“Facebook Inc. reached a deal with the Australian government to restore news pages to the social media company’s platform, following a five-day suspension because of a disagreement over payment for content,” WSJ writes.
Why It Matters: In response to a new law requiring Facebook and Google to pay traditional media companies for content, Facebook pulled news from its platform in Australia last week. It’s a highly-monitored situation, offering a potential model for other countries to compel big social platforms to pay for content. Facebook eventually got a deal done, though which was a big relief for Australian news providers that saw a noticeable decrease in traffic during the hiatus.
In negotiations, Facebook did get some changes to the legislation.
- The new agreement builds in an additional round of negotiation with media companies before they turn to an arbitrator, as well as “more acknowledgment of any deals Facebook reaches with publishers on its own.
- In return, Facebook said it would restore services in Australia over the coming days.
Though details weren’t disclosed, Facebook did break the seal by agreeing to a deal with Australian television and newspaper company Seven West Media Ltd.
“Both Google and Facebook have in the past been willing to pay for news in certain contexts. Google, which initially opposed the legislation and had threatened to shut down its search engine in Australia, also recently agreed to new deals to pay some publishers for content, including News Corp, owner of The Wall Street Journal publisher Dow Jones & Co.”
- Facebook’s move to remove news “caused an uproar in Australia, including from consumers,” underscoring the power the platform holds over its users.
Looking Ahead: Australian Treasurer Josh Frydenberg said, “There’s no doubt that Australia has been a proxy battle for the world. Facebook and Google have not hidden the fact that they know that the eyes of the world are on Australia.”
- A Canadian government official said his country would move forward on similar legislation, while Europe has seen calls for it as well.
Facebook still looks very cheap at $264 per share, which is only 12.5x forward EBITDA. There’s a reason why $FB is up 1.10% amid this Tech sell off.