children, pretending to be superheroes on the playground and narrating the effects of their powers to compensate for the lack of any other sign they exist.
Confounding the situation is that Facebook and Google do more to distort the directional value of a hyperlink than anyone.
Facebook does use outside content to generate engagement material while reducing the likelihood of outflow and keeping the most profitable engagement activity on-platform — unless someone's paying for the ticket off. This is pretty well-covered, and you can see how good social companies have gotten at influencing when there should be a certain type of outcome in their advertising tools.
Snippets are Google's most obvious equivalent. Today, most search results include units that aim to eliminate the need to click through while using the destination's extracted content to do so.
The units are effective and get better every year. It's already more likely that a user won't need to click on your link than that the search will result in a visit. In 2019, 49% of queries resulted in no click at all. Take out the clicks to other Google properties, like Maps, and the number of searches that end in an off-platform click is even lower at 41.45%. Google's efforts to keep users on-platform aren't as well-concealed as Facebook's, but we'll hand them that it's less egregious. The user at least derives value from it.
Where it gets twisted is that even as these snippets become more effective at preventing off-platform clicks, publishers are forced to provide the metadata that enables them to remain viable longer. Fewer queries result in a click, but the bulk of clicks are still to the first result. The alternative is to give it up to another site. Google will construct these snippets from your content itself if there's no schema present or if it thinks its snippet extracts better content. It's competition with other sites that Google leverages, so you'll perform the data processing it uses to compete with you as an alternative end destination.
Australia isn't shaking down the innocent, or even the naturally flawed, or even the only slightly malicious. But when drafting vague legislation with far-reaching implications, tit-for-tat is not part of the criteria. The solution does more to distort the way the web functions locally than any of these questionable practices do.
Or as Mike Masnick at Techdirt puts it in The Bizarre Reaction To Facebook's Decision To Get Out Of The News Business In Australia:
Facebook is a terrible, terrible company and deserves lots of blame for lots of bad things that it does. But this ain't it.
To qualify as a solution, an approach shouldn't create more significant problems or solve the wrong ones. Even Tim Berners-Lee called this particular solution out to say it'd make the web unworkable.
Back on our playground protagonists, this is part of the government's response via the Treasurer, Josh Frydenberg: “He [Zuckerberg] endangered public safety. In the middle of a pandemic, people weren’t able to get access to information about the vaccines."
This quote isn't about the general news ban. Facebook initially hid links posted by government departments from local emergency services and social services like 1800RESPECT, which supports victims of sexual assault and domestic violence. It was a pointed choice Facebook made to criticize the bill's lack of specificity, later confirming it had intentionally "taken a broad view in order to respect the law as drafted." Indefensible selections for making that point and a classic Facebook bungling of the sort of basic judgment that is impossible to explain or excuse. But there's hypocrisy in Frydenberg's criticisms.
Awareness campaigns are a key way governments get important information distributed, and naturally, Facebook is one of the channels in the media mix. But if it's not just a channel and this US commercial interest serves as a dependency, that seems like a government decision-making problem. It's not like your government notices hit your newsfeed instead of your email and MyGov accounts. News isn't scarce outside of the Facebook feed either. But it's the Liberal Party's initiative that will make it harder to access news or be exposed to it in doing other things. It must have been a tough statement to make with a straight face.
If the distribution of news to the public is that high of a priority for the government, why is it seeking to make its distribution a cost center for the platforms?
There's no coherent philosophy underpinned by even rudimentary intellectual rigor. Go after aggregators making product decisions to reduce click-off to the aggregated data source, or even ask Google to pay snippet scrapees the full ad revenue from those no-click searches. Anything would make more sense. Frydenberg himself doesn't seem to know what he believes about the most fundamental assumption of the government's argument.
Do platforms capture value when they distribute information and links? Or are they performing an essential public service?
Facebook's bet seems to be that Rupert (and other more genuine and probably more financially pressed organizations) will see traffic drop and call the Australian government off the whole thing. They have gathered that blocking news in Australia indefinitely is something they can easily afford to do. More so still if it serves as a deterrent elsewhere — apparently, our bad idea has other fans.
That's a reasonable bet for Facebook to make. At the same time, Facebook forced media organizations to diversify away from that dependency in 2016, when it cratered outbound traffic to publishers as advertising CPMs were tumbling below another threshold in their decade-long decline. I can imagine News Corp being an exception to this, but most publishers don't count on Facebook's referral traffic in 2021. It's insignificant.
We all know that baby pictures don't drive engagement. There's an extent to which it needs to allow users to share news, and at least in more countries than not. Facebook stands to gain if it can stare this situation down, but it could also simply secure the status quo for pennies on the dollar with an agreement or an initiative like Google's. It's eager to make a deal on Section 230 and welcomes the massive costs of comprehensive moderation, where those costs are a defensive asset because they are massive. They turn its size into a moat and put the cost of a competitive attack outside the reach of most budgets. Does it view soft external protections like legislation as fair game for dismantlement in business, but the intended functioning of the web itself as too important a dependency to compromise? Is it just picking the most opportunistic position in each case?
These questions are so unanswerable that they're functionally irrelevant. They're interesting. But it's better to focus on its actions and an unflavored interpretation of the resulting outcomes.
Facebook has always been comfortable with edges. Whether or not its motives are altruistic, it is in a position we rarely see — making its bet on protecting the most essential and atomic units of the open web. Google made a lot more noise but lost its nerve. News media is now Google's dependent for who knows how long.
Google's folding may also end up going down as a smart call. It's parting with this revenue voluntarily rather than waiting for politicians to turn the internet upside down, gets a better deal on terms it sets, and takes all the public relations pot left on the table by Facebook. Facebook's non-compliance could be a risk for Google if it results in a more prescriptive revision of the legislation that unravels their play. And if Australia starts an international trend, Facebook would find itself in a challenging position. But so would the web.
For now, there are more new questions than answers. Thinking about what this means is an exercise in speculation, just as our guesses at the way Facebook and Google are approaching these issues internally are. The next step will be to see whether the code becomes law, and that's a decision Parliament will have to make with everyone watching.
Further Reading
And for a bit of comic relief, the bloopers: