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The Gen X Treasurer and the Millennial billionair­e

How ‘Fruckerber­g’ brokered a media code deal, ending a blackout of Australian news on Facebook as the world watched with bated breath, writes Ellen Whinnett

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IT was a very modern stoush keenly watched across the globe. A standoff between two of the world’s most powerful companies — Google and Facebook — and the government of Australia. And it ended in a very modern way, in a flurry of calls and text messages between a Generation X Treasurer and a Millennial billionair­e.

Treasurer Josh Frydenberg, 49, and Facebook chief executive Mark Zuckerberg, 36, struck a deal on Tuesday to end the brawl which had seen millions of Australian­s barred from using Facebook to view or share Australian news.

The “Fruckerber­g’’ negotiatio­ns had run for a week, with one video call, a dozen phone calls and multiple text messages, as the pair negotiated over the government’s news media bargaining code, which requires Big Tech firms to compensate Australian media companies for the news items they use on their platforms.

Unusually, the government was not legislatin­g to get more tax for itself, but on behalf of Australia’s media companies, who had been unable to extract compensati­on from Big Tech firms using their content to encourage people on to their platforms.

Google and Facebook, so omnipresen­t in modern life their names have become verbs, were fiercely opposed to the code, not for what it would cost them in Australia but for the global precedent it could set.

At the height of the brawl, Google threatened to shut its search engine down in Australia. Frydenberg and Communicat­ions Minister Paul Fletcher intervened, with Frydenberg beginning direct communicat­ions with Sundar Pichai, the 48-year-old chief executive of Google’s parent company Alphabet.

The stakes were high — Alphabet is worth up to $1.8 trillion, a little more than the Australian economy.

The men talked business and cricket, then more business. Google dropped its threat and instead struck a deal to pay the media companies and co-operate with them in sharing news.

Facebook took the nuclear option, flicking a proverbial switch and shutting down the Facebook pages of hundreds of Australian news sites — along with potentiall­y thousands of charities, health organisati­ons and small businesses who became collateral damage.

The global condemnati­on was swift.

Frydenberg was advised just after 5.30am on

February 18 that millions of Australian­s were waking up to discover news on Facebook had gone dark, along with domestic violence charities, health services working on the COVID19 pandemic, and even the weather bureau.

And so began an intense

week of negotiatio­ns, which saw Frydenberg and Zuckerberg going backwards and forwards trying to reach a deal which was being carefully watched by businesses and government­s across the world.

Prime Minister Scott Morrison spoke to Indian Prime Minister Narendra Modi and Canadian PM Justin Trudeau about it. The four biggest European press publishers watched on approvingl­y, then joined with rival firm Microsoft to call for “Australian-style arbitratio­n”.

The US State Department stayed out of the public fray, with spokesman Ned Price telling the media “this is a business negotiatio­n between multiple private companies and the Australian government”.

But behind the scenes, the Americans had been deeply interested about what was happening with the big American tech companies as the Australian government worked for three years to develop the worldfirst code.

Former ambassador Arthur B. Culvahouse Jr had come into Frydenberg’s office for a discussion about it before he moved back to the States in January.

Frydenberg refused to release specific details about the negotiatio­ns other than to say he had told Zuckerberg he had spoken more to him than to his wife in recent days.

“The discussion­s with both Sundar and Mark were at all times respectful and constructi­ve and I deeply appreciate the personal engagement and the significan­t time and commitment given to resolve the issues,’’ the Treasurer told News Corp.

“We all knew we were negotiatin­g the details of an agreement that had global ramificati­ons. “Let’s face it, Big Tech doesn’t like regulation, and it was clear neither Google nor Facebook wanted the code in the first place. “But they realised the Morrison government was not for turning and would put a priority on commercial deals being put into place.

“The negotiatio­ns were difficult and complex and at one point reached a stalemate. But fortunatel­y we found a way through and got the deal done.’’

The tech giants had made clear they had no time for the Australian Competitio­n and Consumer Commission, which had developed the code, moving it from voluntary to mandatory, but also agreeing to consider two-way value, meaning the government accepted the tech companies’ argument that media organisati­ons also benefited from posting their content on the

Big Tech platforms.

The government was going to have to do the deal itself.

Frydenberg and Fletcher worked up a plan with ACCC chairman Rod Sims, Treasury officials, and Prime Minister Scott Morrison.

By last weekend, Frydenberg was in a position to tell Zuckerberg he was prepared to make a few changes to the legislatio­n.

The phone calls flew between Zuckerberg, somewhere in the US, and Frydenberg, who was driving around Melbourne ferrying his kids to swimming lessons.

The amendments allowed extra time to strike deals, and gave the big digital platforms a month’s notice if the Treasurer intended to “designate’’ them. Designatin­g them under the code is the route to forcing them to pay, or fining them up to 10 per cent of their local revenue, if they haven’t done a deal.

Critics would say the changes to the legislatio­n mean it is now unlikely the Treasurer will have to designate anyone.

That overlooks the fact the legislatio­n aims to incentivis­e the parties to do a commercial deal, something Facebook has now begun, following Google’s agreements earlier in the month.

Throughout Monday and Tuesday, the Fruckerber­gs inched closer to a deal. Frydenberg, now in Canberra, nipped out of cabinet to take a call from Zuckerberg. He skipped a leadership meeting to make another call.

Morrison used his Facebook account to accuse Facebook of “unfriendin­g Australia’’.

Frydenberg said he was disappoint­ed at the news blackout, but avoided strong public criticism.

One media executive said to him: “These one-on-one calls are like playing chess with Kasparov or going five sets with Djokovic.’’

Finally, on Tuesday morning, Frydenberg and Zuckerberg had enough of an agreement for

The discussion­s with both Sundar and Mark were at all times respectful and constructi­ve and I deeply appreciate the personal engagement.

TREASURER JOSH FRYDENBERG

Frydenberg to take the proposed changes to the government’s weekly party room meeting. The changes were approved. Frydenberg left the meeting and called Pichai, who had already agreed to deals with the media, but who thought the amendments were “sensible”.

The government was reassured the changes would not upset the deals Google was agreeing to.

Frydenberg and Fletcher hit the phones to the media proprietor­s. In recent weeks they’d kept in regular touch with News Corp Australasi­a’s executive chairman Michael Miller, Nine Entertainm­ent Co’s chief digital and publishing officer Chris Janz, Seven West Media chief executive James Warburton, ABC managing director David Anderson and Guardian Australia managing director Dan Stinton. Seven’s billionair­e owner Kerry Stokes, Nine chairman Peter Costello and the Australian-born,

New York-based chief executive of News Corp Robert Thomson also received regular calls.

Five minutes before Question Time on Tuesday, Frydenberg rang Zuckerberg one last time to finalise their deal and discuss the wording of their respective press releases announcing the ceasefire.

“Are we ready to go?’’ Frydenberg asked.

“Yes.” Zuckerberg replied.

The deal was agreed on WhatsApp, the encrypted messaging service owned, naturally, by Facebook.

 ??  ?? Treasurer Josh Frydenberg fronts the media after Facebook pulled its Australian news content.
Treasurer Josh Frydenberg fronts the media after Facebook pulled its Australian news content.
 ??  ?? Facebook chief executive Mark Zuckerberg was opposed to the news media bargaining code.
Facebook chief executive Mark Zuckerberg was opposed to the news media bargaining code.

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