Australia passes 2.5 per cent levy threat for Big Tech news deals

MUMBAI: Australia is making Big Tech pay attention and potentially pay up. The country has passed legislation requiring major technology platforms including Google, Meta, TikTok and LinkedIn to either strike commercial agreements with local news publishers or face a levy on their Australian advertising revenue.

The News Bargaining Incentive introduces a 2.5 per cent levy on Australian advertising revenue earned by eligible technology companies that do not meet the requirements for commercial news agreements. Revenue collected through the levy will be directed towards supporting Australian journalism and news production.

The rules apply to digital platforms operating significant search or social-media services in Australia and generating more than A$250 million in local advertising revenue.

To avoid the levy, platforms must enter into commercial arrangements with at least eight Australian publishers before the end of their reporting period. The value of those deals can then be offset against their potential levy liability.

The framework also gives smaller publishers a bigger seat at the negotiating table. Agreements with small and mid-sized, regional and independent media organisations qualify for a larger offset than deals with major media companies.

The legislation is the latest chapter in Australia’s effort to make technology platforms contribute more directly to the journalism ecosystem.

Australia became the first major country to introduce a mandatory news bargaining framework in 2021, leading to a high-profile confrontation with Google and Meta. Facebook temporarily blocked news sharing in the country before restoring the service following negotiations with the government and publishers.

The debate resurfaced after Meta chose not to renew several commercial news agreements established under the earlier framework. The company argued that news represented only a small share of activity on its platforms, while Australian publishers warned that the loss of such deals could further pressure newsroom finances.

The new system changes the equation by attaching a direct financial consequence to the absence of commercial agreements.

The Australian government argues that platforms benefit from news through user engagement and the advertising opportunities generated around that activity, while publishers carry the cost of producing journalism.

“The legislation is here, and the message to platforms to pursue commercial deals is clear,” the Australian government said following Parliament’s approval of the bill.

The government has positioned the measure as a means of supporting the sustainability of Australian journalism and local news businesses.

The approach is also being watched beyond Australia as publishers worldwide face declining referral traffic from social platforms, reduced visibility of news in feeds and the growing influence of AI-powered search and discovery.

Canada and several European jurisdictions have already introduced or explored mechanisms requiring technology platforms to compensate news organisations. Australia’s model, however, links the financial pressure directly to advertising revenue, making the economics harder for covered platforms to ignore.

For Big Tech, the choice is therefore becoming fairly straightforward: deal with publishers or deal with the levy.