Why Facebook Actually Wins By Blocking An Entire Continent

Facebook is turning off the news on its core app in Australia. Ironically, that’s likely good news for Facebook’s other platforms.

The social media giant on Wednesday announced it would restrict both publishers and average users in Australia from sharing and posting news stories, a response to a proposed law Down Under to force companies like Facebook and Google to pay news publishers for content. 

However, Facebook’s restrictions only apply to its core app and won’t affect Instagram, Messenger or WhatsApp, the company confirmed in a statement to Forbes. None of those platforms allow for widespread broadcasting of news articles and links as Facebook does. Yet they’re similar enough so users wanting to pass around the latest Herald Sun scoop could find themselves doing so more regularly on one of those three Facebook-owned products—even though, of course, they can’t do it on Facebook’s main site. 

Messenger and WhatsApp were the first and third most-downloaded social apps in Australia on Wednesday, according to data from SensorTower, which tracks the app universe. Facebook, meanwhile, was No. 2. In 2020, Messenger averaged 260,000 downloads per month, more even than Facebook’s 223,000. WhatsApp averaged 200,000. 

While Facebook has an iron grip on the Australian social media market, Twitter also has an opportunity to benefit from its withdrawal. “Twitter would be a prime candidate,” says Joe Bonner, an Argus Research analyst. “They’re already very driven by the news.” Other companies poised to fill the void left by Facebook include messaging-apps like Discord, Telegram and Signal. They’re likely to attract everyday users looking to share stories; none of them are particularly big with mainstream publishers. All three have ranked highly among the most-downloaded social apps in Australia over the past month, according to SensorTower. 

News accounts for less than 4% of the content shared on Facebook, the company said in a blog post outlining the decision, meaning, Facebook probably won’t suffer a big hit to its traffic from prohibiting news stories. 

“For Facebook, it doesn’t significantly move the needle,” says Daniel Ives, a Wedbush Securities analyst covering Facebook. But he adds, “This speaks to a broader issue for large tech stalwarts going into 2021. There’s gonna be more of these Old Western standoff situations.”

Facebook’s investors don’t seem too concerned. The company’s shares fell by 0.15% on Wednesday, beating out the 0.6% drop suffered by the tech-dominated Nasdaq composite. There’s a likely reason they’re not upset: Australia represents only a small market for the massive tech firm. While it booked nearly $71 billion in global revenue in 2019, only about $520 million of those sales came from Australia, according to the latest breakout figures Facebook gave on Australia.

“The jury is still out in terms of how this plays out. This was an aggressive move,” says Wedbush’s Ives. “It’s the start of a cascade of these types of events globally from a regulatory perspective...It’s Australia today—what’s tomorrow?”





Source: Forbes
Image Source: Getty Images