UPDATE: On February 22, Facebook announced that it would restore access to news media content in Australia. This decision was taken after the Australian government agreed to changes within the regulatory regime that would: 1) take account of existing deals between platforms and publishers; 2) allow for mediation prior to arbitration; and 3) include additional lead time before platforms were “designated” as being covered by the code.
On February 17, Facebook announced it would restrict sharing or viewing local and international news content in Australia in response to the Morrison Government’s move to regulate the relationship between the tech giant and news media outlets.
At Forrester, we had already predicted that in 2021 nationalistic economic policies, regional free trade partnerships, state restrictions on where companies do business, growing claims of sovereignty, environmental, and other geopolitical turbulence would accelerate fundamental shifts in consumer behaviors across Asia Pacific and the world. Australia’s media bargaining code is just another example.
Developed in early 2020 after three years of consultation, the Australian Government’s goal was to create legislation to address the power imbalance between digital platforms and media businesses through a mandatory bargaining code. The first of its kind in the world, the code is designed to compensate news media businesses for the content they generate that is subsequently distributed and consumed through digital platforms.
Facebook’s Decision To Unfriend Australia
Has Already Backfired
After months of lobbying against the code, and its implications for other countries watching with interest, both Facebook and Google threatened removal of part or all of their services from Australia in January. Google wisely reversed course, agreeing to terms with three of Australia’s largest media companies, including Rupert Murdoch’s News Corporation, with more to come. Microsoft’s President Brad Smith has also publicly announced that the company would endorse and support a similar legislation in the United States, Canada, the European Union, and other countries.
In contrast, Facebook, one of Australia’s largest retailers, has followed through on its threats. But caught up in the ban were government, health, and safety pages, including fire, police, emergency services, hospitals, health departments, disability service providers and even the Australia Bureau of Meteorology. Facebook’s own pages, some outside Australia in small South Pacific nations and even some of their own advertiser clients, were also offline. The consumer backlash was swift, with the hashtags #BoycottZuckerberg and #DeleteFacebook trending on Twitter and users opting to consume content via other platforms.
Lessons For CMOs And CIOs In A Turbulent World
So, in light of these types of disruptive forces and the stark example Facebook’s ban represents, CMOs and CIOs must:
- Commit to values-driven business for better results. Companies that acknowledge the values of consumers and employees, and also authentically embrace their own corporate values, will grow faster and drive better business results. Facebook’s action in this case ignores the reality that values-based consumers, employees, and now citizens are dominant forces in today’s market. For more, see our report, “Live Your Values To Grow Your Business.”
- Manage the increased risk of values-driven stakeholders. Collective bargaining in the age of the customer to date has been when customers or employees, through their social media activity, negotiate directly with a brand to force companies to renegotiate the terms of their customer engagement and their policies. Nowhere is this more apparent than in the brand boycott of Facebook over its refusal to police hate speech on its platform. This new friction between Facebook and Australian voters shows that firms must now also consider the values of nations and their citizens if they want to protect their reputation. For more, see our report, “Collective Bargaining Forces Companies To Manage Reputational Risk.”
- Strike a balance between bowing, collaborating, and challenging regulators. Facebook’s decision not only impacted its own users, but also the reputation of brands that rely on the platform to run their business. Firms must consider their government relations strategy carefully, opting for as much cocreation as possible. Ultimately, standoffs only hurt your reputation and damage your business ecosystem if they don’t lead you back to the negotiating table. For more, see our report, “Don’t Let Government Derail Your Customer Experience Innovation.”
- Adopt a hyperlocal approach to brand and technology for resilience. To anticipate and respond to risks in a sustainable way, firms must adopt brand strategies that reflect local consumers’ personal values, which rely heavily on local beliefs about social issues, politics, and causes. This, in turn, will require technology architectures that use cloud-native, edge, and intelligent automation in support of more localized operating factors. It will also help ensure that ecosystem choices and technology platforms are resilient and adaptive enough to respond when geopolitical disruption occurs. After the recent actions by Facebook, this means creating new digital interaction options that are less reliant on the social media giant. For more, see our report, “Geopolitical Disruption Demands Local Trust.”