The Australian government is imposing new tax legislation on Big Tech companies to support local Australian media outlets.
Since 2020, the Parliament of Australia has developed legislation to preserve media diversity, an effort that aims to remove any barriers to accessing reliable, accurate and independent news. The initiative focuses on the impact of media ownership laws and the influence of Big Tech platforms like Facebook and Google.
The relationship between local journalism and social media is imbalanced. Larger platforms benefit from information provided by news outlets, and therefore prioritise these companies over smaller and independent news organisations. Many of the government’s new regulations look to combat this imbalance by encouraging commercial agreements between Australian news outlets and Big Tech platforms. With recent proposed legislation, there’s been controversy and pushback from these companies.
Previous attempts at media protection
In 2021, the Australian government made their first attempt at managing the relationship between news and social media with the News Media Bargaining code. Within this code, companies like Meta and Google were encouraged to make commercial agreements with news outlets and publishers.
Although the code seemed beneficial at first, generating over thirty commercial agreements, there were faulty measures that failed to enforce the terms of the agreement. For example, the Treasurer was supposed to designate a digital platform to abide by mandatory obligations. However, the threat of designation actually prompted companies to make these agreements on their own to avoid processes under the code.
While this certainly contributed to the code’s flawed structure, the main driver in its failure was the lack of enforcement. Without strict regulations, companies were able to withdraw from their agreements.
Meta terminated its agreements by refusing to renew its commercial deals, due to claims that users weren’t using their platforms, like Facebook, for news content. As such, it wanted to invest its money into measures that actually affected its users.
However, these agreements were vital for media outlets, as companies like ABC used funding from commercial deals to create regional jobs.
Recent legislation for Australian tax on Big Tech companies
Previous attempts at legislation proved to be weak and offered little enforcement. As a result, newer drafts are in development for an Australian tax on Big Tech companies to support journalism.
In the new draft, Big Tech companies will be taxed 2.25 percent of their Australian-made revenue. Money generated from this tax will be used to fund Australian news media, thus supporting journalists. Funding will be dispersed based on the number of employed journalists at each outlet. In total, about $200 million to $250 million could be generated to be distributed to newsrooms.
The only way to avoid the tax is by creating and signing commercial contracts. Big Tech companies would have to strike deals with a minimum of four different media groups, as a way of diversifying prospects and gathering different perspectives on information. By entering into these agreements, Big Tech companies can deduct 150 percent of their signed agreements from their fiscal tax. Additionally, they can deduct a greater 170 percent if they make deals with smaller outlets, thus encouraging a more even spread of benefit across media groups.
Being subject to the tax results in a greater deduction of generated revenue, where striking agreements amounts to about 1.5 percent of Australian revenue in comparison to the tax’s 2.25 percent. Legislators hope that this provides incentive for Big Tech companies to support journalism.
How are Big Tech companies responding?
Big Tech companies are dissatisfied with the legislation proposal. Google, in particular, does not feel it should be subjected to such strict regulations because it has abided by the terms of the previous code, unlike Meta. It has committed to licensing agreements, and therefore rejects the need for tax on Big Tech companies.
Additionally, Microsoft, Snapchat and Open AI are exempt from the tax, frustrating other companies which argue that these exempt businesses are also sources news from Australian media outlets. Google points out that Microsoft owns LinkedIn, which distributes news just like the companies actually subjected to this tax.
Meta is dismissing the proposal, claiming that it’s a digital service tax (DST). These taxes specifically target large companies by essentially allowing companies to increase their taxes over large tech companies based on their involvement with local audiences. Meta also argues that it shouldn’t be subjected to tight regulations because media outlets voluntarily post on its platforms and receive profit.
Even though legislators claim these regulations will lead to more sustainable news, Meta rejects the claim and is refusing to pay for content amidst its de-prioritisation of news.
Support for the News Bargaining Incentive
Australian news outlets are in support of the government’s News Bargaining Incentive (NBI), and have released a joint statement encouraging support for the legislation. Directors, presidents, and CEOs across various outlets, including ABC, Nine Entertainment Co, The Guardian Australia, and others, have explained how important it is for digital platforms to support journalism, as Australian democracy relies on diverse news and perspectives.
The new legislation currently does not apply to AI companies, however many are hoping it will eventually extend to such platforms. Legislators are not prioritising AI companies since they are already being subject to developing policies and regulations as this technology is on the rise.
If you’d like to read more about recent technology in Australia, take a look at this article about trends in HR, tech and business .