Australia passes law taxing big tech over news payments

Australia's parliament passed legislation on Thursday that puts a price on ignoring local journalism. Under the new News Bargaining Incentive, tech giants must either strike commercial deals with Australian news outlets or hand over a slice of their advertising earnings to the government instead.

The law levies 2.5% tax on the Australian revenue generated from advertisements on the part of the firms that fail to come into an agreement with the local publishers. However, the law applies to firms which have a “significant” presence in Australia through their social media and search engines and whose local revenues are above A$250 million, or $178 million.

Platforms aren't locked into paying the levy outright. They can sidestep the charge by signing agreements with at least eight different Australian publishers before their reporting period closes. 

No single deal can cover more than 25% of a platform's total levy liability, a cap designed to stop companies from satisfying the requirement through one or two large partnerships while smaller outlets go unpaid.

Money raised through the levy flows directly to Australian news organisations, whose stories the government says help drive engagement and ad revenue on these platforms in the first place. 

The government called the passage "an important day for Australian news businesses and Australian journalism". 

It is worth mentioning that the law was approved by the parliament just one day after the adoption of a bill limiting gambling advertisements. The scheme takes advantage of the Australian News Media Bargaining Code from 2021, where tech companies were made to negotiate with the publishers directly.