Skip to main content
Welcome to
super saver spring
offer ends april 20
save over $140
Sale ends in
$0.99
per week for 24 weeks
Welcome to
super saver spring
$0.99
per week for 24 weeks
save over $140
// //

Australian Treasurer Josh Frydenberg was as shocked as anyone when he learned that Facebook Inc. had blocked news content from its website in his country at 5:30 a.m. on Thursday.

He had been in direct contact with Facebook CEO Mark Zuckerberg and, he thought, was making progress toward an accommodation over proposed rules that would force the tech titan to pay publishers to link to their news.

Yet this was a shock four years in the making – a potential global turning point for regulation of big social media companies that began with Australia’s complex, provincial politics in 2017.

Story continues below advertisement

The fight between the world’s largest social media company and the 13th-largest economy is the result of a bill, scheduled for debate next week in Australia’s Senate, that was foisted on Frydenberg and his boss at the time.

The then-Prime minister Malcolm Turnbull wanted to relax media merger-and-acquisition laws to let Australian news outlets like Rupert Murdoch’s News Corp scale up and survive a revenue crash as advertisers took their business to internet heavyweights like Facebook and Alphabet Inc.’s Google.

Turnbull’s conservative government needed support from outspoken independent Nick Xenophon, who held the balance of power in the Senate. He made the government promise an inquiry into “internet giants such as Google and Facebook.”

This week’s blow-up “is something I’d be very happy to take responsibility for,” said Xenophon, now a private sector lawyer.

“If there is a viable rival to Facebook in years to come, its genesis will be the event that occurred in Australia on the 18th of February,” he told Reuters. “Facebook has exposed the level of its market power. It’s behaving like a monopoly.”

Turnbull’s treasurer, Scott Morrison, honoured the Xenophon deal by tasking the antitrust regulator with examining Google and Facebook to “fully understand their influence in Australia.”

The Australian Competition and Consumer Commission’s (ACCC) inquiry ground on, Morrison became prime minister and Frydenberg became his treasurer. Meanwhile, Facebook’s image in Australia as a harmless online gathering spot was marred by revelations it sold third-party marketers the personal data of millions of people to target in the 2016 U.S. election.

Story continues below advertisement

CONCILIATION VS BOMBSHELL

When the ACCC delivered its report in mid-2019, Frydenberg called out Facebook’s $5-billion fine for the election-related privacy breaches, saying it and Google “need to be held to account and their activities need to be more transparent.”

He left it to Australian media and Big Tech to thrash out a framework to negotiate the price of links that draw clicks – and advertising dollars – to their platforms. When that failed the ACCC stepped in, saying it would appoint an arbitrator to set fees in the event of stalemate, a model suggested by News Corp.

The tech titans responded last September with threats to cancel their services in the country if the bargaining code took effect. They repeated the threats in January.

With parliamentary votes looming, Prime Minister Morrison revealed that Microsoft Corp CEO Satya Nadella had offered its search engine Bing if Google’s disappeared. Frydenberg said he was talking with Zuckerberg.

As the bill moved through and passed the lower house, Google struck deals with free-to-air network Seven West Media Ltd and rival Nine Entertainment Co Holdings, which also owns the Sydney Morning Herald and Melbourne’s The Age newspapers.

“None of these deals would be happening if we didn’t have the legislation before the parliament,” Frydenberg said on Wednesday. Then, in the early hours of Thursday morning Canberra time, News Corp announced a global deal with Google.

Story continues below advertisement

News Corp. and Seven thanked Morrison, Frydenberg and ACCC commissioner Rod Sims for forcing the issue. Murdoch’s company said Xenophon was “instrumental in having Australia adopt a world first, highly innovative policy approach.”

As Google turned conciliatory and the bill looked set to become law next week, it was Facebook’s turn.

Frydenberg was dressed for tennis on Thursday morning when he learned Facebook had taken a dramatically different approach – pulling the plug on Australia’s news sites and, inadvertently, on many government disaster-information pages and other public-service outlets.

Facebook said on Thursday that because the bill “does not provide clear guidance on the definition of news content, we have taken a broad definition in order to respect the law as drafted.”

Frydenberg cancelled his tennis game and arranged another call with Zuckerberg, and another the next day.

“We certainly weren’t given any notice by Facebook,” the treasurer told reporters. But he said his half-hour call was “constructive.”

Story continues below advertisement

“We’ll hear from them in the coming days and we’ll see if we can find a pathway forward.”

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies