Big information tech companies that fail to strike deals with Australian media will face higher levy

Big information tech companies that fail to strike commercial deals with Australian media organisations will face a 2.5 per cent levy on their digital advertising revenue under the federal government’s proposed amendments to media bargaining laws, with legislation expected to be introduced to parliament within weeks.

However, the companies have secured a key concession, successfully arguing the levy should apply only to their digital advertising revenue. That means while the penalty rate for failing to reach agreements with news organisations is higher than originally implemented, the amount companies would ultimately pay would be calculated on a much smaller portion of their overall revenue.

In the existing incentive structure, big digital search companies like Google would have paid a fee of 2.25 per cent of their revenue if they did not pay at least four local news companies under commercial agreements. But they could avoid paying the fee if they entered into tax-deductible agreements worth about 1.5 per cent of their revenue.

The government has now changed the fee to 2.5 per cent of advertising revenue if companies do not come to agreements with at least six local news services. AI companies will continue to be excluded from the scheme.

Assistant Treasurer Daniel Mulino said big tech companies should provide compensation to the organisations who provide them content through news. “That will mean that we have a news production ecosystem that is more sustainable going forward,” he said. “This reflects the fact that what we are really trying to target here is the part of the business that uses the news.”