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Australia's news law prods Google, Facebook down opposite paths

When the Australian government told tech platforms they had to start paying publishers for the headlines and links that fill their users' posts, Google caved but Facebook walked.

Why it matters: These companies' moves Wednesday — as Google struck a deal with News Corp to evade Australia's forthcoming rules, while Facebook essentially barred news content there — could shape how news companies are compensated for their work online for years to come.

Driving the news: Facebook said it will restrict publishers and people in Australia from sharing or viewing Australian and international news content. It will also block links to Australian publishers for its users around the globe.

  • The move came hours after Google announced it struck a multiyear agreement with News Corp, the largest owner of newspapers by circulation in Australia, to pay for its content, essentially skirting the law. Google has struck similar deals with several Australian publishers in the past week.

Catch up quick: These efforts are happening in response to the new law, expected to pass imminently, forcing Google and Facebook to pay Australian news publishers for content, including headlines and links, via terms set by a third party.

  • Lawmakers said they would avoid passing the measure if Google and Facebook reached payment terms with Australian news publishers on their own.
  • Google's deals will allow it to fulfill those conditions.

The big picture: Google and Facebook's opposing decisions set a precedent for how they may handle other global efforts to force them to pay news publishers.

  • Restricting people from sharing articles on their News Feeds cuts into Facebook's business far less than Google would be affected if it had to stop Australians from using its search engine, the primary vehicle for sharing links on its platform.
  • Facebook has been trying to reduce the amount of news content shared from publishers on its platform, anyway, in an effort to make the social network more intimate. More recently, it said it would try to reduce the amount of political news on its feed.

Be smart: News Corp, the global publishing giant run by Rupert Murdoch, has been aggressively lobbying in favor of the Australian law for years, as it owns a sizable portion of the newspaper market in the country. Google's decision to strike these deals at the last minute marks a huge victory for Murdoch's lobbying campaign.

What to watch: Countries around the world are eyeing ways to force tech companies to pay publishers. In the U.S., Australia’s efforts have caught the attention of some members of Congress, according to sources in the publishing industry.

The other side: Online platforms have long maintained that publishers voluntarily provide the headlines, images and links that users share on social media — and that such sharing serves the publishers' interest, since some users will click through to publishers' own pages.

  • Google and Facebook take particular issue with the arbitration clause in Australia's code, under which a government-appointed panel sets the payout rate if the parties can't reach a deal.
  • Sources say that the tech giants worry that involving third-party arbitrators could help publishers win unreasonable rates.

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