The Australian Government has formally begun its consultation process on its proposed News Media Bargaining Code Incentive. As anticipated, the country is continuing down the path of penalizing specific digital service suppliers who fail to reach commercial deals that do not meet the expectations of publishers—irrespective of economic sense. Although framed as a way to “encourage commercial arrangements between major digital platforms and news publishers by providing a generous deduction for eligible deals”, the incentive operates as a coercive and discriminatory tax-like regime that would disproportionately target foreign, predominantly American digital services.
While the consultation poses five questions on the thresholds surrounding covered services, the policy direction is already taking shape. Assuming the consultation’s answers to Q1 cover “search” and “social media” in their ordinary meanings, Q2 finds that the framework will use a gross annual Australian revenue to determine which firms are subject to the incentive, and Q3 sets that threshold around AUD $250 million; many companies, the majority of which are American, would fall plainly in scope or have services swept in.
Despite many similarities to digital services taxes (DSTs) (threshold-based, covering a narrow subset of market participants), the structure of the proposal operates more as a targeted, content-based financial mandate, transferring revenue to politically-favored domestic constituents. Australia’s proposal is even worse than a DST because the incentive conditions the tax on specific distribution decisions made by companies, imposes obligations on specific firms and categories of speech, and creates direct government overreach and leverage over negotiations between publishing entities and digital services. This distinction is especially important given that the proposed incentive structure raises significant and profound concerns with respect to discrimination, coercion, and the use of regulatory tools to force payments to the country’s media entities. Accordingly, the U.S. Government should consider utilizing the tools of trade policy to enforce against such discriminatory treatment, to better ensure a competitive market and freedom of information sharing on the internet.
The initial framework is clear: Australia is moving toward a uniquely punitive and non-neutral system that singles out U.S. firms under the guise of support for the News Media Bargaining Code they’ve found is limited and ineffective.
More on the Bargaining Code here.
