Facebook is a bad company that makes money doing harm. It is the tobacco vendor of the internet economy. Although, in fairness to tobacco companies, they at least pay tax.

Perhaps we should have lower expectations from a company that began as a web site to objectify women. Or was caught lying about the analytics it gave its advertisers. Or manipulated the news feeds of its users to study the impact on their mental health.

Or which, even today, routinely amplifies voices of hate to turn a profit.

It is kind of absurd how Facebook, an advertising technology company that claims it can discern the intent of one buyer out of a billion in a millisecond, can’t distinguish between a media web site hosting news and a charity raising money for young children dying of cancer, or a women’s shelter that protects its clients from violent abusive men out to kill them, or … well you get the picture.

Its actions yesterday also damaged its customers.

Many of its big brand advertisers in Australia who give it hundreds of millions of dollars a year were frozen out with no warning. They might like to start asking questions. And considering actions. Class actions.

None of this is surprising, given Facebook’s long history of always doing the wrong thing when the right thing is a reasonable alternative.

This could get ugly, quickly, for Facebook. Forget its line yesterday that so many companies were caught up in its ban due to the wider definition of news in the legislation. That is spin, which is the polite language we use in business for lies. Facebook is lying. This was a poorly executed hit job by amateurs who used a sledgehammer when a scalpel would have been more appropriate.

Its response to the damage it has done speaks volumes to how little it cares about its customers.

Take Booktopia as one example. The company with over 100,000 fans on Facebook is one of the fast-rising stars of the local e-commerce sector and recently raised $20 million. Banned. Booktopia’s CMO Steffen Daleng told Which-50 there was no outreach or help from the platform. “We have heard nothing. We received no emails, no notifications. It was pure serendipity we even realised there was a problem.”

Motorola has a huge following on Facebook — over 15 million followers. Banned.

The list of brands mistakenly banned by Facebook rapidly grew throughout yesterday. Not all are household names you would recognise. Many were small businesses for whom Facebook is critical. Didn’t matter. Banned.

Google, which a few weeks ago was threatening to abandon the country over the same legislation, has now struck deals with News, Nine, and Seven, and will likely close more deals with the ABC and The Guardian shortly. It is all so cynical.

Disruption is messy

There’s a bigger story here. That’s the one about the role of governments when markets are disrupted. And this is all about media market disruption.

The legislation Facebook and Google object to is flawed. It also ignores the precedent from Fairfax Media Publications Pty Ltd v. Reed International Books Australia in 2010, which found that republishing snippets of someone else’s information and charging a quid for it is perfectly legal. (I was the Associate Publisher of the Australian Financial Review at the time and therefore on the losing side of the argument.)

The framework designed by the government in response to media pressure is an example of pure rent-seeking by market incumbents. The government should not be in the business of redistributing wealth from successful companies to unsuccessful companies.

However, it absolutely should be in the business of redistributing wealth from successful companies to the whole community through the taxation system. After all, those taxes created the infrastructure — roads, schools, hospitals, broadband — on which that success is built. If the government wants to go after Google and Facebook, it should do so on that basis. But of course, that means it would have to go after News Corporation as well.

Frankly,  there is a much more efficient way to fund public interest journalism than the mess we have witnessed in recent months. If the government really cares about public interest journalism, as it claims, then it can increase funding for the ABC and SBS tomorrow, and create an independent structure such as the one under which the Reserve Bank operates.

That way, both of those public broadcasters can genuinely and effectively serve the interests of the Australian community — and not whichever politician has his or her bum attached to the ministerial leather at the time.

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