Australia Lays Fiendish Tax Trap For Meta – With An Expensive Escape Hatch

Australia has created a tax that only big tech companies must pay – but which they can also legally avoid by paying money to Aussie news publishers.

The new tax – dubbed the "News Bargaining Incentive" – is a follow-up to 2021's News Media Bargaining Code under which Australia forced Meta and Google to negotiate payments to local publishers, to reflect the value their news content adds to their search and social services. Those payments went straight to local publishers^*

The two tech giants both signed up, but the Code requires occasional re-negotiation of payment plans.

Meta's negotiations are due soon, and The House That Zuck Built has signalled it won't negotiate a new deal. Instead, it could repeat its actions in Canada, where it no longer allows links to news – to avoid obligations under a law like the Code.

If Meta or Google stopped allowing links to Australian publishers' articles, they would be exempt from the Code.

Australian lawmakers have realized that, which is why the News Bargaining Incentive has two elements: a charge, and an offset.

The charge will be levied on entities covered by the Code that choose not to make payments to publishers. The Register understands the charge will be sufficiently high that it will hurt to pay it.

But if an entity covered by the Code chooses to do deals with local media under the Code, the offset kicks in – and defrays the cost of the charge! Australian media will get funds needed to pay journalists, Big Tech will cough up a sliver of global revenue, and – in theory – the Land Down Under will emerge as a slightly better place thanks to its residents being able to access quality info curated by pros.

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Entities that earn more than AU$250 million ($160 million) in revenue down under will be impacted by the scheme, which Australia's government has said won't be used as a revenue-raising measure.

The Incentive is not yet law. A consultation paper will appear in early 2025, and a federal election due by May means it could be some time before it reaches Parliament.

Big Tech will likely use that time to push back – fiercely – just as they did when the Code was floated in 2020.

Australia persisted, and many governments around the world watched on with interest. Meta and Google scored some significant changes to the Code, but nonetheless signed up and handed over cash. Some international governments tried to follow Australia's lead, but Meta in particular decided it didn't like this sort of law and decided not to play ball – just as in Canada.

So now we get another round of "That's not a knife. That's a knife" as Australia and Big Tech brandish their blades of sovereign and market power.

The introduction of the Incentive is Australia's second big swipe at Big Tech in two weeks. The nation effectively banned kids under 16 using social media by requiring operators to "make reasonable efforts" to identify youngsters and deny them service. Australia has therefore reduced Big Tech's ability to make money and found a way to make it spend more on local media. Now to see if it works. ®

^*The Register is not eligible for these schemes, which we report to keep readers informed of evolving relations between sovereign states and Big Tech.