The claim that treasurer Josh Frydenberg conceded too much in his round of head-to-heads with Mark Zuckerberg completely misses the point, says Terry McCrann.
The claim that treasurer Josh Frydenberg conceded too much in his round of head-to-heads with Mark Zuckerberg completely misses the point, says Terry McCrann.

Terry McCrann: 'Why Facebook panicked and lost'

At the end of the - what was almost literally one - day, Facebook blinked.

The claim that treasurer Josh Frydenberg conceded too much in his round of head-to-heads with Facebook boss Mark Zuckerberg completely misses the point. The big, absolutely fundamental point.

This is, that in practical terms - at the cutting edge where old media and new tech are engaging in their arm-wrestles - Frydenberg conceded nothing.

As I explained back in December, when Frydenberg and communications minister Paul Fletcher unveiled their 'code'- designed to get social media and other tech platforms to pay for content, principally from media groups - it was all about 'encouraging' the two sides to do deals in their shared best interests.

It's best understood the way sports rights operate. TV and other media need the sports to get eyeballs, and dollars; the sports need media broadcasts to get eyeballs, and dollars. It's all in the deal and the arm-wrestle to get to it.

The platforms like Google and Facebook need media content -albeit, maybe not so much as the networks need AFL or Big Bash - media/sports need the exposure on the platforms/TV.

Now you can argue over who gets the greater benefit from the media-tech marriage, just as you can do the same with sports rights; but it's irrelevant to the code.

It would be very relevant if the code tried to lay down specific rules, measures and payments. But it did not then and it does not now.

Again, as I wrote in December, it did not opt for rigid rules and busybody regulators. It did not seek to lock in either 20th century or even 21st century industry structures. It did not aim at guaranteeing a future or even just a short-term profit for any specific players.

The thing that has to be understood, critically for how the code works and more specifically why Facebook did what it did and then why it blinked, is that the code is only a 'backstop'. It's only triggered if the two sides can't do a deal. If they deal, it's dormant.

The key thing the code does is to discourage anyone from relying on its compulsory arbitration. It would fail if it made it attractive for either side - media or tech - to see it as likely to deliver a better deal for them.

 

Treasurer Josh Frydenberg at Parliament House Canberra. Picture: NCA NewsWire/Gary Ramage
Treasurer Josh Frydenberg at Parliament House Canberra. Picture: NCA NewsWire/Gary Ramage

 

So on that front nothing has changed. Old media and new tech still have to have their arm-wrestles; a now 'different' code remains irrelevant to that because neither side wants to, or indeed can really afford to, trigger the mandatory arbitration to impose a deal.

Who knows what Facebook thought it was doing or what it would achieve by ripping out the news feeds.

In practical terms it achieved zip - it still has to do the head-to-head deals and it's got zero extra bargaining power; indeed if anything slightly less.

All it did achieve was highlighting the issue and projecting the 'Aussie solution' into the global space. Oh yes, and 'winning' for Zuckerberg half-a-dozen head-to-heads with Frydenberg.

Most of the commentary has missed the one big thing that sparked a Facebook panic: Google suddenly doing deals, almost universally across Australian media and indeed drifting into the international space with Rupert Murdoch's NewsCorp globally, scooping up the UK and US as well as Australia and this paper.

The Google threat to Facebook is far more existential than the globalised cost of an Australian content deal. Maybe that realisation was what sparked its misplaced and chaotic bullying.

Right now Google and Facebook operate very comfortably and very profitably in mostly adjacent spaces. But both have been aggressive colonisers of other parts of the digital; indeed their operating models in separate ways all-but demand it.


Philip’s unconventional royal romance

Premium Content Philip’s unconventional royal romance

Prince Philip’s rather unconventional romance blossomed into love

Philip’s deep bond with Australia

Premium Content Philip’s deep bond with Australia

Prince Philip visited Australia an astonishing 35 times.

Southern Downs showcased as top tourist spot in new podcast

Premium Content Southern Downs showcased as top tourist spot in new podcast

Warwick, Killarney, Granite Belt take centre stage in new Queensland travel series.