A 2020 survey revealed that 39% of Australians get at least some of their news from Facebook. Last month, that number abruptly dropped when Facebook made the unprecedented move to ban all Australian news content under threat from a new law requiring all tech platforms to fairly compensate news outlets for their content. While Facebook and Google initially protested, Google eventually agreed to the Australian government’s terms; Facebook, however, flexed its market power by turning off all Australian news content, disrupting a significant information delivery system for the continent.
Traffic to Australian news sites fell 13% within the country, and 30% with users overseas. With news outlets across the globe struggling financially, Facebook used its might to compel a government representing 25 million people to bend to its will. Only after winning substantial concessions did the company restore Australian news content to the platform. One of the changes Facebook negotiated is an exemption from the law for those who make a “significant contribution to the sustainability of the Australian news industry…,” a subjective definition that will be determined by the country’s treasury minister.
This episode is significant globally, and shows what Facebook is willing to do in a country that represents only .5% of its 2.7 billion active monthly users. Facebook has demonstrated that global dependence on the platform has given the company the power to decide whether or not to comply with the laws passed by any given country. The European Union has been considering similar legislation, but regulators may think twice after seeing what happened in Australia
The United States is not immune to Big Tech’s shakedowns. Last month, North Dakota state lawmakers tried to pass a bill aimed at cracking down on anti-competitive practices by Google and Apple in online app stores. The companies’ lobbyists rolled in and legislators soon agreed to water down the bill, with one North Dakota lawmaker glumly explaining, “Apple has deeper pockets than the state of North Dakota.”
Facebook and Apple are not alone in this practice. In 2018, Seattle lawmakers passed a progressive “head tax” that would have placed a $275 per employee tax on Seattle businesses making more than $20 million a year to fund more affordable housing and mitigate the city’s homelessness crisis. Amazon refused to engage in any discussion, and instead threatened to pull out of its lease and halt its Seattle expansion plans. Less than a month later, Seattle lawmakers voted to repeal the head tax.
Most recently, the Arizona House of Representatives narrowly passed HB 2005, requiring app stores to allow app makers to use their own payment processing software. Previous rules allowed Apple and Google to effectively enforce a tollbooth on mobile phone app use by charging app owners a 30% processing fee. For business owners, opting out of either app stores because of high processing fees would be deadly, so paying the exorbitant fees remained the only option. Functionally, Apple and Google maintain a monopoly on app stores.
Unsurprisingly, Apple and Google, which spend millions on lobbying the federal government every year, joined forces with local influencers ahead of the HB 2005 vote in an attempt to sway it in their favor. Although lawmakers ultimately voted to curb Apple and Google’s power, this is yet another instance in which big tech companies pull out all the stops to maximize profits. Legislation similar to that passed in Arizona is pending in other states including Georgia and Minnesota; we can expect to see Apple and Google run similar playbooks.
Clearly, the power dynamic is askew. Corporations like Facebook have little or no financial incentive to change the status quo, but governments, concerned with a host of compelling issues including disinformation, decline of media, and a lack of competition, do.
Until governments rein them in, Big Tech will continue to throw punches that achieve its preferred policy outcomes. Reducing the size and scale of these companies would not dilute their essential purposes, but instead would provide a level playing field where governments can no longer be effectively extorted by unaccountable, concentrated power.
The Tech Transparency Project is an information and research hub for journalists, academics, policymakers and members of the public interested in exploring the influence of the major technology platforms on politics, policy, and our lives. It is run by Campaign for Accountability, a nonprofit watchdog group focused on public accountability.