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Why Facebook and Google are fighting publishers for news payments

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Facebook Inc. FB 2.12% agreed to restore the news to the Australian platform on Tuesday. This is after a five-day power outage in a conflict with the government over a proposal to force tech companies to pay news publishers for content.

Alphabet Inc. GOOG 0.29% The current showdown, which also involves Google, represents a boil of long-standing questions around the world. Does the Big Tech Platform have to pay publishers for news articles posted on the site?

Why did Google and Facebook have to pay for the news?

Google and Facebook say they help publishers by delivering traffic. In their view, demanding payment from tech companies to display news content violates the principle of open links that make the Web work. Publishers say the main reason they don’t get paid is the power imbalance between them and the tech platform. Their role in the distribution of their stories is so important that publishers feel they have no choice but to agree to the terms of tech companies.

Copyright laws vary from country to country, but in the United States, news headlines and snippets displayed in Google Search are generally considered fair use of their content under copyright law. This means that companies can view these snippets without having to negotiate a license fee from the copyright owner. .. Determining what should be considered fair use is complex. This involves weighing factors such as whether news snippets on the tech platform are considered a replacement for the entire article and can harm the publisher.

Whether the current use of Google and Facebook news content is fair use is unknown, as the courts have not filed a proceeding. The key legal decisions of 2007 provide guiding principles for what copyright lawyers are expecting today. In that case, porn publisher Perfect 10 sued Google, claiming that thumbnail photos indexed by Google’s image search hurt its business. The Ninth Circuit Court of Appeals endorsed Google, primarily because it saw Google’s search engine as a pointer to Perfect 10s content and not a replacement.

Google cites rulings claiming to respect the copyrights of publishers.

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

Publishers claim that Google’s business has changed significantly since the 2007 Perfect 10 ruling. In the early days of Google, the search found a list of links to the publisher’s website. Today, Google often tries to answer user questions, and at the top of the results page, a large image pulled from the publisher so that users don’t have to click to access the publisher’s link. And text are displayed.

Facebook users can discuss news articles linked based on headlines and images, but without clicking or visiting the publisher’s page. Social media giants, on the other hand, can monetize the attention and engagement generated by posts with their own ads.

Google and Facebook have grown into advertising giants, with advertising accounting for the majority of last year’s revenue, at $ 18.169 billion and $ 70.7 billion, respectively. In contrast, advertising revenue in the news publishing industry is steadily declining.

How did the government intervene?

Governments around the world are moving to shift the balance of power between big tech platforms and news organizations as the economic disadvantages of the news industry in the current model become apparent.

In 2019, the European Union changed copyright law to allow publishers to ask technology platforms to pay for snippets of content. When France became the first country to implement the directive, Google slammed against the law and threatened to shut down Google News if it was forced to pay a license. In January, Google signed a deal with a group of French publishers to create a framework for paying for online news.

Facebook has blocked Australians from viewing or sharing news articles as lawmakers have discussed a bill that would force social media companies to pay for content. The law is receiving worldwide attention and may provide models for other countries.Photo: Joshua Delson / Getty Images

In the United States, bipartisan bills have circulated in Congress for the past few years, giving news publishers the right to temporarily negotiate with Google and Facebook. The bill has not been reintroduced in the current session.

Australia is expected to pass a stricter version of such regulation. This means that you need a technology platform that exceeds a certain size. This means that Google and Facebook will need to arbitrate baseball with the news publisher in order to reach an agreement on news payments. The arbitration method requires two sides that cannot reach the transaction, each offering a single final offer, and the arbitrator chooses one. In this case, it is designed to level the competition between tech giants and the publishers they are negotiating with.

How did the technology platform react?

In the years leading up to the Australian showdown, Google and Facebook have thrown money at news publishers in response to increasing pressure from publishers and politicians, digging deeper into the core copyright issues. .. Payments come in many forms, from grants to new products such as the Facebook News tab and Google News Showcase. This allows the technology platform to pay for some content on condition.

Google and Facebook initially approached the Australian bill in the same way, threatening to suspend services in the country if it was passed. In a December blog post, Google called Australia’s proposal infeasible.

Share your thoughts

Do you think the relationship between Google and publishers is evenly balanced? Why or why not? Join the conversation below.

After that, their strategy diverged. Google has announced a three-year global contract with News Corp., the parent company of The Wall Street Journal. It’s worth tens of millions of dollars in licensing News Corporation content for a variety of products. Facebook, meanwhile, took advantage of the threat of removing news from the platform and did so on February 18.

William Easton, managing director of Facebook in Australia and New Zealand, said the company is Google because Google search crawls the web, while publishers are willing to post news on Facebook. Said that the relationship with the news is different.

Easton also said Facebook’s business profits from the news were minimal. News accounts for less than 4% of the content people see in news feeds, he said.

Immediately after Facebook acted, traffic to the Australian media plummeted. According to data from analytics firm Chartbeat, Australian publishers have found that traffic from international readers has dropped by about 20% after Facebook stopped sharing news articles for its users.

On Tuesday, Facebook agreed to restore news to the Australian platform following an agreement with the Australian Government that would give more time to reach a separate agreement with the publisher before the arbitration process began. did.

Write to Keach Hagey at [email protected]

Copyright 2020 Dow Jones & Company, Inc. all rights reserved. 87990cbe856818d5eddac44c7b1cdeb8

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