Tech giants could soon have a new multimillion-dollar motivator to negotiate deals with Australian media companies to pay for news, after details of Labor鈥檚 proposed news bargaining incentive were finally revealed this week.
On Thursday, Treasury released a new聽聽on the mechanism, which was聽聽late last year.
It is designed to pressure large digital platforms, including Meta (owner of Facebook and Instagram), Google and ByteDance (owner of TikTok) into paying Australian publishers for using their content.
Under the聽, any digital platform earning more than A$250 million in annual revenue from Australia from search or social media services would face a charge equivalent to 2.25% of this revenue.
But platforms could reduce this charge by negotiating or renewing commercial deals with Australian news outlets. Every dollar paid to publishers would reduce the amount payable by $1.50. That means it would always be cheaper to fund journalism directly than pay the charge.
However, its design looks a lot like a 鈥渄igital services tax鈥 on big US tech companies. US President Donald Trump has put such measures聽, making it a bold move for Australia.
Why big tech needed a nudge
The proposed new model sits on top of the existing聽聽introduced by the Morrison government in 2021.
This code聽. Despite聽聽from Australia, Google eventually reached agreements with many publishers.
Meta eventually signed deals, too, albeit after聽聽from Facebook in Australia during a standoff. These payments became a crucial funding source for Australian media.
However, the code had a key structural weakness: it relied on platforms choosing to participate. Platforms can opt out, simply by not renewing commercial contracts with the news outlets and removing local news content.
In early 2024, Meta announced it聽聽its Australian news agreements.
The company argued news provided little commercial value. Without this revenue, many smaller Australian media would require large alternative sources of funding.
The government needed a mechanism that did not depend on voluntary cooperation. So, the聽聽was born, creating a financial consequence for refusing to pay.
Taxing digital profits
From a tax perspective, the proposed incentive resembles what鈥檚 called a聽.
Digital services taxes are already used in the聽,听聽and several other jurisdictions to collect tax from large digital platforms.
These taxes generally apply only to very large multinational platforms, focusing on digital advertising and user-based platform services. They use revenue, rather than profit, as the tax base. Their rates typically fall between 3% and 5%.
Australia has considered a digital services tax before. In 2018, Treasury released a聽聽exploring an interim digital turnover tax aimed at the biggest global platforms.
But successive governments paused the idea and instead backed聽聽to reallocate a portion of multinational tech companies鈥 profits to the countries where their users are located.
Called 鈥溾, this measure formed an important part of 鈥減illar one鈥 of an聽, which was supposed to be implemented globally in 2023.
A digital services tax in all but name
The proposed news bargaining incentive closely mirrors a digital services tax, applying a percentage charge to the Australian revenue of large digital platforms.
Most of that revenue comes from digital advertising, which is the central target of these taxes globally. The effective rate of 2.25% is also broadly in line with the typical digital services tax range.
The key political difference is where the money goes. A digital services tax sends revenue only to the government, while the Australian government鈥檚 proposal allows platforms to pay news publishers directly.
This gives Canberra a line of defence that this policy is about media competition, rather than taxation.
A bold move for Australia
The geopolitical context is now particularly important. In January, the Trump administration聽聽for the OECD鈥檚 global tax deal.
Trump has consistently described digital services taxes as聽聽measures targeting American companies. He has also previously authorised trade investigations and tariff threats against countries that pursued them.
Australia is聽. The US Trade Representative has placed elements of Australia鈥檚 digital regulation under review for potential unfair trade practices.
Even though Australia has not introduced a digital services tax, any measures that resemble one 鈥 or shift revenue away from US technology firms 鈥 are politically sensitive.
This means the news bargaining incentive must navigate a delicate political space. On paper, it is a competition and media funding mechanism. In substance, it functions very much like a tax to redirect tax revenue back to where users are located.
If Washington views the measure as a digital services tax in disguise, Australia could face diplomatic friction at a time when US trade policy has become significantly more unpredictable.
Republished from The Conversation under Creative Commons licence.
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