The fight with Facebook where everyone might lose

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SvD Näringsliv

This column was first published in SvD Näringsliv, in Swedish, on February 22nd, 2021.

From having lived in symbiosis – to now being in open conflict. The media companies may have emerged victorious from the first round against the tech giants, but it risks becoming an expensive story that leaves few, if any, winners, writes SvD’s tech analyst Björn Jeffery.

“I get it, Facebook is a terrible, terrible company and deserves lots of blame for lots of bad things that it does. But this ain’t it.”

That’s what Mike Masnick, journalist and CEO of the think tank Copia Institute, said after Facebook chose to block links to Australian news media. This was a counter to the new law that required the tech giants have to pay for domestic journalistic content. Their competitor Google, on the other hand, agreed to this at a cost of an estimated $100 million.

New legislation is also to be expected in Sweden. The Swedish newspaper publishers’ acting CEO Thomas Mattsson said last week that he wants the tech companies to pay for journalism and that it should provide “more fair and reasonable competition.” The relationship between news media and social media, on the other hand, is more symbolic and entangled than what the newspapers’ industry representatives make it sound like.

Let’s back up a little. 2004 was the year Mark Zuckerberg launched his creation “TheFacebook” at Harvard. No one knew that it would change the media world forever, and the media industry breathed optimism – a year later, the American newspapers set a new revenue record.

Then business models started crumbling, but not just because of Facebook.

First, it started with newspapers losing significant revenue from their highly profitable classified ads to sites such as Blocket in Sweden and Craigslist in the USA. Then came a sharp increase in precision in search advertising from companies like Google, and print lost both circulation and revenue. In Sweden, the market share for print advertising fell from 57 percent in 2010 to 20 percent in 2019, according to the Swedish Institute for Media Studies. At the same time, digital ads made the opposite journey – up from 20 to 58 percent over the same period.

Media companies changed, but now needed to drive more traffic to their sites to increase their digital advertising revenue. And where did that come from? Well, from Google and Facebook. I myself have run large-scale search engine optimization projects in a Swedish media group with exactly that purpose. Thomas Mattsson – then editor-in-chief of Expressen – was one of several journalistic leaders who appointed dedicated social media editorial staff in 2014. The tech companies needed content. Media companies needed traffic.

Back to 2021. Where did the symbiosis go?

It is, to say the least, a bit messy since many media companies have invested time and money in building a following in social media, only to then see themselves being downgraded in the algorithms. If you want to be seen now, you have to pay Facebook. A classic bait and switch.

But there is more under the surface. While many media companies have struggled uphill since 2005, the tech giants have broken countless traffic and stock market records. Facebook reached 2.8 billion users in Q4 2020. When media mogul Rupert Murdoch turns this into politics in Australia and passes a bill, which can be partly interpreted as tech companies being held responsible for media companies’ revenue reduction, we risk having a one-sided debate.

It also shifts the focus from regulating the many problematic areas that exist in tech to a single issue of media company financing. These are two important issues to look at, but they are not one and the same. A much better way could have been to tax the tech companies more in each individual country and manage the support for journalism through that.

This regulation can also have far-reaching consequences for the internet in general. Charging to link is an unusually radical proposition. Tim Berners-Lee recently thought that a large-scale rollout of this type of team could “make the web unusable around the world.” And he should know. He invented the World Wide Web in 1989.

The media industry may have won the first battle, but it could be a Pyrrhic victory. In the long run, a free and open internet is best for all parties. Because when one party starts charging for links, others will to follow. That could get expensive for all of us.

This column was first published in SvD Näringsliv, in Swedish, on February 22nd, 2021.

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