Out With the Old, In With The New(s)? Not for Facebook Australia

[robynm09]

This thread is for the general discussion of the Article Out With the Old, In With The New(s)? Not for Facebook Australia. Please add to the discussion here.

 

[Jacob Miller]

Hey all! I wanted to share some initial thoughts on this article and highlight a few potential discussion points for how this story and certain others could be relevant for applicants this cycle. These will be quite brief, so it would be great to see some more folks' opinions added!

Firstly, on the point of the specific piece of regulation in Australia, it is worthwhile pointing out that this is only likely to be of limited importance for London lawyers on a day-to-day basis. Only those working on certain tech-related matters with Australian-based elements will, for now, need to be particularly aware of the minutae of the particular piece of regulation.

A development in a similar space that London lawyers will need to remain cognisant of, however, is the introduction of Article 17 of the Copyright Directive, a piece of EU-level regulation. Article 17 imposes highly controversial obligations on Big Tech providers (AKA: internet intermediaries) like Facebook and Google by making them directly liable for copyright breaches of their users. This might seem a little confusing, so let's look at a brief example:

Joe Bloggs wants to watch the latest season of a TV show for free, instead of paying for a download or streaming service. He logs onto his computer and uses google to find 'downloaddodgymovies.com' and proceeds to download illegally-uploaded free versions of the TV show. In this scenario, the website has committed a breach of copyright by uploading these files, and Joe Bloggs has committed a breach of copyright by downloading it. Theoretically, the makers of the show (or those with a legal interest in it) could sue for these copyright breaches, but, in practice, this is next to impossible due to the nature of the internet and also the cost-benefit balance would render it completely impractical for filmmakers.
Article 17 would allow the show's makers etc to sue Google for permitting the website to be accessible, instead. This would evidently massively increase big tech's litigation exposure and trading risk, hence its massive unpopularity with legislatures.

More about the legal element of this Article can be found in this article. In terms of similar historic cases for copyright breaches of tech providers, the Napster case remains one of the seminal discussion points on this general issue.

The UK Government has already confirmed, however, that it will not directly copy this provision into UK law post-Brexit. Why is this? Well, there are several different elements to consider, but arguably the biggest is that the Government wants London (and the UK more generally) to become a hotspot for tech investment, and having a less onerous regulatory landscape is one way to achieve this.

Why, then, do London lawyers have to be aware of Article 17 any more than the Australian legislation discussed above? Well, that's quite simple: London lawyers will do far more work which has multijurisdictional elements concerning one of the EU 27 than it will Australia. To that end, they will still be expected to advise on matters of EU law for long onto the future. Most major firms already have specialist Brexit advisory teams in place, so the navigation of these regulatory nuances will be highly important for big tech clients receiving advice from London offices. Finally, the differences in the regulatory landscape will result in parallel lines of advice needing to be given for all major tech companies on an ongoing basis. This particular consideration will affect more than just Brexit specialist teams as the London legal market settles into post-Brexit advice-giving across the entire firm.

So while we've strayed somewhat off-topic from the original article, I do feel the Article 17 developments, in a very similar space to the Australian regulations, are of massive importance and are also representative of a paradigm shift towards the developed world beginning to increase the amount of regulation that major tech providers are subject to. What do you think?

 

[Jaysen]

Found this to be quite a shocking decision by Australia! Equally, Facebook's response by temporarily banning news links from Australian users shows how powerful it is as an organisation.

For us, it's worth keeping in mind one of the most relevant parties to the UK is the Competition and Markets Authority. It's a running theme that as time goes on, global regulators will continue to take more measures to regulate the largest tech companies in the world.

I wrote a post before about the other charges levied at big tech:

It's a fair point to make and one that has protected the big tech giants for some time now. US antitrust law has been shaped by a school of thought, which, put very simplistically, is that monopolies are okay as long as they don't abuse their powers. And when thinking about abusing their powers, we consider whether consumer welfare is being harmed, traditionally by monopolies raising their prices.

The issue is Facebook and Google are free to use and exceptionally convenient. Amazon also doesn’t use its monopoly power to raise prices; instead prices are often far lower than could be found anywhere else. If consumers welfare, in terms of price, isn’t being harmed by monopoly power, the question is should antitrust law be concerned?

A few issues though:

• The problem with some of the Big Tech platforms, notably Amazon and Google, is that they sell products against competitors on their platform, which simultaneously operates as a marketplace. In other words, they own the platform and set the rules. This gives them an unfair advantage and an ability to prioritise their own products (which Google has done previously by prioritising its own products in its search results).
• While platforms are 'free', consumers are often paying by giving up their data. The more data these companies gain, the more a competitive advantage they have, and the harder it is for new companies to enter the market.
• Google has the resources and position to pay companies to be the default search engine, preventing competitors from having a chance. If it's hard for new companies to enter the market and no-one can reasonably challenge Google, the argument is that consumers (and advertisers) lose out on innovation and choice.

With that in mind, there is a new wave of thinking around antitrust law that is starting to challenge the traditional view.

 

[Dheepa]

Hi guys, so to kick off my end of the discussion, I think it’ll be important to clarify what is and isn’t new about the Australian law mentioned in the article. This will help put into context why I think we’re likely to see a similar rollout of legislation across the EU and potentially the UK.

Background

Big Tech has shaken up the publishing and news industry in two ways:

• The free sharing of content and news across platforms has meant that many traditional news outlets no longer see a demand for their content.
• Even when news groups shifted to embrace online publishing, they struggled to generate ad revenue that would keep them going.

All this led to publishers lobbying (for the better part of the last decade) for rights to any of their content being linked to on Big Tech platforms to be better protected.

Striking a balance between news groups and Big Tech is something that governments have already tried and it’s not like Big Tech has been oblivious to the pressure. Art 17 of the EU Copyright Directive (as Jacob discussed) allowed publishers to start charging Big Tech for snippets of articles that are published on platforms. Later that year, Facebook announced that it would enter into commercial agreements with around 40 US publishers to publish their content in its “News” Tab.

The novel aspect of the Australian law is mainly the arbitration rule that it has introduced. The rule allows the government to appoint an independent arbitrator that can set a mandatory rate tech companies pay to publishers for their content, should prior negotiations between the two parties fail.

So if I were discussing this an interview, what kind of issues would I be looking into?

Role of Big Tech – is this really regulating/curbing their influence or increasing it?

In my opinion, this law has given platforms like Facebook more control over the information it chooses to let people see. An amendment to the initial law states that if BigTech have made a “significant contribution” to the news industry in Australia then less scrutiny will apply. This allows platforms to have free reign over which news outlets to enter into agreements with, what kind of perspectives are represented and which news groups get cut out from benefiting entirely. In light of all the problems Facebook has had with controlling misinformation, and hate speech, I personally think it’s going to create huge political issues (like we saw in the US this past summer) down the line.

Increasing pressure on BigTech

In response to the Australian law, Nick Clegg explained that he believed the law to be based on a fundamental misunderstanding of Facebook’s business model. He argued that Facebook barely generated revenue from news and that sharing profits from ad revenues didn’t make sense. Facebook’s news blackout (what the Australian PM sees as intimidation tactics) is only going to make life for all Big Tech companies harder. The 449-page report released by House of Representatives in October of last year summarised the concerns of US lawmakers after the Big Tech anti-trust hearings in the summer. Combined with the new Democratic government in the US, Facebook’s actions will likely increase momentum on antitrust regulations. Under the proposed Digital Services Act, the EU is already considering requiring Big Tech platforms to share data, so why not share ad revenues? Importantly, the EU is also considering following Australia’s lead on this point by including a similar model in the aforementioned Act. While I think it is worth questioning if those profits should be shared with news companies who arguably are just as much to blame for their own situation (due to their slow transition online), it is especially unlikely after the blackout that law makers will be sympathetic in any way to Big Tech.

Relevance to law firms

As Jacob has pointed out, the UK is keen to remain a hotspot for tech players and is really looking to differentiate itself from parts of the EU regime. In terms of broad trends to keep an eye out for, these are my thoughts:

1. The fact that Google’s deal with News Group was a global one that includes UK newspapers (specifically The Times and the Sun) leads me to believe that it is possible that local news outlets will lobby for similar legislation from the government to ensure that they are not cut out of this potentially business saving source of revenue as well. Google spent $22m on content from an average of 100 publishers in France while an agreement with one news group in Australia alone (Seven West Media) is said to be between $7.7m to $23m (FT). Now that Facebook has removed its ban on news content in Australia, it is likely that high market prices for news content will continue. With these deals now straying into far more profitable regions, this is potentially going to be a great source of revenue for law firms.

2. The UK is already implementing a special digital unit to tackle Big Tech competition issues. This is in addition to the already enforced digital services tax. It has also recently introduced the online harms bill that creates a new duty of care towards users. Big Tech platforms will also be required to create an appeal system for any content removed. Governments' around the world seem to be taking a piecemeal approach to Big Tech regulation in general. Everything we’ve seen so far has been reactionary and as more policies and regulations outside the traditional bounds of data privacy, tax and competition issues develop, it is highly likely that law firms will need to develop specialised tech regulation teams (similar to the recent increase in specialist environment and ESG teams) to deal with the myriad of legislation coming.

 

[Jacob Miller]

Hi guys, so to kick off my end of the discussion, I think it’ll be important to clarify what is and isn’t new about the Australian law mentioned in the article. This will help put into context why I think we’re likely to see a similar rollout of legislation across the EU and potentially the UK.

Background

Big Tech has shaken up the publishing and news industry in two ways:

• The free sharing of content and news across platforms has meant that many traditional news outlets no longer see a demand for their content.
• Even when news groups shifted to embrace online publishing, they struggled to generate ad revenue that would keep them going.

All this led to publishers lobbying (for the better part of the last decade) for their rights to any of their content being linked to on Big Tech platforms to be better protected.

Striking a balance between news groups and Big Tech is something that governments have already tried and it’s not like Big Tech has been oblivious to the pressure. Art 17 of the EU Copyright Directive (as Jacob discussed) allowed publishers to start charging Big Tech for snippets of articles that are published on platforms. Later that year, Facebook announced that it would enter into commercial agreements with around 40 US publishers to publish their content in its “News” Tab.

The novel aspect of the Australian law is mainly the arbitration rule that it has introduced. The rule allows the government to appoint an independent arbitrator that can set a rate that tech companies must pay to publishers for their content, should prior negotiations fail.

So if I were discussing this an interview, what kind of issues would I be looking into?

Role of Big Tech – is this really regulating/curbing their influence or increasing it?

All this law has done in my eyes is given platforms like Facebook more control over the information it chooses to let people see. An amendment to the initial law states that if BigTech have made a “significant contribution” to the news industry in Australia then less scrutiny will apply. This allows platforms to have free reign over which news outlets to enter into agreements with, what kind of perspectives are represented and which news groups get cut out from benefiting entirely. In light of all the problems Facebook has had with controlling misinformation, and hate speech, I personally think it’s going to create huge political issues (like we saw in the US this past summer) down the line.

Increasing pressure on BigTech

In response to the Australian law, Nick Clegg explained that he believed the law was based on a fundamental misunderstanding of Facebook’s business model. He argued that Facebook barely generated revenue from news and that sharing profits from ad revenues didn’t make sense. Facebook’s news blackout (what the Australian PM sees as intimidation tactics) is only going to make life for all Big Tech companies harder. The 449-page report released by House of Representatives in October of last year summarised the concerns of US lawmakers after the Big Tech anti-trust hearings in the summer. Combined with the new Democratic government in the US, Facebook’s actions will likely increase momentum on antitrust regulations. Under the proposed Digital Services Act, the EU is already considering requiring Big Tech platforms to share data, so why not share ad revenues? Importantly, the EU is already considering following Australia’s lead on this point by including a similar model in the aforementioned Act. While I think it is worth questioning if those profits should be shared with news companies who arguably are just as much to blame for their own situation (due to their slow transition online), it is especially unlikely that after the short blackout that law makers will be sympathetic in any way to Big Tech.

Relevance to law firms:

As Jacob has pointed out, the UK is keen to remain a hotspot for tech players and is really looking to differentiate itself from parts of the EU regime. However in terms of broad trends to keep an eye out for, these are my thoughts:

1. The fact that Google’s deal with News Group was a global one that includes UK newspapers (specifically The Times and the Sun) leads me to believe that it is possible that local news outlets will lobby for similar legislation from the government to ensure that they are not cut out of this business saving source of revenue as well. Google spent $22m on content from an average of 100 publishers in France while an agreement with one news group in Australia alone (Seven West Media) is said to be between $7.7m to $23m (FT). Now that Facebook has removed its ban on news content in Australia, it is likely that high market prices for news content will continue. With these deals now straying into far more profitable regions for law firms, this is going to be a great source of revenue for law firms.

2. The UK is already implementing a special digital unit to tackle Big Tech competition issues. This is in addition to the already enforced digital services tax. It has also recently introduced the online harms bill that creates a new duty of care on users and Big Tech platforms will also be required to create an appeal system for any content removed. Government’s around the world seem to be taking a piecemeal approach to Big Tech regulation in general. Everything we’ve seen so far has been reactionary and as more policies and regulations outside the traditional bounds of data privacy, tax and competition issues develop, it is highly likely that law firms will need to develop specialised tech regulation teams (similar to the recent increase in specialist environment and ESG teams) to deal with the myriad of legislation coming.

Really interesting thoughts Dheepa!

I find the general discussion of "privatised censorship" very interesting. Social media platforms (as long as I've used them anyway, so about a decade now?) have always had controls in place, to a greater or lesser degree, to have certain hateful content removed. This is, of course, absolutely necessary and should absolutely be made a priority so that everyone can feel safe when using these platforms.

I would tend to say, though, that in the last couple of years we've begun to see a real blurring of lines and a definite agenda appear to what Big Tech will and won't take it upon themselves to censor. I'll also say from the outset that I'm not attaching a moral value/ this-is-right-and-this-is-wrong type judgement either way. I noticed this first a few years ago now when I used to do re-enactment as a hobby (nerdy, I know). Facebook started clamping down massively on the selling of certain re-enactment equipment (i.e., anything that looked vaguely militaristic) - it was also around the same time that Apple replaced the 'gun' emoji with a water pistol one. While this is quite a particular couple of examples, and I can also understand the reasons that FB etc started interrupting these sales posts (especially in the wake of a few terrible shootings in the States), it did display a definite political agenda which has, arguably, been extended in the last couple of years into politics more generally.

Whether you agree or disagree with either the content which Big Tech is censoring, or whether they should be censoring it in the first place, the on-going discussion, in my opinion, has to surround whether private organisations should be allowed to essentially be the Alamo for what end users are and aren't allowed to see. Relating this to what Jaysen mentioned about competition issues, I think it will be extremely interesting in the months and years to come whether we will begin to see a string of competition-related claims brought against Big Tech providers for news-sharing/ endorsing practices.

From a legal practicality standpoint, I am personally concerned about the peicemeal - even arbitrary - approach that governments and supranational states (EU) are taking to Big Tech regulation. In some ways, it's probably the single biggest example of traditional, jurisdiction-by-jurisdiction law as a mechanism for regulating behaviour being at odds with the modern world: social media is built on the fundamental idea of connecting the world, but countries with different laws imposing different obligations on providers is the antithesis of this! I would be surprised if a multinational/ worldwide convention for big tech regulation became the focal point of discussion in the next 5-10 years - though this would evidently create another new layer of complexity in its creation and enforcement!

 

[Matthew U]

Perhaps interesting to compare what is going on in Australia with the legal battle between Alliance de la Presse d'Information Générale ('APIG') and Google in France last year.* France was the first Member State to implement Article 15 of the EU Copyright Directive, which gives press publishers the right to a fair share of revenues derived from the online use of their content. Rather than pay French press organisations for using their content in its search results, Google stated that it would no longer use extracts of articles, images, etc at all. That then created an awkward dilemma for the publishers: allow Google to use their content for free or lose a substantial amount of web traffic.

The Autorité de la Concurrence viewed this as imposing unfair trading conditions and therefore an abuse of dominant position; in April 2020, it ordered Google to negotiate in good faith with French press publishers for the use of their content. The Cour d'appel de Paris upheld that decision in October 2020. Although Google has reached an agreement with APIG worth $22 million per year (as @Dheepa mentioned above), the Autorité is concerned that Google has failed to properly negotiate with other French press organisations, such as news agency Agence France-Presse. Looks like Google isn't off the hook yet...

*It seems as though APIG was represented by Latham & Watkins, while Google was represented by Allen & Overy.

 

[Dheepa]

In some ways, it's probably the single biggest example of traditional, jurisdiction-by-jurisdiction law as a mechanism for regulating behaviour being at odds with the modern world: social media is built on the fundamental idea of connecting the world, but countries with different laws imposing different obligations on providers is the antithesis of this!

Really like how you've phrased this Jacob - so very true!

On whether or not private companies should be allowed to dictate what end users see, if it isn't the tech giants themselves doing it, it's the companies they are outsourcing fact checking to. Personally I'm not sure there's a clear cut way out of this one. Interestingly enough, the conversation this summer in the US was about whether Facebook was doing enough to curb misinformation on political ads (so whether they were regulating harmful/potentially fake free speech enough). But fast forward to now, when Twitter and Facebook has permanently banned Trump's account, it seems like people are more outraged that freedom of speech can be curbed to such an extent. A point I mentioned in my original post about the UK requiring Big Tech platforms to create an appeal system for any content removed seems to try to find a middle ground on this.

I agree that regulating Big Tech through a collective supranational standpoint is the more effective way forward. The fact of the matter is, every time Big Tech platforms do something shocking - like the blackout in Australia, it reminds governments that these platforms seem to think they themselves are a iconoclastic supranational authority. I think that if governments are serious about regulating Big Tech, it needs to be through some form of collective policy/code of conduct/law. This is also easier said than done. The OECD have been recommending an overhaul of international taxation (beyond just a digital tax) particularly to deal with tech companies and their buusiness models for years now with no success. Very unlikely anything about the piecemeal approach will change. What you mentioned in your original post about parallel lines of regulation developing is likely to be the case.

Perhaps interesting to compare what is going on in Australia with the legal battle between Alliance de la Presse d'Information Générale ('APIG') and Google in France last year.* France was the first Member State to implement Article 15 of the EU Copyright Directive, which gives press publishers the right to a fair share of revenues derived from the online use of their content. Rather than pay French press organisations for using their content in its search results, Google stated that it would no longer use extracts of articles, images, etc at all. That then created an awkward dilemma for the publishers: allow Google to use their content for free or lose a substantial amount of web traffic.

The Autorité de la Concurrence viewed this as imposing unfair trading conditions and therefore an abuse of dominant position; in April 2020, it ordered Google to negotiate in good faith with French press publishers for the use of their content. The Cour d'appel de Paris upheld that decision in October 2020. Although Google has reached an agreement with APIG worth $22 million per year (as @Dheepa mentioned above), the Autorité is concerned that Google has failed to properly negotiate with other French press organisations, such as news agency Agence France-Presse. Looks like Google isn't off the hook yet...

*It seems as though APIG was represented by Latham & Watkins, while Google was represented by Allen & Overy.

I think this is exactly why the EU is considering taking the Australian approach with the arbitrator that can set rates/prices. Circumvents bargaining power issues such as the one in this case entirely.

 

[TiredPG]

I think it is worth questioning if those profits should be shared with news companies who arguably are just as much to blame for their own situation (due to their slow transition online)

I think this is especially important in the context of Facebook. A vast majority of media/news publishers were encouraged, and even payed, by Facebook to begin producing quick, shareable video content as that was what was effective on their platform. Then Facebook changed their algorithm to take users' feeds away from videos and towards even more hyper-personalised feeds - that is immense power. Clegg argues that a tiny proportion of Facebook's revenue comes from news, but the vast majority of Facebook users use it for news. I think Facebook may have overplayed their hand here, and Australia just happened to blink first/be the weaker party. If those users are using Facebook for news and are at the same generating ad revenue for Facebook via other interactions, I think profit sharing is a not unimportant conversation to have. Twitter just announced they're looking at some sort of subscription-type/Patreon model for users which could arguably deal with this type of legislation quite easily - I follow loads of journalists on Twitter, would happily pay for some of their content as it would be built in the platform itself.

I think that the Australian requirement of notification of algorithmic changes is in response to situations such as that, which obviously affect small media publishers more so than big conglomerates. That is another conversation though, and one I think that Australia fails. You're right that 'significant contribution' could create problems down the line, which I think will negatively affect smaller publishers - why should a company have to make a small deal with a small publisher when it has already made a 'significant contribution' worth billions to the state's publishing industry? The whole point of this law was to protect the industry as a whole and all it really does now is create opportunity for large publishers.

Whether you agree or disagree with either the content which Big Tech is censoring, or whether they should be censoring it in the first place, the on-going discussion, in my opinion, has to surround whether private organisations should be allowed to essentially be the Alamo for what end users are and aren't allowed to see.

The US Supreme Court recently noted that social media is essentially 'the modern public square', which obviously hints at how they may deal with free speech claims against private actors in the future. There was a case in the 1980s where they held that a private shopping mall was a public forum, under California's constitution, in order for the plaintiff-activists to distribute leaflets. As a modern public square, to me, they're more akin to utility providers - they are necessary for democracy and life (especially at the minute) - and should be regulated as such. The Online Harms Bill duty of care goes some way towards that but we'll see how that plays out.

 

[Dheepa]

Twitter just announced they're looking at some sort of subscription-type/Patreon model for users which could arguably deal with this type of legislation quite easily - I follow loads of journalists on Twitter, would happily pay for some of their content as it would be built in the platform itself.

I think the issue with subscription like model is that it places even more bargaining power in the hands of the Big Tech platforms. Twitter dictates how much revenue gets shared, dictates any other terms and conditions with journalists and all the while still get to maintain that they are helping the news/journalism industry. Seems to me like it would be more a workaround rather than compliance with the legislation and considering the extent of the crack down on Big Tech, I'm not sure governments would let this one go very easily.

Completely agree that the Australian legislation fails smaller news outlets though. Not to be cynical but even with the bigger news groups, no telling how much of the additional revenue will actually go into producing more independent journalism and hiring more journalists vs just padding shareholder/executive pockets.