Australia's new strategy to compel big tech to support digital news media

New Delhi: The Australian government has introduced a new approach, dubbed the "news media bargaining incentive," to coax digital giants back to negotiating with news organisations. 

This strategy involves a new tax levied by the Australian Tax Office on digital platforms. 

Platforms that engage in or renew agreements with news publishers for content usage can offset this tax. Conversely, those platforms that opt-out will face the levy, irrespective of whether they distribute news content.

Assistant Treasurer Stephen Jones and Communications Minister Michelle Rowland have indicated that this could result in significant financial implications for companies like Meta and Google, far exceeding what they would pay if they were to negotiate deals.

This move supports the Morrison government's 2021 News Media Bargaining Code, which empowered the federal treasurer to designate digital platforms for mandatory commercial agreements with news outlets for online news content. While a 2022 review hailed the code as successful without actual enforcement, the looming threat of designation led to over 34 agreements, with a combined value exceeding A$200 million.

Despite this, Meta decided not to renew its previous contracts with Australian media, contrasting with Google's continued engagement. The government now faces a dilemma, akin to "four-dimensional chess," particularly after observing the fallout from Canada's approach:

Canada's hardline tactics: Canada's Online News Act (Bill C-18) aimed to force Meta and Google into paying for news content. However, Meta's immediate response was to block news on its platforms, drastically reducing news consumption and affecting small local news providers, with one-third becoming inactive online. This Canadian precedent has left a cautionary tale for Australia.

Australia's incentive-based approach

To avoid a similar fate, Australia has chosen a more nuanced incentive model. The levy applies to all platforms regardless of news hosting, encouraging them to negotiate or consider the financial implications of withdrawing from Australia. The government is betting on this "designation-like" scheme, sweetened by the possibility for big tech to offset their payments through deals with publishers.

However, there are complexities:

• Transparency Issues: Under previous arrangements, the specifics of deals remained confidential, creating a disparity where larger publishers benefited, leaving smaller ones at a disadvantage. This trend is likely to persist under the new incentive scheme.
• Ongoing Challenges: The government has yet to confront the possibility of platforms like Meta further retreating from negotiations. With the details of the incentive still under wraps, a forthcoming consultation paper expected in early 2025 will shed light on the structure, giving companies like Meta time to strategise their next steps.