Briefing: How Meta Extorted Australia

This briefing highlights key details of whistleblower revelations about Facebook’s unprecedented tactical response to the development of Australia’s News Media Bargaining Code in February 2021, and the concurrent reforms that were made to the Code, all of which handed significant power to Facebook.

It appears that a piece of legislation created to require digital platforms and news businesses to negotiate ‘in good faith’ was negotiated in extreme bad faith, directly resulting in a weaker Code and worse deal for Australian journalism. It also undermined the federal lawmaking process. The whistleblowers’ evidence squarely raises questions of civil and criminal liability for fraud.

Three things the whistleblowers revealed about Facebook’s tactics

I. Facebook intended for the ’news blackout’ to be widespread and damaging

• Facebook had seven months to plan its response: this was not a rushed accident as the company’s public relations team heavily pushed. Facebook created an ‘ACCC response team’ in August 2020. The team was put together with the sole purpose of countering the impact of the Code, timing the shutdown of Facebook pages in a way that gave maximum leverage in the legislative process.
• Facebook chose the widest possible ‘news blackout’: the ACCC response team had modelled different options for a take down and enacted the most extreme version, with knowledge that its impact would extend beyond news. Emergency, health and government services all suffered.
• Facebook could have reversed the widespread, damaging blackout but did not. The response team did not follow the company’s usual checks and balances, such as cross checks with sensitive pages and Xcheck list, which typically prevent takedowns from causing adverse effects or ‘over moderating’.
• Facebook turned off safety features that would have prevented a widespread, damaging blackout: There are automatic triggers inside Facebook’s systems that detect ‘over blocking’ and instigate a 50% or 25% roll back in the ‘blockage’. In this case, they were not triggered.
• Facebook did not offer an appeals process: Facebook normally offers an appeals process when the company blocks a page but did not in this case – leaving emergency services, health, government and civil society with no recourse.
• There was no pre-roll out trial of the news blackout: This would have tested potential damage or harm to non-news pages, but was omitted despite having had seven months of preparation.

II. Facebook knew this was dangerous and actively covered its tracks

• The ‘ACCC response team’ were silenced: They were required to sign an extra NDA, which is an anomaly, and were told to never put anything that could be inferred as intent in writing.
• Facebook normally undertakes a ‘post mortem analysis’ of any significant issues: This has not happened in this case, which is highly unusual. Some Facebook staff expressed concerns, and were reassured that this was an accident.

III. The damage was intentional and celebrated as a successful negotiating tactic

• After achieving four significant concessions, Facebook’s first action was to unblock the Australian Federal Government’s page.
• Facebook sent a note to the ‘ACCC response team’ celebrating the team’s success, noting that Facebook had ‘landed exactly’ where it wanted. Mark Zuckerberg and Sheryl Sandberg sent out their own versions of this celebratory note. (See screenshots in appendix 1). Staff who tried to remedy the issue were not included in the congratulatory emails.

Four concessions Meta won as a result of these tactics

There is a worrying misconception that Facebook’s behaviour does not warrant outrage because the Code became law without significant changes being made. This is not true. Four changes were made to the Code at the 11th hour, after Facebook’s news blackout (see appendix 2 for more details). That these concessions were cause for celebration is testament to their significance to Facebook.

1. Making it highly unlikely any large platforms will be designated under the code

   Platforms are only subject to the code if they are “designated” by the Treasurer. Before the blackout the Treasurer only had to consider “whether there is a significant bargaining power imbalance” between the platform and Australian news businesses. Significantly, after the blackout, the amended version of the Code states that the Treasurer also has to take into account whether the platform “has made a significant contribution to the sustainability of the Australian news industry,” meaning that making some deals in general is likely to be sufficient. More than a year into the code’s existence, no platform has been designated and many publishers that would have been able to make deals under the pre-blackout version of the Code haven’t been able to do so.

2. Giving digital platforms extensive notice if they were being considered for designation

   Platforms are given a full month’s notice if the Treasurer is even considering requiring them to negotiate under the Code. This gives platforms a month to continue to use their unbalanced bargaining power to strike deals, to deploy their not insignificant lobbying powers to avoid determination, and to engage in similar tactics to those from Feb 2021.

3. Allowing digital platforms to ‘differentiate’ between news businesses if they ‘pay up’

   Changes to the so-called ‘non-differentiation’ provisions empower digital platforms throughout the negotiation process, handing them both a ‘carrot’ and a ‘stick’ to bully news business to agree to unfair deals – further entrenching their unbalanced bargaining power. Before the blackout, it was much less clear that they would have been able to do this.

4. Forcing a mediation process before arbitration can begin

   Forced mediation presents a significant time delay and cost barrier for news businesses to access any remedies overseen by the Commission and significantly weakens the negotiating position of news businesses.

These four changes cumulatively significantly benefit digital platforms in the negotiation process, leaving the Code significantly weaker than earlier drafts and its driving rationale in the Digital Platforms Inquiry.

Key dates in the legislative process and negotiations

• 17 February 2021 – Bill passed through the House of Representatives; overnight, Facebook blacks out news and non-news sites

• 22 February 2021 – Amended bill introduced to the Senate, with the four concessions above

• 23 February 2021 – Facebook reverses the blackout

• 24 February 2021 – Bill passed through the Senate

• 25 February 2021 – Bill passed both Houses

  See a full timeline in our report here

Reflections

The Australian experience provides a cautionary tale for countries around the world as they begin drafting their own news media bargaining codes. Facebook may very well be planning on engaging the same negotiating tactics. The whistleblowers’ evidence also reveals that Facebook engaged in systematic deception against the public and lawmakers, raising the prospect of civil and criminal culpability for the company and senior officials that deserve investigation by State and Federal authorities.

This memo has been created by Reset Australia and the Minderoo Tech & Policy Lab at the University of Western Australia