Facebook versus Australia explained simply

What is happening: Australia introduced a news bargaining media code (read: legislation) that is intended to address the perceived imbalance of power between Australian news outlets and the digital platforms they inhabit. This proposed legislation is not yet law, but digital platforms—Facebook specifically—are already taking action by preventing any sharing of news in Australia on the 2.5-billion-user platform.

The breakdown: Presently, news corporations use digital platforms like Google, Facebook, and their display networks much like everyone else: they can share content organically or they can pay the platform to reach more of their connected audience and new audiences. The new code proposed by the ACCC would drastically change the way news is shared. It creates a framework for news businesses to place a monetary value on their content and require that Google and Facebook pay for them.

The legislation as it exists today fundamentally misunderstands the relationship that news businesses have with Facebook. Unlike Google which actively indexes content from news sources, Facebook consumes submitted content. News businesses choose the content they wish to share, and they do this with the intention of growing their audience using the platform that Facebook has built.

My opinion: Content production is costly and I imagine that journalistic content is doubly so. News companies are likely hurting for more revenue sources beyond subscriptions and ad units; however, grifting Facebook—given that Facebook doesn't control which stories are published to their network—is a low blow.

That said, proactively blocking news content in an entire country is even lower. The world's largest social network claimed their move was anticipatory to the legislature from the context of legal protection. It seems pretty clear that this isn't the full picture. Facebook's reaction seems like a retaliation against Australia for introducing the new media code and then a pat on the shoulder to the Australian public saying, "Look what your government made us do."

Facebook's retaliation may come back to haunt them on the global stage as politicians are already calling the social network "incompatible with democracy." Unfortunately this action is just one in a long history of many actions - some of which have led to a number of wonderful invitations to sit in front of a Senate Judiciary Committee in the United States. Instead of avoiding governmental regulation, they seem content to barrel recklessly toward it at full speed.

As for the legislation, I don't imagine it will be going away any time soon. Some form of the news bargaining media code will pass, and Facebook (if it values its presence in Australia) will have to continue to work with news businesses and the Australian government to make it work.