Facebook and Instagram company Meta has accused Australia of violating the Free Trade Agreement (FTA) with the United States following the country's government's proposal to impose a new tax on technology companies that do not enter into content licensing agreements with local media organizations.
In a statement issued on Thursday, Meta described the proposed 2.25% tax on companies' total revenue in Australia as untenable. According to the company, the tax would not only involve revenue from social media platforms, but also income from other businesses not directly related to social media services.
The proposal, known as the News Bargaining Incentive, is an effort by the Australian government to ensure that giant technology companies continue to contribute to the local media industry that provides news content to their users.
Meta said the move contradicts commitments contained in the Free Trade Agreement between Australia and the United States. The company argued that Australia should treat American companies equally as it does local companies.
According to Meta, the scope of the proposed tax is also broader than some digital services taxes introduced by other countries before, which have sparked trade retaliation from the US government.
The conflict between Meta and the Australian government has actually been going on since 2021 when Australia became the first country in the world to pass a law that forced digital platforms such as Facebook and Google to negotiate with media organizations to pay for the use of news content.
At that time, Meta acted to block news sharing in Australia in protest of the law. However, the company later agreed to sign agreements with most of the country's major media organizations.
However, in 2024 Meta announced that it would no longer pay for news content. In response, the Australian government chose to introduce a new measure by imposing a tax on technology companies that refused to make agreements with news publishers.
Under the latest proposal, the companies involved are not only Meta and Google, but also include the short-video platform TikTok. Google had previously signed agreements with news publishers under the old system, but the company also reportedly disagreed with the new tax proposal.
The issue has also gained attention in the United States, particularly under President Donald Trump. Australia's efforts to regulate technology companies, many of which are based in the United States, are seen as a sensitive issue in the trade relationship between the two countries.
In fact, a US Congressional committee recently asked Australia's internet regulator to testify about allegations that it is trying to restrict Americans' freedom of expression on digital platforms.
So far, Australian regulators have not said whether they will comply with the request or not.
The new tax proposal is expected to increase tensions between the Australian government and global technology companies, testing the balance between the interests of the local media industry, the power of digital platforms and international trade relations.
