SYDNEY, June 4 - Meta, the owner of Facebook and Instagram, accused Australia of breaching the U.S.-Australia Free Trade Agreement by advancing a proposed levy that would tax certain tech platforms 2.25% of all their Australian revenue. The company described the plan, which would apply to revenue beyond social media activities, as "indefensible" and warned it exceeds the scope of digital taxes that previously drew trade action from the United States.
In a blog post published on Thursday, Meta said the draft legislation underpinning what Canberra calls the news bargaining incentive "plainly violates the commitments Australia and the United States made in their bilateral Free Trade Agreement, which commits Australia to grant American companies 'treatment no less favourable' than Australian peers." The company argued that by using firms' total domestic revenue as the tax base, the Australian proposal is wider in reach than some existing digital services taxes that provoked U.S. trade measures.
Meta urged policy makers to examine carefully what the proposed model represents, adding that the Australian approach goes "even broader than existing digital services taxes enacted by some governments which resulted in the United States initiating trade actions." A spokesperson for Assistant Treasurer Dan Molino, who would oversee the levy if enacted, was not immediately available for comment.
The dispute traces back to efforts to make social media firms compensate news organisations for content that drives engagement. Australia was the first country to pass a law in 2021 forcing tech platforms to negotiate payment arrangements with local publishers or face arbitration. Meta initially blocked news content in Australia for a short period, then reached agreements with most major outlets, but in 2024 said it had ceased paying for news.
Rather than rekindling the arbitration model, the government moved to a new mechanism that would raise revenue through a tax. The scope of affected companies was also expanded: where earlier measures targeted Meta and Google, the proposed tax is aimed at Meta, Google and TikTok. The company noted that Google had struck deals under the previous framework but has also voiced opposition to the proposed tax.
The proposed changes have become a point of international tension under the current U.S. administration. A U.S. congressional committee has requested that Australia's internet regulator testify about what the committee characterises as a regime of censoring American free speech; the regulator has not yet confirmed whether she will appear.
Clear summary
Meta says Australia’s draft law imposing a 2.25% tax on platforms’ total Australian revenue breaches the countries' bilateral free trade agreement and is broader than digital taxes that previously drew U.S. trade responses. The dispute centers on longstanding efforts to make tech platforms financially compensate news publishers, a policy that Australia has moved from arbitration toward a revenue-based levy applied to additional firms including TikTok.
Key points
- Meta labelled the proposed 2.25% tax on total Australian revenue as "indefensible" and a violation of commitments under the U.S.-Australia Free Trade Agreement.
- The measure expands the prior focus on Meta and Google to include TikTok, and uses a tax mechanism rather than arbitration to enforce payments to news organisations.
- Sectors affected include large social media platforms, digital advertising, and news media, with potential implications for international trade relations.
Risks and uncertainties
- Geopolitical and trade tensions - Meta warned the tax could prompt trade responses similar to past U.S. actions; this raises uncertainty for cross-border regulatory relations between allied governments, particularly affecting tech and trade policy.
- Regulatory unpredictability for tech firms - Changes from arbitration to a revenue-based tax and expansion of the list of targeted companies create compliance and cost uncertainty for major platforms and the digital advertising market.
- Procedural uncertainty - A U.S. congressional committee has sought testimony from Australia's internet regulator over alleged censorship of American free speech, but the regulator has not yet said whether she will testify, leaving procedural outcomes unclear.