Pay up by January 1 or face huge penalties, government tells Zuckerberg

Meta boss Mark Zuckerberg is facing federal warnings against retaliating over a proposed levy to force tech giants including Facebook, TikTok and Google to fund journalism, which could raise more than $1 billion over four years for media companies battling declining revenue.

The Albanese government revealed its new policy, first reported by this masthead, on Thursday to encourage platforms to pay media businesses for news shared on their sites, opening a second major fight with big tech just weeks after declaring plans to ban teens from social media.

Communications Minister Michelle Rowland and Assistant Treasurer Stephen Jones, who will take a “dim view” of efforts to retaliate against the law.Credit: Ben Symons

It follows a failure from Meta, which owns Facebook and Instagram, to renew funding deals with media companies including News Corp, the ABC, Guardian Australia and Nine (the owner of this masthead) that it struck under a Morrison government-era code in 2021.

To push the tech companies back to the negotiating table, Labor plans to legislate a yearly charge in the tens of millions of dollars on big social media platforms with more than $250 million in Australian revenue. If a technology company agreed to fund the media, it would be allowed to deduct more than the value of that payment from the levy.

The government intends for the charge to come into effect from January 1, despite key details still being determined. As parliament has risen for the year, this suggests it would have to be applied retrospectively.

The proposed law sets up a showdown with Meta, which last year blocked Canadians’ access to news on Facebook and Instagram amid a similar dispute, showing the $US1.6 trillion ($2.5 trillion) company’s determination to avoid paying for content that publishers argue draws users and advertising dollars to its sites.

How the charge would work

• Government to set flat yearly charge for Meta, TikTok and Google.
• Any payments to media companies would reduce the charge, with an extra discount to encourage such deals as an “offset”.
• If companies refuse to pay for news, charge will be levied and revenue will be dispersed to firms by the government.

Assistant Treasurer Stephen Jones confirmed his government was prepared for a potential legal challenge from Meta, which has consistently argued its users do not value news content and it should therefore not pay for article links.

“The Australian government will defend its sovereignty and we would take very, very dimly any decision by any platform to respond to this very reasonable, well-thought-through, deeply consulted initiative with any … sort of retributive actions,” Jones said.

If tech firms refused to strike content deals, any money collected by the government from the charges would be dispersed directly to media companies. The government has yet to determine the amount of the charge, how much it would be reduced by payments to the media, or how money would be distributed to the media.

But Jones and Communications Minister Michelle Rowland have committed to funding media businesses at least at the same level as the current deals, which have been estimated at nearly $1 billion over four years from Meta and Google combined.

Meta, Google and TikTok would all fall within the scope of the charge, referred to as a news media bargaining incentive, as they earn Australian revenue of more than $250 million. Labor has not yet decided whether Apple, which runs Apple News, and Microsoft, which owns LinkedIn, would be captured.

“A strong and diverse news sector is vital for our democracy. The rapid growth of digital platforms in recent years has disrupted Australia’s media landscape, and it is threatening the viability of public interest journalism,” Rowland said.

“We need to get the parties back to the table.”

A Meta spokesperson said it agreed with the government that current legalisation was flawed but was concerned the proposal charged one industry to subsidise another.

“News publishers voluntarily choose to post content on our platforms because they receive value from doing so,” the spokeswoman said.

Meta, Google, Microsoft, TikTok and Apple combined generate more than $10 billion in revenue from Australia annually while almost all traditional media companies have cut jobs over the past 12 months as advertisers scaled back their spending.

The government could have used existing laws to encourage tech giants to pay for news under a process called “designation”, which would have triggered an arbitration process if the parties did not agree on a payment.

But the government ignored pleas from News Corp, Nine and Seven West Media to do so because it was concerned Meta would simply remove news material and escape the rules. Stripping news would have crippled smaller outlets that rely on social media to reach audiences.

The new charge would apply even if platforms refused to carry news, getting around Meta’s threat.

News Corp Australasia boss Michael Miller welcomed the government’s reworked bargaining legislation, saying it provided a foundation to rebuild Australia’s media industry after an estimated 1000 job losses this year.

News Corp would contact Meta to restart commercial negotiations, as well as TikTok to begin negotiations for an agreement, Miller said in a statement.

“I believe news publishers and the tech platforms should have relationships that benefit both parties on commercial and broader terms, and the government has set a clear timetable to conclude discussions,” Miller said.

Acting Nine chief executive Matt Stanton welcomed the announcement, saying it was a first step to ensuring the company was fairly compensated for the material it produced.

“We’re looking forward to working collaboratively with the government over the coming months to ensure the framework produces the best possible outcomes for our business, our people and our audiences,” Stanton said in an email.

Seven West Media boss Jeff Howard welcomed what he called a strengthening of the original code, under which the company had commercial deals with both Google and Meta. He said the updates ensured media companies were fairly remunerated for news production.

“An enhanced news bargaining incentive means trusted and reliable news will continue to appear on these platforms, combatting the growing problem of misinformation and disinformation,” Howard said.

A spokesman for Google said the company had extensive commercial deals with Australian publishers and was committed to renewing them when they expire. Any new laws should reflect Microsoft, Apple and Snapchat’s role in providing news, the spokesman said.

“The government’s introduction of a targeted tax risks the ongoing viability of commercial deals with news publishers in Australia,” he said. “We are reviewing today’s announcement and will have more to say once we’ve assessed the full impact.”

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