The boss of stock trading app Robinhood has apologised for blocking customers from buying shares in video game retail chain GameStop during a stock frenzy last month that saw its share price rise more than 1,700pc.
“I’m sorry for what happened,” Robinhood chief executive Vlad Tenev told the US House Committee On Financial Services. “I’m not going to say we’re perfect and we haven’t made mistakes in the past. Robinhood will learn from this and improve and I’ll make sure of that.”
The stock trading app, which abandoned plans to launch in the UK last year, was forced to place restrictions on its customers purchasing so-called “meme stocks” including GameStop after millions of users of Reddit drove up the price of shares.
GameStop stock surged from $17 (£12) to $483 between 25 and 28 January, an incident which Mr Tenev described as a “black swan event” that had a one in 3.5m chance of occuring.
He denied claims that the app was in cahoots with hedge funds that shorted GameStop when it ceased trading of the stock. He said that Robinhood received “zero pressure from anyone” to restrict trading, instead crediting the decision to capital depository requirements.
Mr Tenev also used the hearing to apologise to the family of Alexander Kearns, 20, who killed himself after mistakenly believing he owned $730,000 after seeing a negative balance in the app.
“I’m sorry to the family of Mr Kearns for their loss,” Mr Tenev said, adding that the passing was personally “troubling”. Mr Tenev said the company is making changes to its app to make the risks of trading clearer.
Thursday’s hearing also saw members of Congress hear from Keith Gill, a prominent Reddit day trader known online as “Roaring Kitty” who used YouTube and Reddit to publicise his belief in the value of GameStop shares.
“The idea that I used social media to promote GameStop stock to unwitting investors and influence the market is preposterous,” he said.
Referencing a recent Zoom hearing in which a lawyer appeared with a cat filter, Mr Gill opened his comments with: “I am not a cat, I am not an institutional investor, nor am I a hedge fund.”
Gabriel Plotkin, the head of hedge fund Melvin Capital which suffered a $4.5bn loss due to its short position on GameStop, called the GameStop episode a “misleading frenzy” and warned that many investors “have now lost significant amounts.”
That’s a wrap
After more than five hours, the hearing is over. The politicians largely cheered on Gill, or Roaring Kitty, and Reddit but had tough questions for Robinhood’s Telev and Citadel’s Griffin over their relationship and whether they truly had retail investors’ best interests at heart.
That’s it for tonight. Check in tomorrow for more tech news.
More than half of Robinhood’s revenue comes from market makers
Robinhood’s Telev has told American politicians that the company makes “more than 50pc” of its revenue from market makers who secure trades on behalf of Robinhood customers, not from its retail trader customers.
Robinhood receives payments from a number of market makers to provide orders, however its largest is Citadel, which was accused by the Securities Exchange Commission for failing to give Robinhood customers the best deal.
Robinhood received $180m in payments for trades in the second quarter of 2020.
Robinhood was fined $65m (£48m) by the US securities regulator for allegedly misleading customers about its commission fees and its deals with high-speed trading companies in December.
It has agreed to pay the fine without admitting to the charges and to make its revenue sources clearer to customers.
Robinhood dodged ‘enormous catastrophe’ during GameStop frenzy
The boss of stock trading app Robinhood admitted that the company narrowly avoided an “enormous catastrophe” which could have wiped its 13m users’ portfolios during the GameStop frenzy.
The 34-year-old admitted that if Robinhood hadn’t placed restrictions on trading of GameStop and other stocks temporarily, its users may have all lost access to the markets.
This is because they were unable to fulfil the $3bn capital call from its equity clearinghouse on January 28. The National Securities Clearing Corporation warned that it would step in and liquidate its unsettled clearing portfolio, leaving users with a “total lack of access to the markets”, Mr Tenev said. As a workaround, it restricted trades to de risk the portfolio.
Congressman Anthony Gonzalez said that this posed a serious risk to consumers in the future.
He said: “In a sense I love your company because it does, when correctly managed provide investment opportunity for individuals who are currently frozen out of the market for one reason or the other, but at the same time I believe a vulnerability was exposed in your business model and perhaps in the regime that governs your capital requirements.
“We just can’t live in a world where my constituents have their portfolio liquidated without their consent, just because you aren’t able to make a capital call.”
It took five hours between Robinhood becoming aware that it needed to give the NSCC cash and halting trades as a workaround.
Reddit chief says Wall Street Bets benefits from anonymity
Reddit’s Steve Huffman says that it has been looking closely at Wall Street Bets, the forum which pumped up GameStop’s share price and encouraged people to invest in the stock to stick a middle finger to Wall Street shortsellers, to see if there was any criminal activity.
He says they “take manipulation on Reddit incredibly seriously” and that Reddit “can be held responsible” for any wrongdoing – but added he had not seen anything that would suggest illegal activity on the forum so far. However, he claimed it was important for users of the forum to enjoy anonymity, because it allowed them to be more open about wins and losses.
Many novice traders and users of the forum grew concerned that they might find themselves mixed up in a Securities and Exchange Commission investigation when rumours spread that the forum had been involved in market manipulation. The SEC says it is looking closely into the circumstances that caused the stocks to go up.
Citadel chief denies talking to Robinhood about halting GME
Citadel’s Kenneth Griffin is grilled by Congressman Juan Vargas on whether anyone at the organisation spoke with Robinhood about halting trades on GameStop and other shorted stocks.
Mr Vargas said that the public believed Robinhood took from the “little guy” and gave to the “big guy” by halting trades so that Citadel, which invested in shortsellers and therefore benefited from the stock going down, could benefit.
“Let me be perfectly clear,” Mr Griffin said. “Absolutely not”.
Pushing him further, Mr Vargas asked: “So if we depose everyone in your organisation we will find that?”
To which Mr Griffin replied: “That is correct”.
Robinhood boss warns of negative impact of financial transaction tax
Robinhood chief executive Vlad Tenev has warned that a proposed financial transaction tax, which would levy a 0.1pc tax on the sale of securities, would harm his 13m customers.
“A 10 basis point transaction tax would eat into the returns of our customers that are largely smaller investors,” he told congressman Alex Mooney.
“In that sense it would be a cost to the retail investor. It would have to be weighed against the potential benefits of this tax.”
GameStop shares drop
After a brief spike while Roaring Kitty, or Mr Gill, was speaking, GameStop shares have dropped 6.6pc in after hours trading.
Although it may come as little surprise that the price, which once soared to $483 per share, has dipped, there was much anticipation that the renewed interest in the company thanks to today’s hearing – and Mr Gill’s optimism about the stock – would pump up the price.
Robinhood boss apologises to family of dead trader
Robinhood’s Mr Tenev used the hearing to apologise to the family of Alexander Kearns, 20, who killed himself after mistakenly believing he owned $730,000 after seeing a negative balance in the app.
“I’m sorry to the family of Mr Kearns for their loss,” Tenev said, adding that the passing was personally “troubling”.
Tenev said the company is making changes to make the risks of trading clearer, and improve education of those who download the app to help them understand what they are taking on.
He said: “We vowed to take a series of very aggressive steps to make our options products safer for our customers”.
Robinhood accused of sharing ‘misleading’ investment data
Robinhood chief executive Vlad Tenev has been accused of sharing “meaningless” information after he repeatedly told members of Congress that the total value of customer assets on Robinhood is $35bn.
“A hard dollar number is meaningless,” said Congressman Jim Himes in a heated back and forth with Mr Tenev in which he sought to persuade Robinhood’s chief executive to share a rate of return experienced by his customers.
Mr Tenev declined to share a rate of return, instead telling the committee that “the proper comparison is to customers not investing at all. Much of our customers are investing for the first time.”
“Don’t make me be rude here,” Mr Himes responded. “I actually think the right comparison is what if clients had invested in an S&P Index Fund.”
Allegations of crime ‘conspiracy theories’
Representative Loudermilk has came out in defence of Robinhood, claiming that the committee is jumping on a crisis and that “we do not need to rush to enact even more big government regulations that could ultimately harm investors”.
He says Robinhood has opened trading up to millions who would never have been able to get involved.
Wall Street Bets investigation
Securities expert Jennifer Schulp tells the committee that the securities regulator should investigate whether anonymous Reddit accounts were engaging in deceptive behaviour while encouraging others to buy GameStop on the r/WallStreetBets forum.
Schulp adds that there is little evidence that there was market manipulation going on, however there might have been “false conduct” that is difficult for the public eye to spot.
Market manipulation is incredibly hard to prove, and it is legal to share public and accurate information on social media when discussing stocks.
Roaring Kitty dons a suit
Keith Gill, known as Roaring Kitty on YouTube, started his opening statement with “I am not a cat… nor am I a hedge fund.”
For the hearing, Gill wore a jacket and tie but his infamous headband (worn in his YouTube vides) could be seen hanging on poster of a kitten with the words “Hang in There”.
Gill told lawmakers that he reaped a profit on his investment because he did his homework, and not because he touted the stock.
“The idea that I used social media to promote GameStop stock to unwitting investors and influence the market is preposterous,” Gill said.
“My posts did not cause the movement of billions of dollars into GameStop shares. It is tragic that some people lost money and my heart goes out to them.”
Hundreds of thousands tune in
The world’s fascination with GameStop was apparent as more than 73.000 tuned in to watch the live stream of the GameStop committee hearing.
Robinhood doesn’t monitor social media
Rep. David Scott started his questioning by saying: “This is a threat to the future of our financial system and we must get to the bottom of it“.
He went on to ask Robinhood chief executive Vlad Tenev if it monitors what happens on social media and how it drives the use of their platforms. He also asked if it has any policies to see if investors are making trades based on legitimate information, rather than social media. Or, in his words, “superfluous information”.
Mr Tenev said Robinhood doesn’t monitor social media in any form, noting it “simply doesn’t” have the technology.
He said: “Our priority throughout the exceptional market conditions…was to maintain the up-time and performance of our platform and make sure we are available to our customers”. Mr Tenev added Robinhood has educational resources for people to learn how to trade, which had 3.2m visitors last year.
The conversation ended with Mr Scott said: “Don’t you see and agree that something very wrong happened here, and that you’re at the centre of it?
Regulators have rapped Citadel in the past
A big question about Citadel’s “payment for order flow” is whether the company truly provides the cheapest prices and the best trading terms that it can. This is a legal requirement for all companies doing such business.
Mr Griffin was unequivocal that it does, but regulators have disagreed in the past. In 2017, the US Securities and Exchange Commission (SEC) accused Citadel of “misleading” clients by failing to get the best prices on retail trades. Citadel agreed to pay $22.6m in penalties, surrendered gains and interest on those gains, admitting no responsibility.
Another controversy is the practice of “trading ahead”. This means using the orders it receives to profit from its own stock at the expense of clients, such as by selling its own before selling clients’, meaning the clients get less money when they’re paid.
Only last July, Citadel paid $700,000 to settle allegations by the US Financial Industry Regulatory Authority (Finra) that its automated compliance system had failed to catch 559 instances. Citadel neither accepted nor denied those findings, but agreed to pay restitution.
13pc of Robinhood users trade options
Quizzed about how Robinhood filters out investors who know enough to handle more complex trades such as options, Mr Tenev says that only 2pc of the app’s customers borrow on margin; 13pc trade options, and only 3pc trade “multi-leg” options.
“The vast majority of our customers are engaging in buy and hold activities and long term investing,” he says.
He adds that Robinhood is actually “more restrictive” than other zero-fee apps, because borrowing on margin requires users to become Robinhood Gold members or $5 per month.
Citadel’s payments to Robinhood under fire
Both Mr Tenev and Mr Griffin were grilled on whether Citadel’s services actually offer Robinhood the best possible price. Citadel is a market maker, a kind of grand financial middleman, that pays Robinhood for “order flow” – meaning that it pays for a reliable stream of transaction requests, as well as getting information about what is being bought and sold.
This is a controversial business model, even though it means Robinhood can offer commission-free trading. One congressman repeated the “if you’re not paying for the product, you are the product” aphorism that has become common in describing Facebook.
Why does Citadel get so much of Robinhood’s order flow? Mr Tenev said it is simply because they provide the best prices and the best “execution quality”. Mr Griffin said this was “very important to the democratisation of finance”.
‘Zero pressure from anyone’, says Tenev
Vlad Tenev says that Robinhood received “zero pressure from anyone” to restrict trading of Gamestop shares, crediting the decision purely to capital depository requirements.
Asked by North Carolina Republican Patrick McHenry why Robinhood stopped users from buying stock and not selling it, Mr Tenev said that the requirements only demanded the former. Moreover, blocking sales would cut users off from access to their money if they wanted to pull it out – a bigger problem than not being allowed to invest it.
Mr McHenry pressed Tenev on why Robinhood, a private company, does not find a way to let users buy stock in itself, taking a stake in the app whose success they power. But Jennifer Schulp of the Cato Institute, a libertarian think tank, said that US regulators demand investors in private firms have at least $200,000 to be “accredited investors”.
Reddit chief executive says forum that pumped GameStop ‘raised important issues’
Steve Huffman, Reddit’s co-founder, says that the forum which helped drive up the price of GameStop and other stocks in late January has raised an important debate about the financial markets.
“WallStreetBets may look sophomoric or chaotic from the outside, but the fact that we are here today means they’ve managed to raise important issues about fairness and opportunity in our financial system,” he said, appearing over video link. “I’m proud they used Reddit to do so.”
GameStop shortseller says ordinary investors ‘lost extraordinary amounts’
Gabriel Plotkin, founder of Melvin Capital Management, the hedgefund that shorted GameStop and was bailed out by Citadel (sparking conspiracy theories about its relationship with Robinhood) says: “In the frenzy during January, GameStop’s stock rose from $17 to a peak of $483.
“I do not think anyone would claim that that price had any relationship to the intrinsic value of the company.
“The unfortunate part of this episode is that ordinary investors who were convinced by a misleading frenzy to buy GameStop at $100, $200, or even $483 have now lost significant amounts.”
Robinhood chief executive testifies in front of US politicians
Vlad Tenev, Robinhood’s chief executive, is appearing via live stream at the House Committee on Financial Services, which is examining whether anything illegal took place between January 25 and January 28, when several stocks soared after social media encouragement. Robinhood ceased trades of these stocks, including GameStop, for a day, causing traders to lose out. Politicians wants to know why this happened – where they put under pressure by the hedgefunds who had shorted the stock?
Australians find ways to side step news ban
Australians are already finding ways to sidestep Facebook’s ban on news content on the site, with one politician reading a newspaper aloud to her followers.
Jenny Leong, who represents the Greens in New South Wales, shared a video on Wednesday where she held up a newspaper.
“Welcome to the new format: Jenny shares an article old school style,” she said.
“Usually when I get up in the morning, I check the news and one of the first things I do is if there’s any cutting edge opinion pieces or stories you guys would like to see on my Facebook, I press share on the link…. This morning I did that but it appears it disappeared because Facebook has decided we can no longer share news content.”
‘We can live without Facebook’, says radio host
Radio host Neil Mitchell has issued a message to Facebook founder Mark Zuckerberg, accusing him of acting like “a cyber bully” and saying Australians can live without the platform.
“I think these attempts to punish us while negotiations are still going are really quite outrageous,” said the presenter, who works at news station 3AW.
Facebook has said Australia’s proposed media law, which would force the platform to pay for the news content it links to, “fundamentally misunderstands the relationship between our platform and publishers who use it to share news content.”
In a blog post, the company said: “It has left us facing a stark choice: attempt to comply with a law that ignores the realities of this relationship, or stop allowing news content on our services in Australia. With a heavy heart, we are choosing the latter.”
Facebook shares slip in response to news ban fall out
Facebook shares dipped 1pc on Thursday as investors assess the implications of the platform’s wide-ranging news ban in Australia.
“While I believe Facebook said that news links only account for 4pc or so of content, the danger here is contagion if other countries pursue similar legislation with broader definitions of who is a publisher,” Bernstein analyst Mark Shmulik told Reuters. “Could this spiral into Facebook paying influencers for their posts?”
News ban ‘threatens human rights’, says Amnesty International
Human rights group Amnesty International has called on Facebook to “immediately reverse” the ban on news content in Australia.
“Facebook’s action starkly demonstrates why allowing one company to exert such dominant power over our information ecosystem threatens human rights,” said Amnesty campaigner, Tim O’Connor, adding he was alarmed community groups, emergency services and charities had also been caught up in the ban.
“We’re particularly concerned with the effect this is having on people in the Pacific, many of whom rely on getting information and news from Facebook due to the nature of their agreements with telecommunications providers,” he added.
“Facebook’s willingness to block credible news sources also stands in sharp distinction to the company’s poor track record in addressing the spread of hateful content and disinformation on the platform”.
Facebook’s message to regulators
Analysts say Facebook’s actions in Australia are designed to send regulators worldwide a clear message: don’t touch the business model.
“It’s a conflict that is playing out in different ways, across multiple countries and I think what Facebook is doing is flexing its muscles, not only in Australia but also showing the rest of the world that it is prepared to take extreme measures if it’s business model is threatened,” says Luca Schiavoni, Senior Analyst at Assembly Research.
“The message is: regulate us on things like privacy but please do not disrupt key elements of our business model”.
Australian musicians also blocked
One of Australia’s best-selling musicians, Jimmy Barnes, has also seen links on his page blocked by Facebook.
The artist, who was the lead vocalist in rock band Cold Chisel, said his videos had been taken down from the site after the platform’s news ban came into effect overnight on Wednesday.
As of Thursday afternoon, his Facebook page was littered with notices reading: “This content isn’t available at the moment”.
WWF page blocked in Australia
Wildlife charity WWF said it has also been a victim of the dispute, saying: “So Facebook has blocked access to our page”.
The news ban comes after Josh Frydenberg, deputy leader of Australia’s Liberty Party, said he had held “a constructive discussion” with Mr Zuckerberg over the weekend.
The tech billionaire had raised “a few remaining issues” regarding the country’s policy of payment for news used on social media – a far cry from the all-out ban that erupted overnight.
‘Crass and deeply irresponsible’ – MPs react
MPs have reacted with anger to Facebook’s decision to stop sharing news in Australia. Julian Knight, who chairs the DCMS Select Committee, said: “Australia is the canary in the coal mine as far as social media legislation is concerned.”
Damian Collins MP, meanwhile, said: “The spreaders of hate speech & disinformation can do their worst in Australia, it’s the real news Mark Zuckerberg is stopping you from sharing.”
‘People will just revolt against it’
People in Australia have reacted with dismay to Facebook’s decision to block news in the market. Here is what they had to say:
Facebook behaving like a ‘school yard bully’ says UK media boss
The chairman of the UK’s News Media Association Henry Faure Walker has said Facebook is acting like a bully and abusing its power over social media.
Mr Walker said that the actions were “a classic example of a monopoly power being the school yard bully, trying to protect its dominant position with scant regard for the citizens and customers it supposedly serves.”
He added: “Facebook’s actions in Australia demonstrate precisely why we need jurisdictions across the globe, including the UK, to coordinate to deliver robust regulation to create a truly level playing between the tech giants and news publishers.”
New Australian law ‘keenly watched’ by regulators
Australia’s new laws that will make tech giants pay to publish news will be watched closely by politicians and regulators around the world, according to Martin Garner of analyst firm CCS Insight.
With other nations looking for ways to re-balance the power between tech firms and news publishers, with the latter having lost much of its advertising revenues, the Australian experiment offers one way to tackle the issue.
He says: “Australia’s move will be watched keenly by countries around the world. In making decisions about regulating major web players, governments have to balance their policies against the possibility that the companies could ultimately pull out of that country. But pulling out would be a bad outcome for both sides: if Facebook blocks news in Australia, it will also reflect badly on Facebook.”
Read Australian PM’s Facebook post in full
Here’s Scott Morrison’s statement about Facebook in full – fittingly posted on the social network’s platform, of course.
Facebook ‘behaving like North Korea’
The premier of Western Australia, Mark McGowan, has accused Facebook of acting like North Korea in stinging remarks that follow the company’s decision to pull news articles entirely from its site in Australia.
McGowan told reporters: “They’re behaving more like North Korea than an American company. I would urge the American Government to assist us here in resolving this matter.
“It’s outside the spirit of the relationship between Australia and the United States.”
Facebook has been critical of new laws that would make it pay for news links shared on its website. It said the new law “fundamentally fails to understand how our services work” in a blog post overnight.
On Twitter and Instagram, the hashtag Delete Facebook has been trending in Australia as users react to its decision to ban news sites from publishing on its services.
Media companies have also reacted furiously, calling on readers to give up on Facebook.
In a message to its readers, Australian Community Media, which runs several magazines, said:
Facebook’s action will take what is already a breeding ground for untruths and turn it into a festering swamp of disinformation. As a company, it is clearly prepared to live with the consequences of tearing up whatever already tattered social contract it had with the people who use its service. Instead of talking, Facebook has walked away. ACM urges every Australian to do the same.
Here is everything you need to know about the Facebook ban
Facebook bans news for all Australians
Overnight, Facebook banned news stories being shown on its site for all Australians. This means that news stories will stop showing up in their feeds and publishers pages have had all their posts deleted.
Why has Facebook banned news?
It did this in opposition to a new News Media Bargaining Code being introduced, that would force it into deals to pay for news. Australia is trying to force tech giants into these deals to support publishers. Google has also threatened to withdraw its search service. You can read more about that here.
What has Facebook blocked?
Australian publishers, newspapers and TV news channels have all seen their stories wiped from Facebook, whether they are shared by users or by the publishers themselves. However, it has also inadvertently blocked dozens of other pages and posts that are not technically news. This has included updates from charities including domestic violence hotlines, weather channels and even its own official Facebook page.
What have people said?
Australia’s Prime Minister, Scott Morrison, has said Australia will not be “intimidated” by Facebook. Scientists and charities have issued warnings that other content has been caught up in the ban, including health warnings over coronavirus. Australia Science and Technology said: “For Facebook to block access to the feeds of trusted science and health organisations in Australia during a pandemic and bushfire season is irresponsible and dangerous.”
There are also concerns that Facebook’s block on traditional news sources will amplify misinformation at a time when news about the pandemic and vaccines can be a matter of life and death.
Are there concerns about the new laws?
Despite widespread condemnation of Facebook, there are also concerns that Australia’s new laws go too far. Critics say the rules are a capitulation to powerful news barons who hold significant political sway. They argue the rules will benefit big publishers the most. Google, meanwhile, has argued the laws will make tech firms pay to offer links, a fundamental building block of the web.
My colleague Laurence Dodds has this in-depth break down of the dust up down under. He writes:
If neither side gives in, this will be a living experiment into how powerful Facebook really is – as well as whether there is life after Facebook for publishers attempting alternative business models. Yet the cost of those answers may prove far higher than mere missed revenue.
Roaring Kitty is sued, and submits evidence to Congress
Roaring Kitty, aka Keith Gill (aka another name which is not suitable for print), the trader who bet big on the rise in GameStop shares and at times sat on tens of millions of dollars in paper gains, has been sued in the US over allegations of market manipulation.
According to a suit brought by an individual investor in Massachusetts, Gill’s share chat on his Reddit and YouTube channel were in fact efforts to pump GameStop higher.
In written testimony to Congress, however, Gill denies this. Here is just some of what Gill had to say:
I am not a hedge fund. I do not have clients, and I do not provide personalized investment advice for fees or commissions. I am an individual investor. The idea that I used social media to promote GameStop stock to unwitting investors is preposterous.I was abundantly clear that my channel was for educational purposes only, and that my aggressive style of investing was unlikely to be suitable for most folks checking out the channel. Whether other individual investors bought the stock was irrelevant to my thesis – my focus was on the fundamentals of the business. It’s worth noting that after five months of streaming, my final stream of 2020 topped out at just ninety-six concurrent viewers.
Gill did become an icon of sorts for amateur investors buying GameStop shares. At several stages, he posted to WallStreetBets with his stock accounts showing huge gains in the tens of millions of dollars. Gill reportedly bought his shares at around $5. At one stage, they were up nearly 7,000pc.
The trader explicitly denies being involved in any kind of market manipulation. But he ends with a nod to GameStop’s WallStreetBets fans: “I’m as bullish as I’ve ever been on a potential turnaround. In short, I like the stock.”
Facebook and Google diverge
Both Facebook and Google are threatened by Australia’s News Media Bargaining Code, but they appear to be diverging on how to fight it. The code would force news publishers and Facebook and Google into mandatory deals that would see the tech firms pay for displaying any news content on their sites.
Google had threatened to pull out of the Australian market entirely, but recently appears to have softened its stance.
Yesterday, it signed a deal with News Corp, of the influential Murdoch family, that would see it pay to provide snippets and digests on its News Showcase service. This comes after Google had threatened to shut down its service in Australia. My colleague Ben Wood has the story here.
Facebook, meanwhile has gone on the offensive and is arguing news is worth more to publishers in Australia than to it.
William Easton, its head of Australia and New Zealand, said: “In fact, and as we have made clear to the Australian government for many months, the value exchange between Facebook and publishers runs in favour of the publishers — which is the reverse of what the legislation would require the arbitrator to assume. Last year Facebook generated approximately 5.1 billion free referrals to Australian publishers worth an estimated AU$407 million.”
Facebook ‘blocks itself’ in Australia news ban
Facebook’s sweeping Australia news ban has blocked charities, weather channels, retailers and even, briefly, its own official page.
The tech giant has said it will bar all news posts and pages from being shown in Australia ahead of a law that would make the tech giant pay to display news stories.
Unfortunately, the messy start to the ban has taken with it a lot of collateral damage. Various health information sites, shops, restaurants and several domestic violence organisations were bumped offline.
It even deleted its own page, according to Andrew Brown, a reporter at the Canberra Times.
Facebook has ‘unfriended’ Australia, says PM
Scott Morrison, the Australian Prime Minister, has taken to Facebook to engage in what one user described as “trolling” of Facebook, saying the country would not back down on efforts to make the tech firm pay for news.
It comes after Facebook blocked news stories from displaying in the news feeds of Australian users as the country prepared to introduce its News Media Bargaining Code.
Morrison said: “We will not be intimidated by BigTech seeking to pressure our Parliament as it votes on our important News Media Bargaining Code.”
Five things to start your day
1) Facebook bans all news for Australian users amid government spat The social media giant urged the government to back down as it froze publishers’ pages and blocked all Australians from sharing news.
2) Only 1pc of Britain’s start-up bailout money went to female founders Industry leaders had urged for the scheme to take into account diversity and existing gaps in funding last April.
3) Texas power crisis threatens world microchip supply as plants shut down Local energy officials have ordered Samsung, NRX and other chipmakers to shut down in order to conserve electricity
4) North Korean hackers charged in cyber scheme targeting Sony and world banks The US Department of Justice accused the men of extorting more than $1.3bn (£930m) in cash and cryptocurrency.
5) Bitcoin ATM boom fuels money laundering fears Installed in shops, petrol stations and even strip clubs, the machines swap cash for cryptocurrencies and vice versa.
Coming up today
Dropbox and Roku announce financial results