For those still confused as to why Meta and Mark Zuckerberg suddenly became fans of Donald Trump straight after the U.S. election, this context might help.
This week, Meta was among a range of tech companies, including Google, Apple, and X, which co-signed a request for the U.S. Government to step in to help them push back against what they’ve labeled “discriminatory” Australian media laws that force them to pay local news providers.
Back in 2021, the Australian government implemented its “News Media Bargaining Code” which effectively forces social apps and search engines to pay local publishers for any use of their content, including links to their sites.
The bill aims to address the impact that digital platforms have had on the ad industry, and subsequent publisher revenues, by redistributing some of the money raked in by the big apps to local providers.
Both Google and Meta have long opposed the bill, with Meta even banning Australian news outlets from its apps for a short time, before the government negotiated a truce. Through that negotiation, both Meta and Google eventually agreed to lesser revenue share deals with Australian publishers, though that’s still resulted in around $200 million per annum being transferred to local publishing companies.
But last year, Meta sought to get out of the deal entirely, citing the “de-prioritization of news” on its platforms. That’s prompted a revision in approach from Australian authorities.
And now, the tech giants are hoping that Trump’s USA-first approach will enable a stronger pushback against the legislation.
As reported by The Guardian:
“Members of the Computer and Communications Industry Association (CCIA) responded to a request by the Office of the United States Trade Representative for ‘comments to assist in reviewing and identifying unfair trade practices and initiating all necessary actions to investigate harm from non-reciprocal trade arrangements’. The comments describe Australia’s news media bargaining incentive as a ‘proposed coercive and discriminatory tax that requires U.S. technology companies to subsidize Australian media companies’.”
And in this instance at least, they’re right. Australia’s News Bargaining Code is a misguided tax on tech platforms, which actually provide more benefit to Australian publishers than the other way around.
As noted, the Australian Government is currently seeking to amend the code to ensure that the platforms keep paying, even if they were to block news entirely, like Meta did back in 2021. But again, this is a pretty blatant levy on tech platforms purely for being successful. And while local publishers could definitely use the extra funding, siphoning it from Meta and Google, which are now their key connectors to their audience, is not the right approach.
The right strategy would seemingly be more stringent tax enforcement, which forces foreign companies to pay local tax, as opposed to establishing offices in tax havens to reduce their obligations.
Meta, for example, reportedly paid $42 million in Australian taxes in 2023, based on $1.4 billion in local ad revenue. But local authorities believe that Meta actually brought in more like $5 billion in local revenue in the period, with the majority of that being funneled through its offices in Ireland, where it pays a much lower tax rate.
The Australian government did actually also look to enact this in 2018, to ensure that Meta and others would be forced to pay their fair share under local tax rules. But the previous Trump administration opposed it, saying that it would not stand for U.S. companies facing higher tax obligations.
But maybe, if the U.S. is going to seek to avoid local obligations either way, and impose tariffs on virtually every partner, that could open the door for a re-examination of this option, with any tax intake to then be re-distributed to local publishers.
Barring that, it still seems misguided for the Australian government to impose what looks like an arbitrary tax on tech platforms simply because they make a lot of money. Australian authorities are also under pressure from local media entities to get more out of the tech players, but again, the approach, as Meta notes, is pretty clearly unfair to its business.
And the Trump Administration has already made it clear that it is indeed going to back American companies in opposing foreign regulatory approaches like this.
Meta’s main target in this respect is the EU, where it’s been faced with an ever-evolving array of complex data protection and usage obligations, resulting in billions of dollars in fines for the business.
But the White House is also looking to even out all trade deals to better favor the U.S.
As such, I’d expect that Australia may have to revise its approach, or say goodbye to the additional revenue that it’s currently generating from the Media Bargaining Code.
The U.S. government will assess submissions before taking further action.
