NWS News Corporation

By Keach Hagey 

Facebook Inc. on Tuesday agreed to restore news to its platform in Australia, following a five-day blackout that came amid a standoff with the country's government over a proposal that would force tech companies to pay news publishers for content.

The current showdown, which also involves Alphabet Inc.'s Google, represents the boiling over of a long-simmering question around the world: Should big tech platforms have to pay publishers for the news articles that populate their sites?

Why haven't Google and Facebook had to pay for news?

Google and Facebook say they help publishers by delivering traffic. In their view, requiring the tech companies to pay to display news content violates the principles of open linking that make the web work. Publishers say that the primary reason they don't get paid is the power imbalance between them and the tech platforms, whose role in the distribution of their stories is so important that publishers feel they have little choice but to assent to tech companies' terms.

Copyright laws differ by country, but in the U.S. the news headlines and snippets turned up in Google searches are typically considered a fair use of that content under copyright law -- meaning that a company can display those snippets without having to negotiate a license fee from the copyright holder. Determining what should count as fair use is complicated; it includes weighing such factors as whether a news snippet on a tech platform could be considered a replacement for the full article, which would harm the publisher.

Whether Google's and Facebook's current use of news content is fair use isn't known because the courts haven't tried a case. A key legal decision from 2007 offers a guiding principle for what copyright lawyers expect today. In that case, Perfect 10, a publisher of pornography, had sued Google, claiming the thumbnail photographs indexed in Google's image search had hurt its business. The Ninth Circuit sided with Google, primarily because it saw Google's search engine as a "pointer" to Perfect 10's content, not a replacement for it.

Google has cited the ruling, and others, to argue that it respects publishers' copyrights.

Why do publishers think Google and Facebook should pay for news?

Publishers argue that Google's business has massively changed since the Perfect 10 ruling in 2007. In Google's early days, a search turned up a list of links to publishers' websites. Today, Google often tries to answer users' queries itself, filling the top of its results page with large images and text often plucked from publishers that make it less necessary for users to click through to a publisher's link.

Facebook users can argue back and forth about a linked news article based on a headline and image that they may never click on -- and thus never arrive on the publisher's page. Meanwhile, the social-media giant can monetize the attention and engagement generated by the post with its own ads.

Google and Facebook have grown into ad behemoths, with advertising accounting for the vast majority of their revenue last year, $181.69 billion and $70.7 billion, respectively. In contrast, the news-publishing industry's ad revenue has steadily declined.

How have governments stepped in?

Governments around the world have been moving to shift the balance of power between big tech platforms and news organizations as the financial disadvantage of the news industry in the current model became clear.

In 2019, the European Union changed its copyright laws to allow publishers to ask tech platforms to pay for using snippets of their content. When France became the first country to implement the directive, Google lobbied hard against the law and threatened to shut down Google News if it were forced to pay for licenses. In January, Google inked a deal with a group of French publishers to create a framework to pay them for online news.

In the U.S., a bipartisan bill has been kicking around Congress for the last several years that would give news publishers the right to band together on a temporary basis to negotiate with Google and Facebook. The bill hasn't been reintroduced in the current session.

Australia is expected to pass a tougher version of such regulation, which would require tech platforms over a certain size -- meaning, Google and Facebook -- to engage in "baseball" arbitration with news publishers to come to an agreement on payment for news. The arbitration method entails two sides who can't reach a deal each presenting a single final offer, and the arbitrator picks one. In this case, it is designed to level the playing field between the tech giants and the publishers with whom they are negotiating.

How have the tech platforms responded?

In the years leading up to the Australian showdown, Google and Facebook responded to growing pressure from publishers and politicians by tossing money at news publishers while digging in hard on the core copyright issue. The payments have taken various forms, from grants to new products like the Facebook News Tab or Google News Showcase, which enable the tech platforms to pay for some content on their terms.

Both Google and Facebook initially approached the proposed Australian law the same way -- by threatening to shut down their services in the country if it passed. In a December blog post, Google called Australia's proposal "unworkable."

Their strategies later diverged: Google announced a three-year global deal with News Corp, the parent company of The Wall Street Journal, worth "tens of millions" of dollars to license News Corp content for various products. Facebook, meanwhile, made good on its threat to remove news from its platform and did so on Feb. 18.

William Easton, managing director of Facebook in Australia and New Zealand, said the company has a different relationship to news than Google does because "publishers willingly choose to post news on Facebook," whereas Google search crawls the web.

Mr. Easton also said Facebook's business gain from news was minimal. "News makes up less than 4% of the content people see in their News Feed, " he said.

Traffic to Australian media outlets plummeted shortly after Facebook acted. According to data from analytics firm Chartbeat, Australian publishers saw traffic from readers outside the country decrease by about 20% in the hours after Facebook cut off sharing of news articles for its users there.

On Tuesday, Facebook agreed to restore news to its platform in Australia, following a deal with the Australian government that would give it more time to reach individual agreements with publishers before the arbitration process began, among other changes.

Write to Keach Hagey at keach.hagey@wsj.com

(END) Dow Jones Newswires

February 23, 2021 14:18 ET (19:18 GMT)

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