Australia Proposes 2.25% Tech Levy to Fund News After Meta Deal Collapse

Prime Minister Anthony Albanese has unveiled draft legislation for a "News Bargaining Incentive" that imposes a financial levy on large technology companies. The move aims to secure sustainable funding for local journalism by penalizing platforms that refuse to reach commercial revenue-sharing agreements with news organizations.

Under the proposed rules, eligible companies will face a levy set at 2.25% of their local Australian revenues, though this amount can be offset by existing commercial deals. To qualify for the levy, a company must generate more than $250 million in annual Australian revenue and maintain a significant user base—either 5 million users for social media platforms or 10 million for search engines. The government currently identifies Meta, Alphabet (Google), and TikTok as the primary targets of the legislation. The Albanese government expects the initiative to raise approximately $250 million annually for the Australian journalism sector.

A Shift in Strategy

This legislation replaces the previous News Media Bargaining Code, a framework that the government now views as ineffective. While the previous code relied on arbitration and the formal designation of companies, no platforms were ever actually designated under that system. The shift to a direct revenue-based levy is designed to close loopholes and prevent tech platforms from simply removing news content to avoid payment obligations.

The urgency of the reform follows a period of significant instability in the market. In early 2024, Meta abandoned its existing deals with Australian news companies, a move that resulted in an estimated $70 million annual loss for the local news industry. Prime Minister Albanese defended the necessity of the new measure, stating that local news is vital to communities and that these stories cannot be told without Australian journalists.

Global Tensions and Trade Risks

The proposal has triggered an immediate and sharp reaction from the United States. A spokesperson for the Trump administration described the levy as "foreign extortion," stating that President Trump is committed to defending the U.S. technology sector from digital services taxes. This escalation suggests that the dispute may move beyond media policy and into the realm of international trade, potentially leading to retaliatory trade remedies against Australia.

Industry leaders have signaled their support for the mandate. In a joint statement, Australia's largest media companies argued that journalism becomes unsustainable if digital platforms profit from news content without paying for it.

What to Watch

As the draft legislation moves toward a final vote, the primary uncertainty remains the reaction of the targeted tech giants. While the government intends to create a financial mandate, the risk of platforms further restricting news access or the U.S. government imposing trade sanctions remains high. Observers will be watching to see if Meta, Alphabet, or TikTok attempt to negotiate new commercial deals to avoid the 2.25% levy before the law takes effect.