This Week in Australian Startups - Issue #26, 28th June 2023

Jun 27, 2023

It’s been about 2 years since the News Media Bargaining Code passed in Australia - designed to compensate news organisations for the linking of their journalism on social media platforms like Facebook. You may recall there was even a brief showdown where Facebook called bluff and blocked all news media coverage, this wasn’t long lived as a settlement was reached where Meta would reach their own agreements with media outlets and not through the bargaining code.

Fast forward to today and Canada has just passed its own version, The Online News Act, taking inspiration from Australia. In response Meta released the following statement “Today, we are confirming that news availability will be ended on Facebook and Instagram for all users in Canada prior to the Online News Act (Bill C-18) taking effect.”

So, what’s different this time?

There’s two factors at play for me - firstly Meta has had much more time to plan compared to when Australia introduced the bargaining code. There were a lot of technical issues when they blocked news in Australia, with some government and essential services pages also being blocked. They’ve now had two years to build a way to block news correctly. Secondly, according Meta the value news provides to their platform is not worth the ‘licensing’ fees they would be required to pay.

The reality is, news outlets need Meta much more than they need them. Let’s dig deeper.

Meta isn’t forcing anyone to post on Facebook or Instagram. News outlets are posting on social media in order to reach a wider audience and generate more reads, clicks and revenue (ad and subscription). Traditional media hasn’t been able to stay relevant in the era of free distribution the internet has brought. Gone are the days where you were limited to what papers were available in your local shop. With the internet, anyone can publish news (just like this newsletter) for free.

Social media platforms are aggregators (and search engines like Google) and there’s benefit for media to engage on these platforms to reach more customers, but they don’t have to. They can advertise and drive customers direct to their website and not rely on aggregators - the reality is whilst in theory that is possible, it’s not how the internet works and would be extremely costly with very little to no returns trying to drive direct traffic at such scale.

In a WSJ article - “Meta said the Canadian law presumes the company unfairly benefits from its relationship with publishers, “when in fact the reverse is true.” Meta said Canadian news publishers choose to share links and other content from their websites on Facebook to reach a wider audience, and it estimates that results in free marketing worth nearly $170 million a year.”

Nick Clegg, Meta’s president of global affairs made some very interesting points when addressing Canada’s Heritage Committee in a hearing:

Users of Meta don’t come to them for news
Less than 3% of content seen in Facebook feeds is news
In Canada Facebook sent more than 1.9 billion clicks in a 12 month period to news outlets - estimated to generate $230M in revenue to them
“Asking a social media company in 2023 to subsidize news publishers for content that isn’t that important to our users is like asking email providers to pay the postal service because people don’t send letters any more”

Meta isn’t alone, earlier this year Google launched its own test to block access to news content in Canada - there is a stark difference in how Meta and Google handles news links. Google parses the web to serve results, having a much bigger need to link to news, where Meta does not solicit news links - these are posted by users or outlets themselves.

Ultimately, based on the numbers Meta has shared the amount of money they would need to pay, it doesn’t add up to the revenue they make from news outlets, nor is it something users of Facebook really care about given the vast amount of user generated content.

Let’s see what happens and if Canada will fold as Australia did and make concessions. It seems like Meta doesn’t really care, and if anything is more likely to stay hard on its stance with Canada to deter any other governments thinking of implementing similar regulations.

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Australian Funding Rounds

Software development cybersec startup Nullify banks $1.1 million pre-Seed round (Startup Daily)
Farming automation startup Stacked Farm adds $40 million to its stack (SmartCompany)
Baresop secures $360,000 raise and strategic partnership with pharmacy distributor Alita Sales (SmartCompany)

International Funding Highlights

Kiwi carbon footprint fintech Cogo banks NZ$1 million (Startup Daily)
Payments provider Volt scores £47m Series B round (UKTN)
TreasurySpring bags £23m to scale enterprise investment platform (UKTN)
Redpanda nabs $100M Series C as streaming service experiences significant growth (TechCrunch)

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This Week in Australian Startups

This Week in Australian Startups - Issue #26, 28th June 2023

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Australian Funding Rounds

International Funding Highlights

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