A high-stakes news-versus-technology battle is playing out in Australia, where Facebook has blocked all sharing of news in response to a bill mandating that it pay publishers for linking to their work — and Google has taken a very different path. On the latest Pivot podcast, Kara Swisher and Scott Galloway discuss Mark Zuckerberg and Rupert Murdoch’s fight, and what it means for the rest of the world.
Kara Swisher: Let’s talk about the global battle with tech giants. Australia has a bill that’s getting close to being passed, which will require Facebook and Google and others to pay news publishers for content in some way. It’s a complicated bill called the News Media Arbitration Code.
We talked about this on Tuesday’s episode. Google had threatened to leave Australia if the bill were passed but didn’t make the move, and then made a deal with three of the biggest publishers in Australia, including News Corp. And it made a more global deal with NewsCorp, not in the US but in other places, to make some payments. Facebook, on the other hand, walked away from the table, and said it said it wasn’t going to pay, and it wasn’t going to be part of this. It closed off all its news links, and then by accident closed off all kinds of important links — health and safety ones — because of the way they machine0learned it, essentially.
This is what Facebook’s managing director in Australia said: “The proposed law fundamentally misunderstands the relation between our platform and publishers who use it to share news content. It left us facing a stark choice: attempt to comply with the law that ignores the realities of this relationship or stop allowing news content on our services in Australia. With a heavy heart, we chose the latter.” They had a heavy heart, Scott.
Scott Galloway: Are they okay?
Swisher: No, they’re never okay.
Galloway: Look, I know you’ve actually been speaking to Facebook.
Swisher: I wrote a whole column on it.
Galloway: Give us your take on this.
Swisher: This bill in Australia has been very much pushed by Rupert Murdoch and his minions — Robert Thompson and others. You got to wonder, right? There’s others who think differently, but I think I’m going with Casey Newton, who said essentially that it’s a shakedown. I think what he wrote is correct. He calls it crony capitalism. I think it’s a racket kind of thing for Rupert Murdoch. Even if you don’t like the tech companies, this law is deeply flawed. Even if you don’t like Facebook, I think our principle that hyperlinking should be free and clear is important.
Google doesn’t want to be paying for putting news links in their search engine. So what they’ve done is they have this special area of Google where they’re going to be paying people for being on it — the three news publishers — and they’ll make deals with all the others, I guess. And then we’ll go from there, essentially. It makes sense for Google to do this because they have a different business. Facebook said no, because news is a very small part of its business, like 4 percent. And they decided “no, we’re going to take them down.” They pushed away from the bargaining table. And they said, no thank you. And it caused a lot of hubbub, like — how dare they? Congressman David Cicilline was like, this shows they’re a monopoly.
Everyone was alleging all kinds of nefarious things. But let me just say they were right to do this if they wanted to. Because they don’t have to pay for news links that aren’t even a quarter of their business. And they shouldn’t have to. It’s very much like what we talked about with Amazon not wanting to host Parler. They don’t want the business.
And so Facebook shouldn’t be forced into even binding arbitration to do this. Other people say this is a great way to do regulation, but I don’t know if anyone should have to pay for links if they don’t want to. And again, I think it’s a gimme for Rupert Murdoch and News Corp. But it’s going around the globe — this idea of paying for content on these platforms. But I don’t think Australia did it really well.
Galloway: There’s so much here. I think probably one of the more interesting things is it shows the distinctions between Facebook and Google’s core business. I’ve always said: Google is God. A prayer is just a query into the universe hoping for some divine intervention that sends you back an answer that you think is more credible than any other answer, from an entity you don’t understand. Google sees everything, evaluates everything, and then distills it back to a great response. That’s prayer. We pray to Google three billion times a day, and we trust it more than any priest, rabbi, scholar, mentor, or boss, and their business is largely dependent upon getting really accurate, up-to-the-minute, credible news. And Google, unlike Facebook, does need credible news.
If your site gets links from the New York Times, which is evaluated as credible, you come up in the search rankings and we all benefit. Now, Facebook is a friend that wants to keep your attention all the time. Even if it’s selling gossip or lies. They’re not in the news business, they’re in the friend business, and their motivation is not credibility, their motivation is engagement. YouTube is more like Facebook than Google. YouTube is also a menace, but the two are different. And Google has decided that news is so central — and also Google is pulling a little bit of an Apple card here in saying, we want to separate from Facebook. And while I agree with you around some of the Murdoch stuff and that, okay, maybe he’s an unwitting winner of this or a witting winner —
Swisher: He’s not unwitting, he’s been lobbying for this. He runs the Australian government.
Galloway: Do you remember though, 15 years ago, he tried to do the same thing, and people — including myself when I was on Bloomberg TV — said, no, we need to support our new guys. The old guard is just trying to entrench themselves. But here’s the thing. When you’re in the business of importing into Australia and pulling up tankers every day and then unloading some good things, but a lot of division, a lot of hate, a lot of misinformation, and then you fill it up with money and leave — there are no hospital wings or universities in Australia named after Facebook billionaires. Australia started doing the math. And even if this specific action is not logical or pure, at the end of the day, people are just fed up with this business.
Swisher: I get it, but it doesn’t mean you should put a law out declaring all Mark Zuckerbergs are declared illegal. I agree with you, but there’s tons of ways they could have taxed it. They could have done a million different things here. And by the way, one of the things we don’t know is if any of this money is actually going to journalism. I think it’s going to Rupert Murdoch’s pocket. And so there wasn’t anything in the law that said this money had to be spent on more journalism, but then Murdoch was acting like the bastion of journalism. I’m sorry, this guy has spewed more toxic waste out into the news world than almost anybody in history. I’m not getting my journalism cues from Rupert Murdoch in any way. Even though he owns the Wall Street Journal and that’s a very good news organization, I think it’s great in spite of his ownership. This is not the way to do it. It doesn’t create a new business model for journalism.
Galloway: It’s one step. This is where it’s all headed, Kara. And I said this two years ago, but I got the regions wrong. I said a nation in Northern Europe or in Latin America was going to ban Facebook. This is a step. I love Australia. I’m friends with a decent number of Australians. I’ve been there. I feel like I have some connection to the culture there. You know what? You don’t fuck with Australia. Whether this legislation is elegant or not, when Zuckerberg and the spokesperson from Facebook says — in terms of the trade between Facebook and news media, news media has garnered more out of this relationship. Oh my God, what bullshit. And then they take their ball and go home, whereas Google tries to be, I think, a little bit more statesmanlike —
Swisher: Sundar Pichai is peaceful. He’s like, this could be more of a problem than it’s worth. We’ll just pay them.
Galloway: But this is where it happens, the legislation is unimportant. All this is is a skirmish battle that’s going to escalate because Facebook has not handled it well and Australia, oh my gosh, they aren’t afraid of anybody. They will shut Facebook down.
Swisher: Well, let me again, bring in Rupert Murdoch. I think Facebook just handled one of the most unscrupulous men on the planet, who has major sway over politics in the U.S. and Australia, a potent PR weapon. I think that’s really the heart of it. And what I would imagine they should take away from this is the level of ire that Facebook is receiving over an issue where it is not the wrong thing to do, what it did. It’s an ugly preview of what’s to come when it gets scrutiny for things it actually does do wrong. No one really likes nor trusts Facebook or Mark Zuckerberg. They just don’t. He’ll get no benefit of the doubt because he’s not likable.
Galloway: That’s exactly right. No one’s in a hurry to be fair with Mr. Zuckerberg anymore. No one’s in a hurry to be thoughtful about legislation. They’re in a hurry to be angry, and deservedly so. I look at Murdoch almost like, again — I take everything back to World War II. They’re the Russians, do we share their values? Do we especially like them? No, but we need them. And also the thing about News Corp —
Swisher: No we don’t need him.
Galloway: Well, hold on. Let me ask you this though, and I asked this as the last question. Facebook and Google control 70, 80 percent of every digital dollar. Does News Corp control that much? Is News Corp really that dominant?
Swisher: News Corp has heralded in the era we live in now through their cynical and persistent use of media to divide, to anger, to spread disinformation. They’re facing a lawsuit right now from Dominion — I think they’re in trouble in that regard. They have done outsize damage in terms of tarnishing civic discourse on the planet. I think he’s one of the most damaging — If I had to pick between him and Mark Zuckerberg, I would pick Rupert Murdoch.
Pivot is produced by Rebecca Sananes. Erica Anderson is the executive producer.
This transcript has been edited for length and clarity.