Beware of geeks bearing gifts.
I gave that warning in a column seven years ago and repeated it here last November. I’ll say it again: Beware of geeks bearing gifts.
I make no apologies for sounding like a cracked record.
On the face of it, New Zealand media companies appear to be trotting along nicely in their bid to get some money for the content that Google and Facebook have been freely appropriating.
The Commerce Commission has issued a draft determination allowing members of the News Publishers Association to bargain collectively with Meta and Google on payment for content. The NPA is a mix of metropolitan and regional newspaper publishers but in this initiative it is minus NZME, which has already brokered deals with both Google and Facebook. NZME’s agreement with the latter is not payment for content but support for NZME’s “subscriber growth and retention”.
Call it ‘content’, call it ‘retention’, no matter. They’re paying up one way or another. All’s good.
But is it?
Associated Press reported that Meta had told U.S. news organisations it would no longer pay them to have their material appear in Facebook’s news tab “as it reallocates resources in the face of the economic downturn and changing user behaviour.”
Facebook launched the U.S. partnerships in 2019 and reportedly paid millions of dollars to the largest news producers such as the Wall Street Journal, New York Times and Washington Post. At the time the partnerships were signed, Facebook’s Mark Zuckerberg was quoted saying that he saw “an opportunity to set up new long-term, stable financial relationships with publishers.”
‘Long term’ doesn’t last long in Zuckerberg’s book. Nor does stability. His company issued a statement saying a “lot has changed since we signed deals three years ago to test bringing additional news links to Facebook News in the U.S.”
The same statement said Facebook News would continue in the other countries and the shift in the U.S. would not change deals in the U.K., France, Germany and Australia. Really? It is odds on that where America goes, we all go.
That would mean the 10-year horizon envisaged in the Commerce Commission’s determination is wishful thinking. The platform’s owners will ensure that no deal will outlive the specific vehicle to which it is attached. Anything linked to news tabs or curated news sites will be vulnerable to changes of strategic direction and they are coming fast.
After years of upward trajectories that matched those of NASA, the shine is coming off the mainstay platforms. Last month, Facebook’s parent Meta posted the first revenue decline in the company’s history and Google’s owner Alphabet reported a slowdown in revenue growth. There were a number of reasons for the declines but chief among them was competition from TikTok.
In December, Forbes magazine reported that TikTok is not just surpassing other social platforms, in terms of global internet traffic, but is becoming more accessed than Google and its suite of services, including Google Maps and Gmail. The Digital 2022 July Global Statchat Report put TikTok’s potential advertising audience at more than one billion and growing, centred on the 18-34 age groups. By a number of metrics, audiences spent more time on TikTok than on any other platform.
This has set off alarm bells in Meta and Alphabet. Mark Zuckerberg’s new focus on the metaverse is, in part, a reaction to the creator content that has drawn users away from ‘traditional’ platforms to TikTok and both of the tech giants are reallocating resources accordingly. You may have noticed some changes to the Facebook home tab. Those changes were made to make it resemble TikTok features.
The statement announcing the pullback from Facebook News in the U.S. also stated: “Most people do not come to Facebook for news, and as a business it doesn’t make sense to overinvest in areas that don’t align with user preferences.”
I have no doubt that New Zealand news producers will be offered enough crumbs from the Google and Facebook New Zealand advertising table – the digital-only advertising sector had revenue last year of $NZ1.62 billion – to pacify them without making any significant dent in profits.
How long will it last? Not long at all, by my guess. Certainly, it is unlikely to last even the three years that American publishers were able to secure. The public are not privy to the contracts between NZME and the tech giants but I would put money on both containing ‘out’ clauses that will allow them to walk away exactly as they are doing with American news producers.
The only way ongoing contributions to the news industry can be guaranteed is by statute and international agreement. The European Union and Australia have shown commendable leads in passing legislation to make the tech giants more accountable, but it will require international resolve to make them pay their dues and behave like good digital citizens.
At the core of the problems with the tech companies is the immense unbridled power they wield on a global scale. Unfortunately, the land that spawned them is not showing the same steely resolve as Brussels and, more moderately, Canberra.
So far the United States government has only played at the edges of that power. Even current legislation before Congress is very limited in its scope. The American Innovation and Choice Online Act would bar the companies from prioritizing their own services over those of their rivals. Last week, the New York Times reported that hopes of getting Congress to vote on even this limited anti-Trust legislation was slipping away and would, in all likelihood, no longer command the 60 votes needed to avoid a filibuster. Meta and Alphabet (along with Apple and Amazon) have been lobbying fiercely against the Bill, pouring tens of millions of dollars into the effort.
Meanwhile, the Wall Street Journal says an effort to break up Meta (started during the Trump Administration by the Federal Trade Commission) lacked merit when it started and is now looking worse. Legal discovery suggests the FTC is now saying that acquisitions like Instagram and WhatsApp were anti-competitive, despite having given them its seal of approval in the first place.
We should not hold our breath waiting for a just solution to a phenomenon that has played a significant part in weakening our news media – perhaps fatally, in some cases. Nor should we expect the giants to play fair or even tell the truth.
Google is setting up a cloud region in New Zealand to extend its $10 billion global cloud business. It has stated that “the New Zealand cloud region will give Kiwi businesses the choice to keep their data onshore and retain data sovereignty and drive their digital transformation efforts locally.”
Last week Radio New Zealand carried a story containing emphatic denials of Google’s claim it will offer New Zealanders complete control over their own data.
A local cloud service provider and a former Google employee both refuted the claim.
Catalyst Cloud CEO Doug Dixon pointed out that overseas technology companies are governed and influenced by the laws in their home countries. He added: “And the cloud isn’t owned by Kiwis. It’s owned by United States corporations.”
Former Google employee George Sadler said that as soon as data is put into a cloud provider that is based offshore – even if they store the data in New Zealand – offshore personnel have some level of access to it. Access is very tightly controlled by the mega companies.
So much for “data sovereignty”.
As I say, beware of geeks bearing gifts.
To Paula Penfold, Louisa Cleave and the Stuff Circuit team for a revealing documentary Fire and Fury that put names and faces to many of the protagonists in the ill-defined but dangerous disinformation movement that led to the occupation of the grounds of Parliament. Among the groups identified was Voices for Freedom, which Stuff yesterday identified as standing candidates in the local body elections while hiding their affiliation. The anti-vaccination, anti-mandate VFF says it wants to make New Zealand “ungovernable”.
To New Zealand Herald political reporter Nicholas Jones for two compelling pieces written while investigating the impact of New Zealand medical personnel in war-torn Ukraine. ‘I’m not afraid to die’: Kiwi doctor on the frontline in Ukraine and ‘No child is safe’: The devastating toll on children caught in Ukraine war are graphic exposés of the human cost of Putin’s criminal invasion. Their links with this country make the stories all the more poignant and bring home the benefits of deploying our own journalists to a war zone. So I also send Interflora blooms to Newshub and TVNZ European correspondents Lisette Reymer and Daniel Faitaua who, with their respective camera crew, have brought a Kiwi perspective to coverage of the invasion.
We have had tantalising little snippets but I await with real anticipation Tova O’Brien’s hour-long interview with Ukrainian president Volodymyr Zelensky tomorrow morning on Today FM.
One thought on “It’s those geeks with gifts again”
Gavin, I highly recommend The Digital Republic by Jamie Susskind for a well thought response to the power of the mega digital companies. We need inalienable rights; they need regulation … and much more.