Australia has passed legislation that will require major technology companies, including Meta, Google, among others, to either strike commercial agreements with local media organisations for news content or face a levy on their Australian advertising revenues.

The News Bargaining Incentive, passed by Parliament on Thursday, is designed to encourage digital platforms to compensate Australian news outlets whose content helps drive user engagement and advertising revenue on their platforms.

Under the legislation, qualifying companies that fail to reach the required commercial agreements will face a levy of 2.5 per cent of their Australian advertising revenue.

According to Reuters, the measure applies to companies providing a “significant” social media or search service in Australia and generating more than A250million(178 million) in local advertising revenue.

The companies covered include Meta, Alphabet’s Google, TikTok and Microsoft’s LinkedIn.

Platforms can avoid the levy by reaching commercial agreements with at least eight different Australian news publishers before the end of their financial reporting period. The value of those agreements will then be offset against their levy liability.

The legislation provides stronger incentives for agreements involving smaller news organisations. Spending with large publishers attracts a 150 per cent offset, while spending with small and medium-sized outlets attracts a 200 per cent offset. However, any individual agreement is capped at 25 per cent of a platform’s levy liability.

The Australian government said the legislation was intended to encourage platforms to negotiate directly with news organisations rather than simply pay the levy.

“The legislation is here, and the message to platforms to pursue commercial deals is clear,” the government said in a statement.

“Deals will need to be finalised before the end of a digital platform’s financial reporting period to be used to offset their liability in that period.”

The government added: “This is an important day for Australian news businesses and Australian journalism.”

The proceeds from the scheme will be directed to Australian news outlets, with the government seeking to support public-interest journalism and the sustainability of the local news sector. The policy is part of Australia’s broader efforts to address the bargaining imbalance between major digital platforms and news organisations.

The legislation follows earlier Australian efforts to make technology companies contribute financially to news publishers whose content is distributed through their platforms. The new incentive also closes a potential route for platforms to avoid obligations simply by removing news from their services.

The passage of the News Bargaining Incentive came a day after Parliament approved legislation restricting gambling advertisements, adding to the government’s recent moves to regulate major digital platforms and online services. (Tribune)