In late 2024, the Australian Government announced a News Bargaining Incentive aimed at encouraging large digital platforms to support Australian news and journalism by incentivising those platforms to enter or renew commercial agreements with news publishers for the payment of news content hosted online.
At its core, the incentive introduces a new ‘charge’ or levy applicable to large digital platforms operating significant social media or search services such as Google, Meta, and TikTok – irrespective of whether those platforms host news content. The calculation of the applicable charge is intended to be based on total gross revenues attributable to Australian markets. Importantly, the charge will apply in addition to corporate income tax and will not form a deductible expense for corporate income tax purposes.
However, platforms will be able to reduce this liability, whether in part or in full, by claiming against a non-refundable offset for eligible expenditure supporting journalism. Accordingly, the scheme has been designed to incentivise large digital platforms to enter or renew commercial agreements with Australian news publishers.
The news bargaining incentive has been introduced in response to the limitations of the 2021 News Media Bargaining Code (the Code). Whilst the Code granted the federal treasurer the power to “designate” a digital platform to enter into commercial agreements for the payment of news publishers, platforms can circumvent those obligations by choosing to simply remove news content. Indeed, in May 2024, Meta announced that it would not renew the commercial deals entered into with Australian news publishers that were triggered by the introduction of the Code.
The Treasury has identified a proposed three limb test to determine which platforms will be subject to the incentive:
A digital platform is considered ‘large’ if it (together with its related bodies corporate) generate over $250 million gross revenue attributable to Australian markets.
The platform must operate a social media and/or a search service. In this respect, it is not expected to capture dating or direct messaging services.
The social media and/or search service must be significant.
It is expected that public consultation in relation to the incentive and particularly, the definitions of “social media and/or search service” and “significant” for the purpose of the three-limb test will commence in early 2025.
The message is clear: participate in news bargaining or face increased levies. Whilst the proposed news bargaining incentive has been welcomed as part of the growing global shift to ensure digital platforms contribute fairly to the industries they profit from; serious questions remain as to the ramifications of the proposals.
It is foreshadowed that platforms like Meta and Google will likely pay far more in levies than if they had simply engaged in direct commercial agreements. Should this occur, there is considerable uncertainty as to whether those platforms will elect to withdraw their operations from Australia altogether.
ABOUT THE AUTHOR
Isabella Orlic is a dynamic member of the team at the forefront of law in the digital age, focusing on defamation, media, commercial, regulatory, and employment law. Her practice is geared towards assisting clients in the social media, marketing, and creative sectors, adeptly navigating complex legal challenges unique to these industries.
Holding a Bachelor of Laws and a Bachelor of Arts (Media and Communications) from the University of Sydney, Isabella blends legal expertise with industry insight to deliver comprehensive, tailored solutions to her clients, empowering them to succeed while managing potential risks box.
