Australia has passed a new law that could force major technology companies, including Meta and Google’s parent company Alphabet, to pay a levy if they fail to strike commercial agreements with local news publishers. The move marks another major attempt by a government to make global technology platforms contribute financially to the news industry.
Under the legislation, known as the News Bargaining Incentive, eligible technology companies could face a 2.5% levy on their Australian advertising revenue if they do not enter qualifying commercial agreements with local media organisations.
The government has framed the measure as an incentive for technology platforms to support journalism rather than simply as a new tax.
Image Credits: News Bytes
Who Does the Levy Apply To?
The levy targets companies operating a “significant” social media or search service in Australia and generating more than A$250 million (around US$178 million) in Australian advertising revenue.
This puts some of the world’s largest technology companies in the spotlight, particularly platforms with substantial advertising businesses and large audiences in Australia.
However, companies can avoid the levy by meeting specific requirements. Platforms that reach agreements with at least eight different publishers by the end of their reporting period can qualify for an exemption.
The value of these commercial agreements would then be taken into account when calculating the company’s potential levy liability.
How Will the Commercial Deals Work?
The legislation specifies that agreements must support the production of news content or relate to news content produced by publishers being made available online through the platforms.
The system also provides different incentives depending on the size of the publisher.
Deals with large publishers receive a 150% offset, meaning the value counted toward the company’s levy liability is higher than the actual amount spent. Agreements with small and medium-sized publishers receive an even larger 200% offset.
There is, however, a limit on how much any individual agreement can contribute. A single deal cannot account for more than 25% of a platform’s total levy liability.
This effectively encourages technology companies to spread their commercial arrangements across multiple publishers rather than relying on one large agreement.
Australia’s Message to Big Tech
The Australian government has made it clear that the legislation is intended to push technology platforms toward direct commercial relationships with local media organisations.
“The legislation is here, and the message to platforms to pursue commercial deals is clear,” the government said in a statement.
The policy reflects Australia’s broader effort to address the financial pressure facing traditional news organisations as advertising revenue has increasingly shifted toward digital platforms.
Rather than simply requiring companies to pay the levy, the government has designed the system to make commercial agreements with publishers the more attractive option.
Image Credits: Firstpost
Why the Law Matters
Australia has previously taken an aggressive approach toward regulating the relationship between technology platforms and the news industry. The latest legislation continues that approach by using the threat of a significant financial charge to encourage platforms to fund local journalism.
For companies such as Meta and Alphabet, the potential cost could be substantial if they fail to meet the requirements. At the same time, the structure of the law gives them an opportunity to avoid the levy by entering qualifying agreements with multiple Australian publishers.
The legislation also comes at a time when governments around the world are examining how powerful technology platforms affect traditional industries, from news and advertising to gambling and entertainment.
Interestingly, the new law was passed just one day after Australian parliament approved legislation restricting gambling advertisements, highlighting the government’s broader push to impose stricter rules on major digital platforms and online businesses.
