Key facts
- Meta accused Australia of violating the U.S.-Australia Free Trade Agreement.
- Australia proposed a 2.25% tax on certain tech giants' Australian revenue.
- Meta views the proposed tax as indefensible and broader than existing digital services taxes.
- Meta is invoking U.S. trade action in response to the proposed tax.
- The tax is part of Australia's 'news bargaining incentive' model.
Meta Platforms Inc. has accused Australia of breaching the Free Trade Agreement (FTA) with the United States, invoking U.S. trade action in response to Australia's proposed media bargaining laws. Australia proposed a new 2.25% tax on certain tech giants' Australian revenue, which Meta views as indefensible and broader than existing digital services taxes. The dispute centers on Australia's proposed 'news bargaining incentive' tax. Meta argues the tax plainly violates commitments made in the bilateral Free Trade Agreement, which mandates 'treatment no less favourable' for American companies. The company is invoking U.S. trade action, drawing parallels to previous U.S. government responses to similar digital services taxes. Australia's proposed 'news bargaining incentive' tax, initially a law requiring platforms to negotiate deals with news outlets, evolved into a tax model after Meta ceased paying for news content. The issue of making social media companies reimburse news outlets for content that drives clicks has been a point of contention since 2021, when Australia became the first country to pass a law forcing platforms to negotiate deals or face government arbitration. After briefly blocking all news feeds in Australia, Meta agreed on deals with most major outlets but in 2024 said it was stopping paying for news. Instead of installing an arbitrator, the government said it would switch to a new model of charging a tax. It also expanded the list of companies it applied to, from Meta and Google to Meta, Google, and TikTok. Google, which had struck deals under the previous model, has also stated it opposes the proposed tax. Australia's effort to regulate mostly U.S.-based tech firms has emerged as a flashpoint under the current U.S. administration.