Meta has released its submission to the News Bargaining Incentive and it hasn’t pulled any punches, it’s safe to say.
The Facebook parent’s argument against the Incentive is four-fold: news content has a “negligible” commercial value to platforms, it represents a tax on innovation, consumption habits have shifted away from news content to short-form video and publishers receive “considerable economic benefits” from their presence on platforms.
The Incentive is an addition to the News Bargaining Code which was passed into law in 2022. The new proposal would place a 2.25 per cent tax on the Australian revenues of Google, Meta and TikTok unless they negotiate deals with publishers worth 1.5 per cent of their turnover. The money provided to publishers would be tax deductible.
The original Code, meanwhile, mandated certain platforms to strike deals with Australian publishers or remove news content from their platforms.
According to the Australian Financial Review, the “treasury has been holding high-level meetings with the major media and tech players” about the Incentive this week.
Tax on innovation
In its submission, Meta said the Incentive “operates as a tax on innovation rather than a targeted response to any identified market failure”.
Mark Zuckerberg’s company said the model does not incentivise Australian news publishers to “innovate for the changing technological [sic] and ignores commercial reality of how consumers engage with news and information in the modern era”.
It’s charge here is that Incentive would levy a tax on all of Meta’s revenue in Australia—regardless of whether it was created through advertising, hardware sales or any other means.
“It captures the growing revenues from hardware and wearables innovations that Meta is bringing to market, products that have no connection whatsoever to news content,” it wrote.
“Meta Quest virtual reality headsets have been available in Australia since October 2020, with the Meta Quest 3 launching in Australia in October 2023. Ray-Ban Meta smart glasses became available in Australia from 2025. For as little policy justification as there is to require social media platforms like Facebook to fund news publishers, there is even less of a rational policy nexus between the sale of virtual reality hardware or wearable technology and the funding of news publishers. The NBI’s revenue base therefore represents a significant structural overreach.”
Be that as it may, Meta already sends the preponderance of its Australian revenue overseas before it can be taxed.
In April, Meta sent 87 per cent of its Australian revenue overseas. Only revenue from advertisers serviced by Meta’s local teams is subject to Australian tax. The rest of the revenue is classed as a “distribution fee” for the overseas parent company.
To be clear, this is not illegal and B&T is not implying that Meta has done anything wrong.
Meta also said that the Incentive might contravene a the Australia-United States Free Trade Agreement.
Economics of publishing
Meta also said the underlying premise of the code “inverts the economics of news content on social media services”.
It quoted a 2023 analysis by NERA Economic Consulting that found publishers reap “considerable economic benefits” from their use of Facebook.
“The market-based economic relationships between publishers and Meta ‘reasonably reflect the value of the bargain to each party,'” wrote Meta in its submission, quoting from the report.
“There is ‘no basis for government interventions designed to tip the scales in favour of publishers,'” it continued.
The 2023 NERA report opens with “The authors wish to thank their colleagues for helpful comments and Meta Platforms, Inc. for financial support.”
Meta similarly pointed to its work in Canada, where it pulled news content from its services in response to the country’s Online News Act, as a cautionary tale.
“The very fact that a platform can remove news content from its services… is itself evidence that news has negligible commercial value to our platforms and illustrates the flawed premise of the Code and now the proposed NBI, which presume that social media platforms benefit from news content that is posted on their platforms,” it wrote, adding that news represents a “very small part” of social feeds these days compared to short-form video.
“The news distribution and discovery landscape has transformed fundamentally. TikTok now has 1.59 billion users globally. YouTube Shorts generates 200 billion daily views. ChatGPT has 800 million weekly active users. Generative artificial intelligence and AI-powered search have created entirely new pathways for consumers to access news,” it continued, noting that the Incentive itself recognised the shift to LLMs.
Research from Telsyte released yesterday found that 12 per cent of Aussies now identify AI tools as their primary means of finding information online, up from 5 per cent a year ago. Majority (81 per cent) are aware of AI summaries in search results, with half indicating they would often rely on the summary without clicking through to the source.
Telsyte anticipates these shifts will pressure search, publishing and digital marketing models as AI summaries and agentic search experiences become more common.
Meta concluded its submission with the following:
“The NBI fails to account for the changing digital and competitive landscape, the reality of how Meta’s services work – specifically that most people now come to our platforms for creator-driven video content – and that news publishers voluntarily choose to post content on our platforms – for free – because they perceive value in doing so.
“It is not the role of digital platforms to pay to rescue public-interest journalism.”
On Wednesday, News Australia chief Michael Miller rejected the notion that the incentive was a tax. “The government only built this path because Meta refused to sit down at the negotiating table, and again they are flipping the script rather than adhering to Australia’s proposed laws,” he said.
Nine Entertainment chief executive Matt Stanton said it was disingenuous to suggest that following Australian law was blocking investment.
“This initiative would be completely unnecessary if these companies simply adhered to existing Australian law, came to the bargaining table and reached deals for the fair use of our commercial property,” he said.
