FaceBook Folds Under Pressure: Will Bow to Link Tax Law and Restore News Feed

It could be the most disastrous development since the US DMCA. Facebook has caved to pressure and says it will restore its news feed.

Late last week, Facebook shut down its news feeds in Australia. This in response to Australia’s insane push to implement a link tax law. The move wound up being one of, if not, the most respectable move Facebook has made in recent memory. Being obligated to pay a tax for the privilege of sending anyone traffic by linking to them is the most ridiculously bad idea’s anyone can come up with in regards to the World Wide Web.

While Google was seemingly willing to go along with this idea via its News Showcase, Facebook’s move was seen by many on both sides as a line in the sand. Finally, someone was willing to stand up to reason and principal. It did make strange bedfellows between Facebook and those who support free speech and the open Internet, but the stakes were way too high not to back Facebook on this one.

Now, barely a week later, we are learning that Facebook has shockingly cave to the demands. News circulating suggests that they will restore the news feed in exchange for more negotiating time with Rupert Murdoch and News Corp. From the CBC:

Facebook said on Tuesday it will lift its ban on Australians viewing and sharing news on its platform after it struck a deal with Australia’s government on legislation that would make digital giants pay for journalism.

The social media company caused alarm with its sudden decision last week to block news on its platform across Australia after the House of Representatives passed the draft law. Initially, the blackout also cut access — at least temporarily — to government pandemic, public health and emergency services, fuelling outrage.

Facebook’s co-operation is a major victory in Australia’s efforts to make two major gateways to the internet, Google and Facebook, pay for the journalism that they use — a faceoff that governments and tech companies the world over have watched closely. Google also had threatened to remove its search functions from Australia because of the proposed law, but that threat has faded.

“There is no doubt that Australia has been a proxy battle for the world,” Treasurer Josh Frydenberg said.

As usual, the media is highly misleading in its reporting. What is actually being targeted is links, not “journalism”. Keep in mind that major media outlets have abandoned all semblance if impartiality in favor of pushing an agenda that only serves themselves at the expense of everyone else. So, a lot about this excerpt is also misinformation being pumped out.

So, back to reality, this development is disastrous on many fronts. This is bad news for free speech, bad news for the open Internet, bad news for journalism, bad news for those who think that the “big tech” companies have accumulated too much market power, and bad news for innovation.

The Electronic Frontier Australia digital rights organization offered some insightful thoughts prior to Facebook caving. A number of those thoughts are still relevant at this point as well:

Technology and the Internet are a vital part of modern society and we must be able to handle these issues with a deftness and aplomb that has been sorely lacking today. Australians deserve better.

Rather than attempting to bully technology companies into providing a direct subsidy for a small subset of Australia’s media organisations, Australia should be using public funds to fund public goods such as journalism.

EFA calls on the government to commit to funding public interest journalism in a non-partisan and open fashion.

We also call on the government to tackle abuses of market power by massive multi-national corporations, such as the wide-scale privacy abuses perpetrated daily by the digital platforms. These issues of surveillance are magnified by the Code rather than improved, and Australians will be worse off no matter how a few palty dollars flow from one massive corporation to another.

The Code does nothing to improve the lives of most Australians. Instead, the childish bullying tactics of both the government and Facebook have today caused us harm.

It is time for our government to look after all Australians, not just those who write the news.

A highly important aspect of these comments is that the News Media Bargaining Code will only go to the biggest news publishers, leaving out all the rest. This highlights how this fight is very far removed from the image of “big tech vs journalism” that large news organizations are trying to have the world believe. It’s more about a group of multinational corporations that are trying to carve out the benefit in all of this. If you are a smaller local news organization not part of the multinational corporate elite, sorry, but you are completely out of luck. Sucker!

Of course, the implications of this latest development highlights just how much worse everything will be.

First, it ultimately paved the way for this legislation to be completely unopposed. In fact, this evening, we are learning that Australia has even passed the News Bargaining Code law (AKA the Link Tax). From CTV:

Australia’s law forcing Google and Facebook to pay for news is ready to take effect, though the laws’ architect said it will take time for the digital giants to strike media deals.

The Parliament on Thursday passed the final amendments to the so-called News Media Bargaining Code agreed between Treasurer Josh Frydenberg and Facebook chief executive Mark Zuckerberg on Tuesday.

In return for the changes, Facebook agreed to lift a ban on Australians accessing and sharing news.

Again, we should emphasize that it’s about links and snippets, not “news” as this article misleadingly claims.

The signal this sends to the rest of the world is that this is a law that other countries might consider passing. If one country passes it, every country could potentially have an interest in passing similar laws. As we previously highlighted, the media in Canada is heavily lobbying the government to pass similar legislation here in this country. So, this disastrous law could be coming to other countries as the multinational media corporations come knocking and demanding that other countries should go to aggregators and platforms with caps in hand.

Bad News for Free Speech

When different countries are motivated to pass similar laws, note that they may not be passed with identical provisions. Some countries might wind up passing laws that mandate every platform (not just Facebook and Google as was the case in Australia). It’s difficult to say what the ensuing fallout is going to be precisely. Still, this puts free speech on very tenuous grounds.

If you are a smaller independent journalist, for instance, what would happen if these platforms did, in fact, decide that paying to link to you is too expensive for them? Depending on how other countries try and pass similar laws, they may decide that linking to news sources in, say, Canada, is a bridge too far and block all news sources that come from Canada.

Alternatively, what if a country passes the law in such a way that every website is required to pay a license fee for linking to content. Many websites are already reeling from the financial effects of COVID-19 as it is. Some sites are trying to break even as they attempt to break through the overall noise that is the Internet today. If a site is already barely scraping by, laying a massive link tax law on top of them could very easily send that site off into the great beyond. That means fewer voices on the overall Internet today.

It doesn’t have to be other smaller news sites that could be affected. What about smaller Wiki sites? What about Internet forums? What about anything that permits users commenting? The risk here is that laws around the world can be passed to punish those who are legitimately trying to build websites legally. This ultimately leaves sites and services that don’t care so much for things like copyright law. Are we really prepared to replace those sites who are run by honest developers with those who may be more interested in injecting users with, say, malware as they try and sell their site as a free speech alternative?

Bad News for the Open Internet

Free speech is, of course, merely one angle on this whole fiasco. What about the open Internet?

The precedent this now passed law sets is that links now have a financial aspect to them. In other words, it injects the idea that links cost money to a number of people. This is not just unprecedented in the world of the Internet, but unprecedented in general. Citing sources in a paper does not cost money (nor should it). Citing sources in a news article doesn’t cost money (nor should it). Making mere references to copyrighted or trademarked items or services doesn’t cost money (nor should it). Yet, here we are with one country that says that linking to news articles is completely different because Rupert Merdoch has decided it to be so.

Within Australia, the next question then becomes, “well, if these big news corporations can get paid for news articles, why not my kind of service?”

Canadians know this sort of behavior all too well. When COVID-19 vaccines started appearing, just about every business you can imagine were calling on their respective provincial governments to issue vaccines to their employees so they can get back to work. Everyone had their reasoning as to why their industry is “essential” and should be at the front of the line for vaccines.

The same thing will happen with the link tax law here. Smaller news publishers will easily argue that the News Media Bargaining Code should also apply to them. They should get a cut because it’s only fair. Then, online companies that sell products might also argue that if news companies are getting a cut, then they should too because they produce their goods and services just like publishers produce news articles. Sooner or later, everyone is going to come knocking – all at the expense of the Internet and whoever an industry will target. Who knows how far that will go?

The inherent effect is going to be obvious. The cost of linking is going to go up for almost everyone who even thinks of producing a small website. Eventually, it will be bad practice to link to anything at all. This ultimately attacks the underlying critical infrastructure of what makes up the web today. If linking becomes a thing of the past, then being able to make a name for yourself online will very easily be in jeopardy. It’s already hard enough to get other communities to link to you as it is now. Imagine how much harder it’s going to be when there is a financial disincentive to do so on top of that.

This isn’t even getting into what is going to happen when other countries consider pulling the same stunt. What if countries take an even further step and mandate link tax laws that are more protectionist? The Internet is worldwide. It shouldn’t be that big of a deal to go from a site that is in Egypt to a website located in South Africa to a site found in South Korea. If there is good quality content on those pages, the country of origin should mean very little – if anything at all.

Yet, countries might see an opportunity to tax websites seen outside their own country. Not only will the effect be that their countries citizens will be disincentivized to link to sites in other countries, but it also risks the idea that you can reach a global audience through the Internet – a key feature of the Internet in the first place.

The overall effect you run the risk of having is great Internet splits where the Internet becomes less global and far more localized. This hamstrings a web developers chances of reaching the widest audience as possible.

That is just one way how the link tax could undermine the Internet as a whole. There are probably hundreds of ways that things can go sideways.

How This is Bad News for Journalism

It’s probably much easier to explain how this is bad news for journalism. As we more or less touched on above, the News Media Bargaining Code is only going to financially support large multi-national corporate interests. The smaller news services are going to get left out in the cold in all of this.

So, imagine the implications if one industry is having to funnel money to a small set of large news outlets. The effects on smaller players is obvious. They will be inherently at a financial disadvantage. What’s worse is that the government is now left to decide who is a “journalism outlet” and who isn’t. This is a direct affront to anyone who are a huge fan of the free and open market. It ultimately picks winners and losers in all of this.

As we’ve already been witnessing in recent weeks, we are seeing the negative implications of how a small set of major media outlets can collude and spread false and misleading information for their own financial gain. If smaller players find holes in the story, they will be much more hard pressed to get the word out to readers who want to be honestly informed. There will be a significant downward pressure on those who are not included in a small list of journalism outlets recognized by the law thanks to the link tax law giving that financial advantage to the big players.

Because of this, journalism as a whole will suffer immensely. The established players will obtain new financial power to keep the competition at bay and journalists on smaller platforms will be much harder pressed to get those critical details that the big players may or may not be motivated to obtain in the first place.

How This is Bad News for Those Critical of the Market Power of Big Tech and Those Who are Fans of Innovation

This is something we’ve more or less touched on previously when discussing the Google News Showcase. With these new taxes in place, it will represent a significant financial barrier to those who want to get into the market. Before, you might only need a great and innovative idea. Not only will you now have to work hard to get a small foothold in the market, but you also now have financial hurdles to overcome as well.

If you are a small startup, and you want to bring your brilliant idea to market, imagine the sticker shock anyone will experience if they have to spend a billion dollars just to create a web program that will finance those big corporate journalism outlets. That could be the end for a lot of ventures out there before the idea even came to market in the first place.

As a result, the big players will remain even more unopposed then they already are. It becomes financially unfeasable to create the next Facebook or Google. So, Facebook and Google will remain the big players in the market because of this. This is a further entrenchment of their market dominance. So, if you are a fan of trying to get new competition in the market, this latest development is ultimately a disasterouse thing to hear for you.

In Conclusion

Ultimately, while major media outlets are hailing this as a major victory, ultimately, this is a disaster movie for anyone who actually knows a thing or two about markets and the Internet in general. Unless you are part of the media establishment, Facebook, or Google, this is as bad of a development as you can get. The terrible implications that could unfold is virtually unlimited here. As things stand now, the implications could be the worst we’ve seen since the US’s DMCA (and we all know the disastrous implications that has had on Fair Use, free speech, and innovation among other things already). This could prove to even be more dangerous for the Internet then that for all we know.

The Small Reasons That Disaster Can Be Avoided

While the law has been passed, there is a possibility that disaster can be avoided. The media establishment could very easily demand too much. In response, Facebook and Google could very easily fall back on their respective nuclear options. This is leaving things to chance, but not something we should leave to chance at this stage.

The other, more long term possibility is that another site (i.e. Reddit or Twitter) could be targeted next. They could react very differently in all of this and challenge the law in court. Keep in mind that this is a law that hasn’t seen the inside of a court yet. A court could very well strike this whole law down. That, of course, will take a lot of time and will depend on developments landing right. It’s a far off possibility, but not out of the question.

The even more difficult possible outcome is that citizens in other countries will convince their respective governments not to follow through with similar laws in other countries. While there are successes of this in the past, there are also plenty of instances where pushing this kind of idea has failed as well. Ultimately, that is a really big ask at this stage.

So, while this story isn’t technically over, things are already starting to look grim. It also could stand to get a whole lot worse in the long run around the world as well. For that, I legitimately worry about the long term future of the open Internet.

Drew Wilson on Twitter: @icecube85 and Facebook.

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