Australia has passed legislation that will require major technology companies, including Meta and Google, among others, to reach commercial deals with local media organizations for news content or face a tax on their advertising revenue in Australia.
The News Trading Incentive, passed by Parliament on Thursday, is designed to encourage digital platforms to compensate Australian news outlets whose content helps drive user engagement and advertising revenue on their platforms.
Under the legislation, qualifying businesses that fail to reach required commercial agreements will face a tax of 2.5 per cent of their advertising revenue in Australia.
According to Reuters, the measure applies to companies that offer a “major” search or social networking service in Australia and that generate more than 250 million Australian dollars (178 million) in local advertising revenue.
Companies covered include Meta, Alphabet’s Google, TikTok and Microsoft’s LinkedIn.
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Platforms can avoid the tax by striking commercial deals with at least eight different Australian news publishers before the end of their financial reporting period. The value of those agreements will be offset by your lien obligation.
The legislation provides stronger incentives for deals involving smaller news organizations. Spending with large publishers attracts 150 percent compensation, while spending with small and medium-sized media attracts 200 percent compensation. However, any individual agreement is capped at 25 percent of a platform’s tax liability.
The Australian government said the legislation was intended to encourage platforms to deal directly with news organizations rather than simply paying the tax.
“The legislation is here and the message to platforms to pursue commercial deals is clear,” the government said in a statement.
“Agreements will need to be closed before the end of a digital platform’s financial reporting period so that they can be used to offset its liability in that period.”
The government added: “This is an important day for Australian news businesses and journalism.”
Profits from the scheme will be directed to Australian media, with the government seeking to support public interest journalism and the sustainability of the local news sector. The policy is part of Australia’s broader efforts to address the trading imbalance between major digital platforms and news organisations.
The legislation follows previous efforts by Australia to have technology companies contribute financially to news publishers whose content is distributed through their platforms. The new incentive also closes off a possible route for platforms to avoid obligations by simply removing news from their services.
The approval of the News Trading Incentive came a day after Parliament passed legislation restricting gambling advertisements, adding to recent government moves to regulate major digital platforms and online services.
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