Facebook, Google and TikTok will be forced to fund Australian journalism regardless of whether they host it, under a federal government plan to impose a new tax to push the tech platforms to make funding agreements with news organisations.
The tax, which could also apply to Apple and Microsoft, would be applied to the platforms’ Australian revenue, but can be reduced to zero if they sign agreements similar to those Google and Meta (the owner of Facebook) signed in 2021, including with the ABC.
The expiration of those agreements, and Meta’s threat not to renew them, made the government reconsider how to get platforms to pay without spooking them to pull news off their platforms.
The new tax could be offset more than dollar for dollar with any amount the platforms spend on new agreements, making those agreements cheaper than paying the tax.
On that basis, the government does not expect its tax will raise any revenue, seeing it instead as a “backstop” to bring platforms and media outlets to the table.
If any revenue is raised, that would also be distributed to outlets via a mechanism that has not yet been determined.
Ministers Stephen Jones and Michelle Rowland plan to legislate the change in the new year but backdate it to take effect from 1 January for tax purposes.
Game of chicken
The ministers have opted not to release their plans for the rate of tax or the size of the offset, except to clarify that it will apply to all social and search platforms with Australian revenue of over $250 million and will not be “refundable”.
That means platforms can only reduce the tax to zero and would not be reimbursed beyond that point.
Ambiguity over the rate allows the government to go to the negotiating table with the tech platforms and make a final decision it thinks they will accept.
Meta has previously threatened to pull all news from its Australian platforms if forced to pay, as it did briefly in 2021. While this proposal will dull that threat by making Meta pay whether it hosts news or not, the government is also conscious of avoiding more drastic actions such as the company withdrawing from Australia entirely.
The first round of Meta and Google agreements had provided a substantial revenue stream to major commercial publishers and the ABC, which used its money to add 60 journalists to its regional workforce.
But many smaller players had been unable to secure agreements.
The design of this tax would not stipulate which media outlets the platforms should pay — instead, it would work like a standard tax offset where any dollar spent on an agreement with a relevant outlet would be deductible.
While full details have not been settled, this raises the possibility that platforms could choose to sign exclusive deals with one or some outlets.
Ms Rowland has separately flagged plans to announce direct government funding for news media in next week’s mid-year budget update, with no further details as yet.
Multinational tax loopholes a risk
The government is unsure whether Microsoft (which owns LinkedIn) and Apple will be covered by its $250 million threshold but is confident it will apply to Alphabet (which owns Google), Meta, and ByteDance (which owns TikTok).
An additional complication is that many of these global companies have long been accused of structuring their tax affairs to “realise” money they make elsewhere in low-taxing countries such as Ireland or Singapore.
The Australian government is part of long-running global efforts to stamp out this practice, but the new tax could bolster the incentive for tech platforms to take advantage of any available loopholes.
