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Facebook CEO Mark Zuckerberg.

Caught, as we are, between an old media dying and a new trying to be born, we should expect plenty more strange phenomena like yesterday’s announcement by Facebook that it was striking news from its platforms in Australian — matched with a strutting “we won’t be responding to coercion” response from Treasurer Josh Frydenberg.

Ignore the public pronouncements from all sides and the spluttering outrage about Australia being picked on. Yesterday’s call by Facebook will have thrown the growing push for regulation of the platforms into a holding pattern. No one can be certain about what happens next.

Moreover, it throws up in the lights the biggest of questions about the giant platforms: can they be regulated? Or, is the only solution to break them up?(Author and internet guru Cory Doctorow argues the latter in How to Destroy Surveillance Capitalism, released last week.)

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Here’s what you need to know as we all watch what happens next with the proposed mandatory code between the digital platforms and news companies.

Who’s right? Who’s wrong?

It’s a war between big tech and old media over money and power. No one is right, although both are marshalling deeply moral arguments (free press! Open internet! Fake news! Journalists jobs!) to support their case.

Both are using their old tools: old media pushing its case in mastheads, Google and Facebook using their platforms; old media lobbying regulators, big tech using its global algorithms.

Why should we care?

It’s like the old joke about a lost driver seeking directions: if you wanted to regulate big tech, you wouldn’t be starting from here. You wouldn’t start by centering the interests of old media.

There are simpler models to get money. Former ACCC chair Allan Fels floated one in today’s AFR: a tax on all digital transactions. There are better ways to support media through the digital transition than forcing Big Tech to prop up old models. Making old media dependent on payments from the platforms could accelerate print closures.

The cost in the government’s current plan is the lost opportunity of better regulation.

Who needs whom?

Here’s the nub of the problem: each side believes deeply that the other is a parasite.

Old media is convinced that the platforms need their content to draw users. After all, why else would you go to Google or Facebook? Big Tech says it funnels users to media companies which can make money through advertising or by selling subscriptions — Facebook claims that’s worth $200 million to Australia’s publishers in the first five months of this year.

Facebook thinks that a news-free news feed will be just as — maybe more — profitable. It’s attempting to pivot to transactions through, for example, Facebook Shops launched this year.

Or take millennials’ social media of choice Instagram (owned by Facebook) where the response to yesterday would have been: “Wait… Instagram has news?”

Instagram brings in about a third of Facebook’s revenues. It’s trickier for Google. When you organise the open internet, it’s hard to exclude news. The draft legislation has been drawn to make it all but impossible.

News snippets are one of the tools they use to keep people on their site, although they don’t sell ads on news searches which they say are only a couple of percent of all searches.

Why is the government supporting old media?

Have you met our government?

OK, as Frydenberg said yesterday: “We want a sustainable media environment.” (That’ll be news to the ABC.) The government has been convinced by News Corp that the key to sustainability is to go where the money is: shake down big tech. I mean… errr… “seek payment for original journalistic content”.

So what happens now?

Initially, nothing. Facebook’s boycott starts once the proposed mandatory code goes through parliament, (expected in December). In the meantime, Facebook’s programmers will be working out how to make good on their threat. The ACCC will be responding to stake-holder submissions on the draft which closed last Friday.

Facebook have already alerted users that their terms and conditions will change on October 1: “We also can remove or restrict access to your content, services or information if we determine that doing so is reasonably necessary to avoid or mitigate adverse legal or regulatory impacts to Facebook.”

The big focus remains where it’s always been: in the US. That’s why Facebook put so much effort into alerting US media to yesterday’s announcement.

There, big tech faces a more existential question: will a Democrat administration be elected in November? And, if so, will it follow through on its rhetoric to move beyond regulation to break up big tech?

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Australia has spoken. We want more from the people in power and deserve a media that keeps them on their toes. And thank you, because it’s been made abundantly clear that at Crikey we’re on the right track.

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Peter Fray
Peter Fray
Editor-in-chief
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