In December 1883 Gardiner Green Hubbard, businessman, lawyer, founder of the journal Science and the National Geographic Society, railed against a privately owned technology company upon which the great bulk of American business and political communication relied. Telegraph company Western Union had created the infrastructure and electrical public square of the Gilded Age of US Capitalism. And with it came inordinate power.
Hubbard wrote in the pages of the North American Review:
The importance of this business transcends its magnitude; for every political, general, or local item of interest is sent by telegraph, and upon this news every daily paper depends for existence … Every important business transaction between parties at a distance, and the most important and vital social communications, are carried on by telegraph.
He was deeply concerned that with this power Western Union was a threat to American democracy given its control over the flow of information. Sound familiar? Today, Facebook and Google exercise monopolistic control over the huge volumes of electronic communication, information and related advertising that are the lifeblood of the modern age. And, as in the case of Western Union, their power is largely unregulated.
Just as our modern world is pondering how to regulate the tech giants, the US Congress grappled with this private control of the public square. Between 1866 and 1900, every elected Congress save for one considered legislation to tame Western Union’s power. As noted by historian Menahem Blondheim ‘this yielded no less than 96 bills and resolutions brought before Congress that addressed the problem of Western Union’. During this period Congressional committees published forty-eight reports into the monopoly power of the telegraph company. That’s more than one report every year, rivalling even the number of reports the Australian parliament has put out into publishing diversity, digital platforms and media ownership.
Hubbard called for aspects of Western Union’s business to be handed over to the Post Office, but all attempts to regulate the company failed. Western Union had deep ties with the post-Civil War Republican Party and the railway companies. Hubbard pointed to its operation across borders as another obstacle to regulation: ‘No State has the power to legislate for a business which extends into every State and Territory, and to every quarter of the habitable world.’ He could have been writing about attempts to regulate Facebook and Google.
It was Hubbard’s own company, Bell Telephone, that eventually swept aside Western Union’s complete dominance of communications infrastructure. The last Western Union telegram was sent on 27 January 2006.
Fast forward 130 years from the Gilded Age, and similar concerns exist about Facebook and Google: private companies monopolising the public square and telecommunications infrastructure of our age. But do we have the luxury of waiting for the next technology innovation to disrupt these oligarchies or do we as a global community need to reimagine how we share information in the internet age?
The internet was born with the promise of the free sharing of information. Within thirty years, it has become prevailed over by a few very powerful and largely unconstrained companies.
In 2014, the Spanish government introduced laws that would require aggregators of news, such as Google, to pay a licence fee to news creators. Google responded by shutting down access to Spanish news. Now in Australia a far-from-perfect legislative tool could compel technology companies to negotiate fair payment for the distribution on their platforms of news content made by media companies.
In response, Facebook flexed its muscle to completely remove local news sharing on its platform. Within a few days a deal had been reached. But who won? On the surface it would appear that Facebook backed down – but it got what it was really after: exemption from regulation.
Facebook Vice-President for Global News Partnerships, Campbell Brown, said: ‘We have come to an agreement that will allow us to support the publishers we choose to.’ (my emphasis.)
Facebook will get to choose which media companies it came to deals with and, in exchange, the government will remove it as a respondent to the legislation.
Google took a similar path without the high-stakes threats: it sealed deals with the major media players (and a few smaller ones) ahead of the News Media Code becoming law, expecting this to be enough to exclude it from its operation. We now have the strange situation where Australia could have a mandatory code that applies to none of the technology companies.
While an injection of $200-300 million into the Australian media ecosystem seems positive, there are no guarantees that this money will be spent on journalism, and no transparency in the nature of the deals. Effectively, the problem is not solved, but just kicked down the road. What happens in a few years, when those licensing deals are up and media companies go back, cap in hand, to Google and Facebook and ask: ‘Please sir, may I have some more?’
In 2019, Google and Facebook booked a combined $A5 billion in advertising, while paying just a little over $100 million in tax: a 2 per cent tax rate. With both being domiciled overseas (as is NewsCorp, which also pays little tax), it is difficult secure fair tax revenue from these companies.
Meanwhile, as the ad revenue has flowed away from media companies to the tech companies, journalism has suffered. In the past ten years, about 5000 Australian journalism jobs have been lost. That’s bad for democracy.
There is less scrutiny of the powerful. Whistleblowers struggle to expose wrongdoing. Local news, sporting and community events go unrecorded. And there’s less critical reporting of our parliaments, our courts and our leaders.
Some critics of the law say Facebook should be free to make its own business decisions. They say that, by threatening to walk away, the company has shown that news organisations need Facebook more than Facebook needs news organisations. They say that no-one is forcing people to use Facebook.
This is a naive understanding of the reach and role of Facebook as a worldwide communications giant. The platform has grown into a natural monopoly. With its reach enhanced through Instagram and WhatsApp, it is the very architecture of modern communication.
That stance also misses the global picture. Facebook wants the huge online communities around media companies to be attached to its platform. That way it can suck up all the data from news communities that it monetises to build its growing gargantuan fortune and power.
When announcing it would turn the news tap back on, Facebook said: ‘We have come to an agreement that will allow us to support the publishers we choose to.’ This is the crucial point. While they have used different tactics over the past few weeks in Australia, the aim was the same: avoid regulation at all cost.
Co-founder of Facebook, Chris Hughes, has pointed out that ‘dominance’ has been the aim of his one-time Harvard dorm buddy, Mark Zuckerberg, from the early days of the social platform.
Now, Zuckerberg felt he could burn the Australian market as a warning to the rest of the world. There are other countries far more reliant on Facebook than is Australia that are meant to be taking note. This is a small turf war in the global struggle to come to terms with the fact the public forums and libraries of the internet age are privately controlled.
The private controllers of these public spaces are prioritising power, profit and shareholder interest over and above the public they say they seek to serve. By commercialising the modern Library of Alexandria, they are trying to turn it into Disneyland.
According to Hughes, who left Facebook in 2007, the platform now controls 80 per cent of the world’s social networking revenue. He says: ‘What started out as light-hearted entertainment has become the primary way that people of all ages communicate online.’
Should such a vehicle be in private hands?
Other critics of the Australian law say this is just a twentieth-century monopoly – Rupert Murdoch’s NewsCorp – using the power of the government against incoming twenty-first-century monopolies.
There is more than a degree of truth in this and the real losers in this Goliath v Goliath battle are democracy, the general public, small publishers and public-interest journalism.
The big difference is that media companies employ real journalists.
In 2007, Fairfax Media, owners of the country’s oldest newspaper group, moved into a shiny new five-storey building on the shores of Sydney Harbour. Every floor was part of the company, which has since been bought by the Nine Entertainment Group. Over the subsequent decade, as journalists lost their jobs in waves of redundancies, floorspace was restructured to allow lower levels to be leased – to Google. From the ground floor up, Google slowly expanded as Fairfax shrunk until eventually the Fairfax Group was bought by Nine and Google completed the takeover of the building to the very top level.
While this is indicative of how new tech has consumed the corporate base of old media, consolidation of Australia media into three main private and two main public media companies means there is ballast for big media to survive.
Australia already has the highest concentration of media ownership in the western world. If reform doesn’t lead to increased diversity, as Eric Beecher has argued, it may not be worth the trouble.
As for the claim that no-one asked publishers to be on Facebook, it doesn’t simply overlook the reality of where the audience is to be found: Facebook itself actively courts publishers through its Facebook Journalism Project.
Rob Stott, editorial director of Australian youth-oriented digital publisher, Junkee.com, recently said in a Tweet:
There is an idea taking hold that Facebook never asked publishers to use the platform and it’s really not true. We weren’t forced to use Facebook but we were actively courted and sometimes even paid by Facebook to use their platform. They have huge media partnership teams dedicated to it.
Much of the training associated with these partnership teams involves showing smaller, digital publishers how to work the Facebook environment to drive traffic. In its power-play with the government, the company brutally turned off access after hooking a large number of customers.
By threatening to walk away from these small publishers, Facebook and Google show they care little for media diversity or democratic publishing.
Google has played good cop, but shares the objective of avoiding direct regulation. It has cut individual deals outside the proposed code with the expectation it will not be included in the scope of the legislation. Facebook is now taking this path.
Before Google decided to sidestep the Australian bill by paying media companies tens of millions of dollars in direct licensing deals, the search engine company sought and received the support of Tim Berners-Lee, the inventor of the world-wide web, who said that the code ‘would undermine the fundamental principle of the ability to link freely on the web and is inconsistent with how the web has been able to operate over the past three decades.’
He was supported in this by the likes the tax-averse Mike Cannon-Brookes, billionaire founder of software company Atlassian. These tech bros seem to have missed the fact that the internet is no longer an anarcho-capitalist nirvana, if it ever was, but is dominated by a small number of global monopolies.
Others have said that ‘Facebook is not compulsory’ and while this is true, Facebook and even more so Google have become essential parts of modern life. Just like no-one forced companies to use the Western Union in the 1890s, it is almost impossible to do business without them. As Facebook co-founder Hughes said:
The choice [to use the platform] is mine, but it doesn’t feel like a choice. Facebook seeps into every corner of our lives to capture as much of our attention and data as possible and, without any alternative, we make the trade.
While Google quietly dropped its ‘Don’t Be Evil’ motto, Facebook has allowed interference in elections, helped spawn the Cambridge Analytica scandal, live streamed the Christchurch massacre, acted unilaterally to cut off information it deems unacceptable, made shady deals with even shadier governments, allowed the spreading of fake news, supported the flourishing of conspiracy theories, aided QAnon echo chambers, amplified anti-vaccination communities and refused to remove violent racist and fascist content.
While we contend with this private control of our new global public spaces, governments must coordinate to introduce levies on revenue made by digital companies to create public interest journalism funds to support the essential functions of the Fourth Estate. There must be transparency in how these funds are spent, ensuring they go to the newsroom and not wasted in the boardroom.
Meaningful regulation will take a global coordination of governments and civil society. Do we have the ticker? Ultimately, we might need to consider something quite radical: rather than break these giants up, their core functions should be handed to not-for-profit global consortia.
Such an operation already exists to manage the ‘back end of the web’. The World Wide Web Consortium (W3C) run by Berners-Lee is a global body that manages the structure and language of the web. It ensures that a computer in Sao Paolo is able to communicate smoothly with a mobile device in Cairo.
A similar model could work to manage global search functions, maps and information libraries run by Google and other search engines. Wikipedia is a successful non-commercial model. Such consortia could also act as a model for a network of social platforms that democratically engaged communities rather than treated them as a host from which to extract data to commercialise.
Meanwhile. in Australia, media companies will receive some licensing money from Google and Facebook for the news media shared on their platforms. In the short term, this is good, so long as the money is invested in journalism. But this revenue remains at the whim of the tech companies and outside government regulation.
The Facebook news ban in Australia was a brief skirmish in the longer war to control private and unregulated domination of our public spaces and libraries. It will take global coordination and willingness to wrest these spaces into public hands to serve our world community, support the essential role that journalism plays in our societies and not feed the domination fantasies of tech bro billionaires.
Image: ‘The ideal city’ by Fra Carneval (1480-1484), detail