Wins and losses for tech giants in revamped News Bargaining Incentive

LinkedIn will no longer be exempt from the News Bargaining Incentive, and only digital advertising revenue earned in Australia will apply to all targeted companies. Photo: hocus-focus.

LinkedIn will no longer be exempt from Australian laws requiring global tech giants to pay for news content on their platforms, and all will have to strike deals with more local media companies to avoid increased taxes.

Google, Meta, TikTok and now the Microsoft-owned LinkedIn will soon have to make deals with six media organisations, up from four under the current draft legislation, or pay 2.5 per cent of their digital revenue generated in Australia (up from 2.25 per cent).

A key concession to the tech companies, however, is that they will only have to pay a percentage of their digital advertising revenue made in Australia, rather than the previously planned total revenue.

Following industry consultation, the Federal Government has just released the final details of changes to the News Bargaining Incentive (NBI), and plans to introduce new legislation within weeks.

Microsoft’s Bing platform will remain exempt from the new rules, because its digital advertising revenue in Australia is under the NBI’s $250 million threshold.

Anthony Albanese had previously promised to also carve out LinkedIn from the NBI, but the Prime Minister has now included the platform in the narrower-based plan.

Changes mean that revenue from supplying news to customers and users by any method other than digital advertising will not attract the impost.

Artificial intelligence companies will also remain exempt from the NBI.

Assistant Treasurer Daniel Mulino pointed to the PM’s recent speech on AI, in which he promised copyright protections for local content.

“There’s a separate process which is looking at the ways in which AI might manipulate or use the content of news to produce something new, and I’m confident that that process will see appropriate outcomes over time,” he said.

But big social media platforms will have to pay to use Australian-made journalism.

“We don’t want to discourage those large tech companies from having a growing footprint in Australia,” Mr Mulino said.

“What we do want though is that part of their business which is using news to be fairly compensating the producers of that news … Australian journalism is important to a well-functioning democracy, and we want it to be sustainable now and into the future.

“While we are making some changes to the News Bargaining Incentive, they do not alter the intent of the legislation and remain true to the policy rationale.

“We want digital platforms to do deals with a diverse range of media organisations and have shown good faith with both the platforms and media companies during the consultation process.”

There were 85 submissions made as part of consultation on Labor’s exposure draft legislation, with narrowing the charge base to digital advertising revenue attributable to Australia being a hard-fought win for the tech companies.

The trade-off is that they will be taxed at the higher rate if no deals are made with local media companies.

The money raised through the taxes is planned to be directed to the employment of journalists in Australia.

The higher rate and the changed threshold aim to encourage deals of around the same size as before.

The government says the changed threshold to $250 million digital advertising revenue aligns it with the new charge base and ensures only platforms with the most bargaining power over news publishers are captured.

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Stakeholder feedback demonstrated a significant reliance of news services on professional networking services and an increasing volume of news content made available on these services.

The offset for deals with small publishers will increase from 170 per cent to 200 per cent to strengthen the incentive for platforms to enter into deals with small and medium news businesses.

The new approach will recognise that the expenditure incurred under existing deals predates the availability of the NBI’s specific details to the platforms.

The scheme will be reviewed after three years.

Following the consultation, changes are also being made to the News Journalism Payment Scheme.

It broadens the definition of journalists to include additional essential news roles and freelancers. It establishes a grants program for small publishers and start-ups (specifically those who do not meet the $150,000 annual revenue threshold) that uses 5 per cent of any NBI funds raised.

It will provide a 20 per cent uplift for regionally based journalists and small- to medium-sized publishers, as well as those serving underrepresented communities, including regional, small-business, CALD, First Nations, LGBTIQA+ and disability communities.

The government says the plan covers the additional operational costs these businesses incur and recognises their importance to the news ecosystem.

It also supports the growth, diversity and innovation in the news sector, rather than embedding the status quo.

Communications Minister Anika Wells said journalism was the “lifeblood of a robust democracy” and the government was backing a strong and sustainable media sector.

“An important change is the doubling of the distribution scheme loading for smaller and regional publishers,” she said.

“This acknowledges both the challenges smaller outlets face, but also the incredible contribution they make to the communities they serve.”