Issue 106

Facebook begs for regulation

Delivered on 29 March 2021 by Justin Pyvis. About a 4 min read.

Facebook, through prepared remarks delivered by Mark Zuckerberg, said it wants Section 230 – the part of the US Communications Decency Act 1996 that protects platforms from the content its users upload – to be changed:

Instead of automatically being granted immunity, platforms should have to show they have adequate systems in place for identifying unlawful content and removing it. A "third party" would decide what constitutes an adequate system and it would be "proportionate to platform size," suggesting smaller companies with less money would have easier standards to meet.

Facebook already employs around 30,000 'content reviewers', more than any other platform (Google/YouTube employ about 10,000, Twitter just 1,500). You can bet your bottom dollar that Facebook will already comply with whatever becomes the definition of an adequate system "proportionate to platform size".

There are many, many unanswered questions about how the thresholds would be determined, given Facebook ≠ Twitter ≠ YouTube ≠ some new potentially disruptive platform. Platforms come in many different shapes and sizes – will Facebook's proposed change also apply to eCommerce platforms such as Shopify? What about blogging platforms such as Wordpress? Or newsletter platforms such as Substack? It could even affect messaging platforms including encrypted, open source services such as Signal. What about the Fediverse, a federated, decentralised collection of publishing platforms, many of which are operated by a single person?

The only certainty is that amending Section 230 to include some kind of third party arbitrator mandating 'adequate systems', i.e. higher costs, to any 'platform' (however defined), would further entrench Facebook's status as the de facto social media platform.

But if you're after more regulation then never fear, for the UK's Competition & Markets Authority is on the job:

We've found that Facebook's completed purchase of Giphy raises competition concerns in relation to digital advertising and the supply of GIFs.

Is there nothing more important to be doing than writing papers on "competition concerns in relation to... the supply of GIFs". Really? REALLY? Tax dollars well spent. Sigh. 🤦‍♂️

Australia's 'news bargaining chip'

Alan Kohler laid out what has become of Australia's news media bargaining code, of which we have been highly critical (see here and here):

Mr Morrison and Mr Frydenberg were standing behind the publishers with bulging tattooed arms folded and cauliflower ears, while their cigar-smoking bosses said: “Nice businesses you’ve got there. Pity if something were to happen to them”.
But why are the victims of this shakedown – Google and Facebook – happy to be coughing up?

Because their core operations of Google search and Facebook news feed have been quarantined and their monopoly rents untouched.

Google is paying publishers to appear in “News Showcase”, which is a very hard-to-find separate website, and Facebook is paying for “Facebook News” which doesn’t exist, but when it does it will also be off to the side.

None of that is surprising. In economic terms, this is a textbook case of rent seeking, with the Australian government – remember, the Treasurer is best buds with Ryan Stokes, son of the billionaire boss of Seven West Media, which greatly benefited from this code – succumbing to a strong lobbying effort from a large, politically influential industry. But what was surprising was the frankness of Rod Sims, the Chair of the Australian Competition and Consumer Commission (ACCC):

"It doesn't matter a toss what the money is paid for", [said Sims].

At an on-the-record Q&A event in Melbourne last week, Mr Sims said: "For reasons of their own, Google and Facebook strongly don't want to pay for news on search and news feed. Fine. The news media companies don't care what the money is for. So I just think it's a perfect outcome."
"The problem we're addressing with the news media code is simply that we wanted to arrest the decline in money going to journalism. That's what the code is about – getting more money into journalism, and I personally think the money going into Seven and Nine, what's been publicly reported, which is north of $30 million, will make a big difference."

So the government worked with the regulator and media companies to concoct some fantastical justification for a 'link tax' for no other reason than to siphon off a bit of Google and Facebook's revenue to subsidise said media companies, presumably so the government could avoid the uncomfortable position of trying justifying the subsidy to the electorate.

It was a good old fashioned shake-down, nothing more, nothing less. The attitude of Rod Sims is particularly disturbing, as his comments make it appear as though his agency was completely captured by the legacy media companies (how does an arbitrarily determined – the power to 'designate' a company is at the Treasurer's discretion – heavily interventionist and intellectually dubious cross-subsidy "strengthen and supplement competitive market processes", exactly?).

Kohler finishes with:

The News Bargaining Code now sits on a shelf waiting for these three-year deals to come up for renewal, when presumably it will be taken down and waved around a bit to make sure the deals are, in fact, renewed.

In other words, Facebook and Google must now pay a ransom to a few billionaire owners of local media conglomerates every 3 years or get out of Australia. No doubt Australia's Treasurer, Josh Friedenberg, will have a cushy job waiting for him at Seven West Media when he's eventually bounced from Parliament. Well played.

Issue 106: Facebook begs for regulation was compiled by Justin Pyvis and delivered on 29 March 2021.