The federal government has revealed a new bargaining chip in the gamble to bring big tech back to the table as news publishers.
The “news media trading incentive” is essentially a new levy imposed by the Australian Taxation Office on digital platforms. Platforms that renew or enter into agreements with news publishers to pay for news content will be able to offset the tax.
Platforms that refuse to come to the negotiating table will still have to pay, whether or not they host news content on their sites.
Deputy Treasurer Stephen Jones and Communications Minister Michelle Rowland suggested at a press conference on Thursday that this would leave organizations such as Meta and Google with a much bigger bill than if they had simply struck deals.
“Chess in four dimensions”
The incentive aims to strengthen the Morrison Government’s 2021 News Media Bargaining Code. This system gave the Federal Treasurer the power to “designate” an eligible digital platform to enter into a commercial agreement with news publishers to pay for news content appearing online.
A 2022 review of the code suggested the legislation was successful without ever having been signed into law. The threat of designation prompted Meta and Google to strike 34 deals totaling more than $200 million in the media industry.
Google has extended the agreements reached. But earlier this year Meta announced it would not renew any of the 13 deals it struck three years ago with Australian media companies. These transactions were worth millions of dollars.
The federal government found itself faced with a conundrum. Should it designate platforms and risk what happened in Canada, where Meta responded to government pressure to pay for journalism by simply removing all Canadian news content from its platforms? Or should Australia take a different approach?
Jones admitted to playing the equivalent of “four-dimensional chess” to determine the government’s next move.
There is no doubt that he and Rowland had an eye on Canada, where the government played hardball – and lost.
What happened in Canada?
Canada’s online news law, Bill C-18, has been touted as the legislation that “learned the lessons” from Australia’s news trading code.
The Australian code was criticized for not immediately designating digital platforms, which essentially allowed platforms to choose which publishers they negotiated with – meaning small or niche publishers largely lost funding.
Instead, the Canadian government insisted that its Online News Act would be the first legislation requiring Meta and Google to pay for third-party news content on their sites.
But the strong-arm tactics did not work.
The legislation existed only hours before Meta announced it would simply block Canadians from accessing and sharing information across all of its platforms.
While the Canadian government successfully brought Google back into negotiations, Meta used Bill C-18 as a global example for other governments considering similar legislation. He followed through on his threat to remove news content from his sites.
The effects on the Canadian news industry were widely felt.
Most Canadian news publishers have reported disastrous declines in online traffic, audience engagement and overall revenue, due to the ban on news content on Facebook.
The Canadian Media Ecosystem Observatory reported that a year after Meta blocked access to news on Facebook and Instagram for Canadian users, about a third of small local news providers are now inactive online.
But the great loss for public interest journalism in Canada is that overall news consumption has fallen. Many Canadians are not replacing the news they previously consumed through Facebook by searching for news elsewhere.
Faced with these dire consequences for public interest journalism, the Australian federal government has chosen a corporate incentive approach.
Will the incentive work?
Above all, the incentive tax announced Thursday applies to digital platforms, whether or not they host news content.
This means digital platforms would pay more if they did not strike deals with news publishers – or they would have to consider the economic value of removing their entire operations from Australia to avoid paying the tax.
The federal government is rolling the dice on a “designation-style” system, with the benefit of ensuring big tech can offset its deals with Australian news publishers.
There are caveats. Jones said big tech companies wouldn’t be able to meet their obligations simply by doing one big deal. However, existing transactions would be recognized under the new regime.
Although this incentive seems promising, questions remain.
Responding to a question from a reporter on Thursday, Jones appeared to suggest that the number and value of any transaction could be made public. However, this is unlikely.
Under the News Media Trading Code, commercial confidentiality provisions mean publishers and platforms are not required to report the number or value of transactions.
News publishers were unwilling to announce how they were investing the money they received or whether that investment was consistent with the News Media Bargaining Code’s policy goal of supporting public interest journalism .
This means that previous research showing that the news media bargaining code created “winners and losers” among news publishers will not change under the new incentive-based system. Small publishers will continue to lose out.
Platforms will continue to choose who they trade with, how much money they contribute, and in some cases even what content they want to see produced.
The elephant in the room
The federal government has not yet addressed the question of meta size: what will happen if digital platforms continue to withdraw from negotiations with news publishers?
Although the federal government has not yet finalized the project, the announcement follows consultation with digital platforms and a briefing to the new US government.
A public consultation document detailing the structure of the incentive will be published in early 2025.
This will undoubtedly give Meta time to think about his next move.
Diana Bossia is Associate Professor of Digital Communications at RMIT University.
