Facebook Wins by Blocking an Entire Continent

Facebook is turning off its access on its core app in Australia; however, this news turns out to be good for other platforms of Facebook.

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Facebook is turning off its access on its core app in Australia; however, this news turns out to be good for other platforms of Facebook.

On Wednesday Facebook announced that it would restrict publishers and average users in Australia from posting and sharing news stories or content. It was a response to a proposed law Down Under to force companies like Facebook and Google GOOG +0.3% GOOG +0.3% to pay news publishers for content.

Moreover, the restrictions are restricted to the core app of Facebook it will not restrict Instagram or Whatsapp, the company confirmed. However, these platforms will not allow widespread broadcasting of news articles as Facebook does. Moreover, they are similar enough for users to pass around the latest Herald Sun scoop could find themselves doing so more regularly on one of those three Facebook-owned products, of course, it can’t be done on Facebook’s main site.

Furthermore, it is noted that Instagram and Whatsapp are the most downloaded apps in Australia, proved by data collected from Sensor Tower which tracks the app universe. However, Facebook was on number 2. Messenger averaged 260,000 downloads per month, more even than Facebook’s 223,000. WhatsApp averaged 200,000 in 2020.

Facebook holds a tight grip on the Australian market while Twitter has an opportunity to benefit from its withdrawal. Joe Bonner an Argus Research analyst says that Twitter would be a prime candidate,” he adds “They’re already very driven by the news.” Many other companies are thriving hard to fill the void after Facebook’s withdrawal-like Telegram, Discord, and Signal. They are likely to attract people and share stories moreover these three ranked among the most downloaded apps in Australia in the past month, recorded by Sensor Tower. None of the apps are big with mainstream publishers. 

Facebook will not face a bigger loss as new accounts for less than 4% of the content was shared on Facebook, so it will not face a bigger loss in traffic by restricting the stories.

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

However, investors of Facebook are least concerned, the shares of the company fell 0.15% on Wednesday beating out the 0.6% drop suffered by the tech-dominated Nasdaq composite. Australia represents only a small market for the gigantic tech firm. The company engaged nearly $71 billion in global revenue in 2019, only about $520 million.

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