The Australian government has proposed taxing social media giants Meta, Google and TikTok a proportion of their revenue to pay for news reporters.
The government unveiled draft legislation on Tuesday that it plans to present to Parliament by July 2. The proposal aims to encourage social media companies to make agreements with news organisations, offering financial incentives for them to pay for journalism, as reported by AP.
Platforms argue that the proposal was a “digital services tax” that does not completely understand the evolving advertising industry and would fail to deliver a sustainable news sector.
Australian Prime Minister Anthony Albanese argued that a monetary value should be attached to journalists’ work, adding that investment in journalism is critical to a healthy democracy.
“It shouldn’t just be able to be taken by a large multinational corporation and used to generate profits for that organisation with no compensation appropriate for the people who produce that creative content,” Albanese told reporters.
“We think that investment in journalism is critical to a healthy democracy,” he added.
The tax would apply to Meta Platforms, which owns Facebook and Instagram, Google, which is owned by Alphabet Inc., and TikTok, which is majority-owned by US-backed investors.
This is the second time Australia has attempted to make platforms pay for Australian news text and images that their users view.
Digital platforms had been pressured to strike deals with Australian news publishers to pay for journalism by legislation passed in 2021 that created the country’s News Media Bargaining Code.
However, these platforms chose to sign commercial agreements with news creators rather than be compelled to go to arbitration, where a judge would determine the price.
But they have since avoided renewing those deals by removing news from their services.
What is the proposed News Bargaining Incentive?
In a bid to make the newly proposed legislation compulsory, the News Bargaining Incentive would impose a 2.25% tax on platforms that choose not to strike commercial deals with news publishers, based on their Australian revenue.
According to the government, platforms that comply by paying publishers for journalism would be eligible for offsets, lowering their overall costs.
The government expects the incentive would raise between 200 and 250 million Australian dollars ($144 million-$179 million) a year. That was about as much as the platforms paid news outlets when the News Media Bargaining Code was working at its peak, according to AP.
The income earned from these platforms will be distributed among news organisations based on how many journalists each organisation employs, Communication Minister Anika Wells said.
Meta, Google oppose legislation
Parent company of Facebook and Instagram, Meta, has opposed the move, saying news organisations “voluntarily post content on our platforms because they receive value from doing so.”
“The idea that we take their news content is simply wrong. This proposed legislation, which would apply to platforms regardless of whether news content even appears on our services, is nothing more than a digital services tax,” Meta said in a statement.
“A government-mandated transfer of wealth from one industry to another, with no connection to the value exchanged, will not deliver a sustainable or innovative news sector. Instead, it will create a news industry dependent on a government-administered subsidy scheme,” Meta added.
Google also rejected the proposal. It clearly stated: “We reject the need for this tax.”
“It ignores the fact that Google already has commercial agreements with the news industry, misunderstands how the ad market changed and mandates payments from some companies while arbitrarily excluding platforms like Microsoft, Snapchat and OpenAI — despite the major shift in how people consume news,” a Google statement said.
TikTok did not immediately respond to a request for comment.
It should be noted that all targeted platforms are American. US critics argue that Australia’s legislation has “disproportionately” cost American corporations.
The Australian prime minister seemed unfazed by a potential pushback from the United States.
“We’re a sovereign nation, and my government will make decisions based upon the Australian national interest,” Albanese said.