Australia Proposes Tax on Tech Giants to Fund Local Journalism in New Legislation

The Australian government has escalated its regulatory push against American tech firms by proposing a new tax to fund local journalism. The move comes as part of a broader effort to address challenges facing the country’s news industry.

Draft Legislation Introduced

On Tuesday, Australia unveiled draft legislation for a News Bargaining Incentive, which would require major tech companies—including Meta, Google, and TikTok—to either strike commercial deals with news organizations or pay a 2.25% tax on local revenue.

Companies that comply with the legislation by negotiating deals would receive tax offsets of either 150% or 170%, significantly reducing their tax burden. The tax would not apply to AI companies.

Prime Minister Anthony Albanese stated that the new measure is expected to generate AUD 200 to 250 million annually, with every dollar directed toward supporting journalists.

Replacing the News Media Bargaining Code

The proposal aims to revise Australia’s existing News Media Bargaining Code, which took effect in 2021. The original code pressured designated tech companies to pay news outlets for their content. While Google and Meta initially complied, Meta allowed its contract to expire in 2024, citing that only 3% of its content was news-related.

Tech Companies Push Back

Meta criticized the new proposal as a digital services tax, arguing in a statement on X that news organizations choose to post content on its platforms because they benefit from the exposure. The company emphasized that it does not take news content without permission and that the tax would apply regardless of whether news content appears on its platforms.

Google also opposed the legislation, stating in a formal response that the proposal “ignores the fact that Google already has commercial agreements with the news industry”. The company argued that the tax “misunderstands how the ad market has changed” and unfairly excludes other major platforms like Microsoft, Snapchat, and OpenAI, despite shifts in how people consume news.

Broader Regulatory Context

Australia has taken an increasingly active role in regulating its digital landscape. In December, the government implemented a ban on social media use for individuals under 16. However, enforcement has proven difficult, with many young Australians circumventing the restrictions. Rather than addressing compliance challenges, the government threatened legal action against platforms including Facebook, Instagram, Snapchat, TikTok, and YouTube for alleged noncompliance.

Potential Benefits and Criticisms

While the proposal aims to support local journalism, critics argue that the benefits may disproportionately favor larger news organizations. The legislation includes incentives for tech companies to strike deals with smaller outlets, but companies could still reduce their tax burden by negotiating with major players.

Australia’s largest news organizations, including News Corp Australia, the Australian Broadcasting Corporation, and Nine Entertainment Co., have been vocal supporters of the code and are likely to be its primary beneficiaries.

Even if the new system provides temporary relief to struggling newsrooms, it does not address deeper structural issues within the journalism industry. The proposal effectively creates a system where Australian news organizations remain dependent on foreign tech platforms for financial support.