Big tech to pay more if no deal reached with Australian media
The Australian government has finalised revisions to its News Bargaining Incentive, a scheme designed to compel large digital platforms to compensate local news organisations. Under the updated draft, technology companies that do not reach commercial agreements with Australian media outlets will face a levy of 2.5 per cent on their digital advertising revenue.
The announcement follows the conclusion of government consultation on the legislation. The revised plan increases the penalty rate from an earlier proposal of 2.25 per cent on overall company revenue to 2.5 per cent, but applies the charge only to revenue generated from digital advertising. As reported by ABC Australia, the companies successfully argued for this narrower base, meaning the effective amount they would pay is calculated on a smaller portion of their total income.
Assistant Treasurer Daniel Mulino explained the rationale in comments carried by ABC Australia. "What we do want though is that part of their business which is using news to be fairly compensating the producers of that news," he said. He added that the government does not want to discourage large tech companies from expanding in Australia but aims to target the segment that benefits from news content.
Changes to the incentive structure
Under the existing News Media Bargaining Code, introduced in 2021, large digital search companies such as Google faced a fee of 2.25 per cent of their revenue if they failed to pay at least four local news companies under commercial agreements. They could avoid the fee by entering into tax-deductible agreements worth about 1.5 per cent of their revenue. The revised incentive raises the threshold to agreements with at least six local news services, with the penalty set at 2.5 per cent of digital advertising revenue.
In a further adjustment, the offset for deals with small publishers will increase from 170 per cent to 200 per cent, according to ABC Australia. Additionally, five per cent of any funds raised through the News Bargaining Incentive will be directed into a grants program aimed at small publishers and new entrants.
The definition of journalists will also be broadened to include essential production roles and freelancers, expanding the scope of those covered by the incentive.
AI companies remain exempt
Artificial intelligence companies will continue to be excluded from both the tax and the obligation to reach agreements with publishers. Platforms such as Microsoft, Snapchat and OpenAI are not subject to the incentive, as reported by ABC Australia. Asked whether AI companies would be brought under the scheme, Assistant Treasurer Mulino indicated they would remain outside its scope.
Context: previous standoffs
The government's push to make big tech pay for news has previously encountered resistance. As ABC Australia reported, past attempts have prompted threats by major platforms to withdraw services from Australian users. Meta, which owns Facebook and Instagram, declined to renew deals with news organisations that were initially made under the News Media Bargaining Code, instead taking steps to sidestep the arrangement.
The revised legislation is expected to be introduced to parliament within weeks, according to the reports.
Key Claims
- Big tech companies that fail to strike commercial deals with Australian media organisations will face a 2.5 per cent levy on their digital advertising revenue.
- The levy applies only to digital advertising revenue, not total company revenue.
- Artificial intelligence companies remain exempt from the tax and from agreements with publishers.
- The government has concluded consultation on its News Bargaining Incentive legislation.
- The definition of journalists will be extended to include essential production roles and freelancers.
- Five per cent of any fund raised through the incentive will be allocated to a grants program for small publishers and new starters.
- The offset for deals with small publishers will increase from 170 per cent to 200 per cent.