Breakingviews

Facebook CEO Mark Zuckerberg testifies before the House Judiciary Subcommittee on Antitrust, Commercial and Administrative Law during a hearing on “Online Platforms and Market Power” in the Rayburn House office Building on Capitol Hill, in Washington, U.S., July 29, 2020. Mandel Ngan/Pool via REUTERS – RC283I9Y3VTI

MELBOURNE (Reuters Breakingviews) – It is increasingly likely that U.S. technology titans will emerge only mildly scarred from a bruising battle in Australia. The government and the media industry are admirably standing up to Facebook and Google in a bid to force them to pay for news, but fresh developments put the duo’s corporate clout on full display.

Defying Canberra’s plan to use a binding arbitration system if tech outfits and publishers cannot strike commercial deals on their own, Facebook on Thursday blocked content providers and users from sharing or seeing local and international news Down Under. In doing so, the $780 billion social-networking company made clear its desire to have more sway over the system. The real threat is that Australia’s model catches on elsewhere.

Facebook, which has come under fire worldwide for failing to police misinformation, is now willing to omit more authoritative sources of news. It even obstructed posts from Australian health and emergency services, drawing fire from Treasurer Josh Frydenberg, who has championed the media-bargaining code. The company led by Mark Zuckerberg disingenuously contends that news makes up only 4% of what people see in their feeds. A University of Canberra study last year reported that 39% of Australians use Facebook for general news and half used it to find news about Covid-19.

Although Google has similarly threatened to abandon the country, it has been negotiating contracts with news providers in Australia and beyond, including Breakingviews parent Thomson Reuters. A three-year deal unveiled this week with Rupert Murdoch’s News Corp, which has been instrumental in the fight to get technology companies to pay for news, is a step in the right direction. It also shows how Google and its $1.4 trillion parent Alphabet are proceeding largely on their own terms.

Google is structuring deals under the fledgling and unproven News Showcase venture it rolled out after Australia embarked on its crackdown, rather than for its widely used search product. Most of the details are also kept under wraps, making it harder for other governments to follow Canberra’s lead. Struggling media enterprises will welcome the additional revenue and the Aussie government’s efforts to level the playing field. In the end, though, they will have barely chipped away at Big Tech’s dominance.

Breakingviews

Reuters Breakingviews is the world’s leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.

Sign up for a free trial of our full service at https://www.breakingviews.com/trial and follow us on Twitter @Breakingviews and at www.breakingviews.com. All opinions expressed are those of the authors.

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Jeffrey Goldfarb