Last week, Microsoft announced its support of a proposal being considered by the Australian Parliament that would require tech companies like Google and Facebook to pay publishers for news through a revenue share agreement. Actively opposing the move, Google vowed to remove its search engine service from the country if the proposal passes. In a similar move, Facebook said they would stop Australian users from sharing news on Facebook and Instagram. Microsoft disagrees with their position and is supporting the measure in Australia, along with similar proposals in the U.S., Canada, the European Union, and other regions.
How the internet and social media have affected the free press
In a lengthy February 11, 2021 blog post, Microsoft president Brad Smith discusses the negative impacts the internet and social media have had on a free press. Since 2000, newsroom revenue in the U.S. has decreased 70%, employment in newsrooms has been cut by 50%, and more than 2,000 newspapers have shuttered completely. News deserts have developed where communities no longer have a local news source. Now approximately 53% of U.S. adults get their news from social media “often” or “sometimes” (Source: Pew Research). The proliferation of doom scrolling news headlines on social media has further exacerbated the problem.
“As we know from our own experience with Microsoft’s Bing search service, access to fresh, broad and deep news coverage is critical to retaining strong user engagement. This means that news content generates significant indirect value for search and social media sites – as much as $4.7 billion annually for Google, according to one recent study – even though people often do not click through to the original story. This means that news organizations go uncompensated even while all this traffic fuels platforms that have become profitable tech gatekeepers on which businesses must advertise to reach consumers,” writes Smith.
Pay publishers for news, says Microsoft
One fix is the trend that governments like the Australian Parliament are requiring companies like Facebook and Google to pay publishers for news.
“The goal is to provide the news organizations with compensation for the benefit derived by tech gatekeepers from the inclusion of news content on their platforms,” Smith says. “It’s an idea that some governments have pursued in parts of Europe, but with only limited success. The reason is that it’s hard to negotiate with a monopolist.”
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Predictably, Facebook and Google are fighting such policies because the new regulations would force them to pay publishers for news, reducing their profit margins and forcing partnerships where the tech companies have previously controlled the relationship.
Microsoft has taken the opposite approach, making supporting the news business a priority, investing in and supporting local news, and paying publishers for news through Microsoft News. Microsoft has also expressed its support directly to the Australian government, promising to comply with any new rules.
A more competitive market
“The key would be to create a more competitive market, something the government can facilitate,” Smith says. “But, as we made clear, we are comfortable running a high-quality search service at lower economic margins than Google and with more economic returns for the press.”
Though Google has done some backpedaling in light of Microsoft’s support of Australian’s proposed regulations, Google is trying to strongarm publishers, making offers to major publishers that would allow Google to terminate any deals if the Australian government does not revise its proposed regulations. According to Media Post, Google has made deals with a handful of publishers in Australia including The Canberra Times, The Illawarra Mercury, The Saturday Paper, Crikey, The New Daily, InDaily and The Conversation.
Facebook and Google have made it clear they are willing to go to extraordinary lengths to withdraw services where governments attempt to interfere with their business models. This creates a fundamental issue that further threatens democracy when tech companies can dictate terms and whose news they will and won’t share via search engines and news feeds.
“The ultimate question is what values we want the tech sector and independent journalism to serve. Yes, Australia’s proposal will reduce the bargaining imbalance that currently favors tech gatekeepers and will help increase opportunities for independent journalism. But this (is) a defining issue of our time that goes to the heart of our democratic freedoms. As we wrote in 2019, ‘The tech sector was born and has grown because it has benefited from these freedoms. We owe it to the future to help ensure that these values survive and even flourish long after we and our products have passed from the scene.’” Smith writes.
In his blog post, Smith notes that Microsoft’s Bing search engine only has about 5% market share in Australia, significantly less than they have in other markets. That means that, if Google truly withdraws their search services, Microsoft stands to gain market share. They will also likely drive more traffic to news organizations, which will be good for all parties involved – readers, news organizations and Microsoft. Microsoft’s position is a noble one, though not entirely selfless.
The final result in Australia is likely to set the stage for what could potentially happen in other countries. Facebook and Google will have to look at their threats, their margins and the goodwill they are losing to decide if this is a game they really want to play. At this point, they look like bullies, and news organizations are their unwilling victims.