Internet’s founder, US officials slap down News and Nine’s crusade on Google

by | Jan 22, 2021 | Business

Is Government intervention viable, or just a favour for Rupert Murdoch’s News Corp and Peter Costello’s Nine Entertainment? Opposition is growing both locally and globally to media laws introduced by the Coalition Government requiring tech giants Google and Facebook to pay for displaying news content. Kim Wingerei delves into the numbers.

Not only is there no business case for the changes – apart from a gift to decaying mainstream media businesses – but US trade officials have slammed the bargaining code as possibly contrary to the US Australian Free Trade Agreement, and the man who started it all, claims the regulation is contrary to the very idea of the Internet.

Sir Tim Berners-Lee, the computer scientist who in 1989 invented the world wide web is undoubtedly a dispassionate voice in the debate, given he could have made a squillion from his work but instead gave it away. As Sir Tim stated:

“Had the technology been proprietary, and in my total control, it would probably not have taken off. You can’t propose that something be a universal space and at the same time keep control of it.”

In a submission to the Senate inquiry on the News Media and Digital Platforms Mandatory Bargaining Code bill, Berners-Lee said the ability of web users to link to other sites was “fundamental to the web” and that the the proposed media code could break it because they risked setting a precedent that “could make the web unworkable around the world”.

News Corp Australia and Nine Media have been pushing hard for the proposed laws, and much of the the mainstream media are right behind it.

Google and Facebook draft laws – yes, a tawdry government mates deal for News and Nine

Google, which dominates search, and Facebook (not including Instagram and Whatsapp) represent 20% of all internet traffic.

But contrary to the arguments of the legacy media – principally Rupert Murdoch’s The Australian and Nine’s Australian Financial Review – Google argues that the mainstream media benefit at least as much from Google as the other way around.

For example, last month (December 2020*), 18.5% of visits to news.com.au came from Google. In other words, Google search drives one in five visitors to news.com.au by people clicking on links in Google search results. Yet News is claiming that Google should pay for using News’ content. As was pointed out by respondents to the ACCC recommendations, News and others can easily remove its content from Google (a single line of code takes care of it) but of course, they won’t.

Google estimates that advertising revenue directly attributable to news content in Australia is $10 million. Without any documentation, it is hard to verify that figure. Regardless, the true figure is likely to be well below the $600 million claimed by Nine chairman Peter Costello and others. Especially given that Google’s total revenue in Australia is $4.8 billion (in 2019) and Google News represents just 0.5% of Google’s total monthly visitors (December 2020*) – or $24 million in revenue terms.

Granted, that is a simplistic calculation, but although Google does make a lot of money from advertising – money that was once directed to the mainstream media – it is not because Google uses news content to generate it.

Facebook (and social media in general) is a different story, but not necessarily a more compelling one for the agitators in the mainstream media. Of news.com.au’s traffic in December 2020, 7.5% came via social media* – two-thirds of that from Facebook.

The only content, including news content, that appears on Facebook’s platform is that shared by a user. The media platforms themselves also share articles, but to a limited degree.

There is virtually no directly attributable link between news-style content and Facebook’s advertising revenue. Moreover, Facebook reported $674 million of revenue in Australia in 2019, a figure that may well be higher thanks to – ahem – international tax accounting measures. Nevertheless, the old, failing mainstream media companies are clutching at revenue straws.

The power and reach of Google and Facebook is undoubtedly of great concern, and the tech giants have been heavily criticised for overreach recently when Twitter and Facebook banned President Trump from their platforms.

In Australia, Google has played its own power games by experimenting with excluding mainstream media content from its search results, drawing widespread opprobrium.

However, trying to force the tech giants to share their revenue with the old and declining media companies is both a furphy and irrelevant.

The ACCC inquiry that led to the proposed law was designed to provide support for the contention that the online platforms have an unfair advantage over old media. But what the inquiry (and its instigators News Limited and Nine Media) failed to mention was that the advantages were achieved because other companies grabbed the online opportunities of the Internet, while the erstwhile media giants sat on their hands.

The Internet has not only changed how we consume news, but also how (and how much) we pay for it, how it is distributed and the cost to produce and publish. The old model of advertising and subscription is no longer working. And as Noam Chomsky and Edward Herman explained in their book “Manufacturing Consent” in 1988, it was always a flawed model where advertisers and other vested interests directly and indirectly influence what gets published and how.

News Limited and Nine Media claim they are fighting for quality independent journalism. But News Limited, in particular has descended into unabashed partisanship – effectively a propaganda arm of the LNP Government; while the old Fairfax mastheads are increasingly focused on infotainment content.

The flag bearers of independent journalism in Australia are now the ABC, although some critics would argue it is increasingly muzzled as a result of a reliance on Government for funding, The Guardian and a growing plethora of nimble, diverse and competent independents – all focused on online distribution.

Citizenship journalism and commentary is also growing world-wide on platforms like Medium, Substack and many more, with podcasting the fastest growing media channel of all, even faster than YouTube. All cater to a younger audience that never reads traditional newspapers or watches the 6pm news.

The power and reach of Google and Facebook is of great concern, and the Government in general, and the ACCC in particular, should be looking at how to regulate and curb that power; also, how to tax them properly. Instead they are running not just a fool’s errand, but doing nothing to protect the consumers of media, nor strengthening competition, which should be their areas of focus.

* – according to SimilarWeb, a global web reporting service

ABOUT THE AUTHOR

Kim Wingerei

Kim Wingerei

Kim Wingerei is a businessman turned writer and commentator. He is passionate about free speech, human rights, democracy and the politics of change. Originally from Norway, Kim has lived in Australia for 30 years. Author of ‘Why Democracy is Broken – A Blueprint for Change’. 

13 Comments

  1. Avatar

    Spot on, if anyone should be paid its:

    1) google for referring a reader to them
    2) the reader for having to wade through all the woke, leftist, progressive, greenie crap Aussie newspapers print these days!

    newspapers are already paywalled too!

    Greedy old school media. Much like how Rupert (via his puppet Turnbull) stitched us up with a 3rd world NBN to try and save his foxtel.

  2. Avatar

    Google changed the world – every day I google (now a verb) words I’ve never heard of and can find complete scientific answers in a fraction of a second – totally amazing when my uni studies involved long hours and late nights in libraries poring through stacks of heavy tomes after digging through card indexes to find anything/something, and often not finding what I was really looking for

    Fake Rupee’s Newcorpse/FOX changed the world – I saw they promote themselves as a brand to appeal to right-wing conservatives – pity about the storming of the US Capitol where 5 people were killed – but hey – that was just fake news, wasn’t it … ?

    unh – I love that FOX is now playing catch up – apparently losing market share to new rabid extremist websites – so there’s a lot of musical chairs trying to stop the money hemorrage from FOX FAKE NEWS – looks like Lachlan needs a talkin’ to from paw …

  3. Avatar

    Isn’t it called “Manufacturing Consent”

    • Elizabeth Minter

      Quite, thanks! I have a copy on my bookshelf but didn’t pick that up. Fixed now.

    • Avatar

      You’re right, that was indeed the title of the book, thanks.

    • Avatar

      Also similar by documentary maker Adam Curtis, who was influenced by Chomsky, had one of four episodes in ‘The Century of the Self’ (looking into architecture of corporate/political methods of influence in the US/UK) named ‘Engineering Consent’.

  4. Avatar

    It seems to me there are two vital questions that must be answered on this subject.

    1. Who supplies the content (stories/articles/investigations) I believe this has previously been journalists whose payment must be considered in this discussion, and whose futures must be insured. Without quality unbiased (as far as the law allows) content IMO we are discussing who delivers content not who produces it.

    2. Government Regulation of both the power to reach an audience and the quality of news content is vital. For decades media delivery has been controlled by regulation, particularly with Television and Radio licences. Along with this there has been regulation of content and mechanisms for complaint and punishment if regulations on truthfulness and bias are not met.

    Most of the decisions I make are based on the information I am provided by the media which today also includes huge social media companies who seem unregulated in the way ‘old media’ is.

    To me leaving money aside for a moment, it is the responsibility of Government to ensure citizens are informed of the news in a factual, honest, unbiased manner. This question does not appear to be at the top of the discussion list. In my opinion it should be.

    Social media has provided an opportunity for many, almost everybody, to provide and opinions and commentary to a wide audience. This IMO makes the need for truthful, unbiased factual reporting more important than ever.

    In summary I am less concerned with who provides the news and more concerned with the quality of the news that is provided.

  5. Avatar

    I’d say the real issue here is not necessarily one pertaining to Google itself, but us, the consumer. It would be less concerning if this media code was solely focused on financial matters, but really what is happening is that the ‘old media’ (excluding the ABC) are desperately attempting to regain their precious monopoly on truth. If this code were to pass it wouldn’t just give these antiquated, senile corporations financial authority over independent outlets, but they would also gain key insight into certain algorithms, which would thus increase the online viewership, and filter of information through the internet. Simply, we can wave goodbye to the independent bastions of truth, and revive Chomsky’s propaganda model in its most dangerous form.

    Watch these for more info…
    https://www.youtube.com/watch?v=zj2r948rUkQ&t=8s
    https://www.youtube.com/watch?v=XiFTT_QgqIc

  6. Avatar

    It is not an easy issue but the author forgot to mention that the US gives them -protection from defamation claims . This is a very bizarre situation, It will be interesting to see if Biden will addresx this .

  7. Avatar

    If Google must now start paying media companies for supplying their content in its search results, then it will simply stop supplying their content. There is no law that says that Google must buy the right to supply links to content if it doesn’t want to.

    So how would this help news organisations who get their income from traffic to their sites – traffic that would surely fall if Google stopped linking to them

  8. Avatar

    Murdoch has been a cancerous influence on the media of the English-speaking world, for sure. And if there’s anyone who you DON’T want to accidentally throw your support behind, it’s him. On the other hand, consider who’s been behind these things over the past 10 years:

    i. Accepting advertising in the lead-up to the US election which was obviously false and coming from nefarious actors (who in some cases reportedly paid for the ads in rubles)

    ii. Sending contractors out into the streets in US cities to take photos of black and Asian people, telling them that they were running a ‘selfie competition’, when in fact what they were doing was collecting non-white faces to feed into their facial recognition AI

    iii. Owning and running the world’s largest right-wing extremist incubator website (YouTube), which it promises to clean up after every White Supremacist bloodbath but never really does, beyond throwing off a few big names like Alex Jones.

    iv. Making user data available to third party organisations, who use it to do things like focus-grouping divisive campaign slogans (“build that wall” and “lock her up” being two famous examples).

    v. Negotiating with the Chinese govt about the possibility of creating an entire parallel internet that presents the world in ways that are to Beijing’s liking (a process that may be continuing now, though they said they’d stopped doing this after their own employees complained)

    vi. Using their media platform to conduct an experiment on 700,000 randomly chosen consumers, in which it tried to make half of those consumers happier while deliberately depressing the others, without concern for the long-term mental health effects and without even informing participants

    vii. Refusing over and over again to put sufficient moderators in new countries where it opens its business, even when they’re getting regular and reliable warnings that users in those countries are using their platform to incite hate crimes and/or genocide

    viii. Deciding to put all its chips on exactly the kind of AI tech that Stephen Hawking warned us against before he died, and ignoring a stream of whistleblowers who (after leaving the company) express horror about the cavalier ways in which that technology is being developed and handled

    ix. Looking at what Amazon has done to the high street and thinking to itself “You know, we could do that with EVERY industry that turns a profit. Let’s go after online flight comparison websites this month, and podcasts next month.”

    x. Attempting to take control over mobile credit markets in developing nations – markets which have supported hundreds of innovative telco start-ups in those nations, as well as countless thousands of people who couldn’t previously participate in most forms of economic activity because they were unbanked, and who have used these services to lift themselves out of poverty.

    The answers are as follows:

    i. Facebook
    ii. Google
    iii. Google
    iv. Facebook
    v. Google
    vi. Facebook
    vii. Facebook
    viii, Google
    ix. Google
    x. Facebook (and Apple)

    The point here is this: in your article, you use terms like “old media” and “legacy media” which have a negative comparative connotation. It’s like saying that QANTAS has a “legacy fleet” of old 747s, implying that it’s time to replace them with newer, better and more reliable planes. But in fact, even if we consider the WORST kind of journalism, replacing it with Google and Facebook is replacing something deeply flawed with something a hundred times worse. So I think, if anything, the language in the article should be skewed the other way, using words that cast unflattering connotations on the tech companies.

    On top of that, the article makes several claims that I think are pretty questionable. Like this one: “The only content, including news content, that appears on Facebook’s platform is that shared by a user.” Sorry to be so blunt, but that strikes me as very misleading, and to be honest, it sounds like it’s coming direct from Facebook itself. I mean sure, if I see an invitation to play an online game in my news feed, it’s a “user” who’s put it here. But c’mon … that user is paying Facebook for the privilege. In other words, they’re an advertiser.

    I’d question this claim too: “Google News represents just 0.5% of Google’s total monthly visitors”. I’m sure it’s technically true, but it’s also deceptive, because it’s predicated on the idea that if you want to get news via Google, you have to specifically go to their News page. That’s obviously not the case – we all get news from Google on a regular basis by typing whatever we want to know into their search window. So this whole 0.5% number is a cheeky bit of sleight-of-hand on Google’s part.

    This is a tactic they use a lot: when asked about a dodgy or controversial aspect of what they do, they often say that it only represents a small part of their business. A great example is when Susan Wojcicki, CEO of YouTube, said the same thing about political content on their platform, during an interview with the NY Times journalist Kevin Roos last year.

    In terms of the actual number of user accounts or channels, it might be technically true that only a small % of YouTube creators are explicitly political. But it’s a very dishonest way to characterise their business, because we know how the business really works. The recommendation engines throw up political content, because it distresses and outrages people, which “drives engagement”. And that’s what YouTube wants. So then they follow up the first video with an invitation to go a little further down the media rabbit hole, then a bit further and a bit further, until a good portion of their users are inhabiting fantasy worlds where you can believe magical things. If you want, you can believe that the real Joe Biden never got inaugurated because he disappeared seven years ago on MH370, and so the person in the White House is a stand-in lookalike, and so the US no longer has a legitimate government, and so … and so … and so … and after January 6th this year, we all know where the “and so” can lead.

    THIS is the kind of effect that Google and Facebook have on journalism. And this is why, if we don’t want to make them pay for news, then we should just prohibit them from hosting news on their sites altogether. That would thwart the likes of Murdoch, but it would also do a huge service to the profession of journalism and to news consumers.

    Mr, Wingerei, there are a bunch of other things in this article that I’d like to comment on, but I really have to stop writing now! And although I disagree with you pretty strongly here, I really appreciate your in-depth and thoughtful coverage. So thank you for writing the article; it broadened my knowledge of the issue and gave me food for thought 🙂

    • Avatar

      Wow! Your reply was better than the article itself lol. Thanks for the read.

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