Google, Facebook, and Mainstream Media Madness
I am no fan of either Google or Facebook. Google has a long history of distortion of news and of down-grading results from websites it disagrees with. Facebook does the same, while at the same time happily continuing to profit from the publication of anti-semitism and anti-vax paranoia, both are which are counter-factual and dangerous to the point of being evil.
People now complaining about Facebook’s delisting Australian news sites, and Google’s suggestion it may do the same thing, or cease to operate to operate in Australia at all, have either not been paying attention, or are deliberately grandstanding.
For an example of the latter, take this exchange from Hansard: Economics Legislation Committee 22/01/2021
Treasury Laws Amendment (News Media and Digital Platforms Mandatory Bargaining Code) Bill 2020. (H/T Catallaxy Files)
… Senator BRAGG: Turning to your tax affairs, how much corporate tax did Google pay in Australia last year?
Ms Silva : Last year Google paid $59 million in tax, and we comply with the tax laws of the land. We restructured our business in 2016 in line with the government’s shift and the change to MAL, the multinational anti-avoidance law. We shifted to a reseller model from then, and last year’s tax was $59 million.
Senator BRAGG: $59 million in corporate tax?
Ms Silva : $59 million in corporate tax.
Senator BRAGG: What’s your revenue in Australia?
Ms Silva : The gross revenue was $4.8 billion, and the profit before tax was $134 million.
Senator BRAGG: $4.8 billion, and you paid $59 million in corporate tax. …
Senator Bragg was an accountant before he became a Liberal Party Senator. He knows very well that taxes are paid on profits, not revenue. Almost no commercial enterprise in Australia could survive if taxes were paid on revenue, that is income before any expenses. Our own business, for example, has revenue of about $1.5 million per year. Our profit, the money left over after expenses including wages, including ours, which are less on an hourly basis than our staffs’, is about $30,000 per year, almost all of which goes back into the business.
Google Australia’s profit before tax was $134 million. It paid $59 million in corporate tax. this is an effective tax rate of 44%. Not only is Google paying its share of tax in Australia, but by world standards, Australia is an extremely expensive place to do business.
Now to today’s stories about Facebook de-linking Australian news sites.
More than half of all traffic to Australian media sites is driven by Facebook and Google. Google does not publish full stories from news sites, it simply links to them. Australian media have spent months whining about this, and complaining to government that Facebook and Google should be forced to pay for sending traditional media media websites traffic.
In no rational world does this make sense. Everyone who has ever run a website knows that traffic is life. Most websites, at least from time to time, pay for advertising, which in web world, means paying for traffic. But here in Australia, media companies want Facebook and Google, which send them the vast majority of their traffic, to pay them for the privilege of doing so.
Sadly, and destructively, but unsurprisingly, they seem to have convinced a sufficient number of politicians that this was a good plan. Unsurprisingly, because most politicians have never run a business, and have no idea how real-world market forces work.
Also unsurprisingly, Facebook has simply said “No thanks. If we have to pay for linking to you, we won’t link to you.” A perfectly reasonable and foreseeable outcome. But now see how the media darlings explode with rage as their traffic, and consequently their advertising revenue, drops to a tiny proportion of previous figures. It’s so unfair! All my work has disappeared!
Tough. Play silly games, win silly prizes.
If the Treasury Laws Amendment (News Media and Digital Platforms Mandatory Bargaining Code) Bill 2020 is not defeated, something that seems unlikely at this stage, Australia’s traditional media groups could well find themselves pushed to the wall far faster than they expected. And it will be their own short-sighted, greedy fault.