Australia Passes Law To Levy Tech Giants That Fail To Pay Local Media For News

(Reuters) - Australia passed legislation on Thursday that will force tech giants to pay millions of dollars in levies if they fail ​to strike commercial deals with local media outlets for news  on their platforms.

The News Bargaining Incentive taxes the companies 2.5% on their advertising revenues unless they strike agreements.

Proceeds from the scheme would be directed to local ​Australian news outlets, whose content helps drive user engagement and ​advertising revenue on the tech firms' platforms.

The levy applies to Meta (META.O), ⁠Alphabet's (GOOGL.O), Google, TikTok and Microsoft's (MSFT.O), opens new tab LinkedIn, covering companies with a "significant" ​social media or search service in Australia, and local advertising revenue exceeding ​A$250 million ($178 million).

Platforms can avoid the charge by reaching agreements with at least eight different publishers by the end of their reporting period. The value of those deals ​would be offset against their levy liability.

The deals must support ​the production of news content or relate to news content produced by the publishers  being ⁠made available online by the platform, the legislation said.

Spending with large publishers carries a 150% offset, while spending with small and medium-sized outlets carries a 200% offset.

Any single deal is also capped at ​25% of a ​platform's levy liability.

"The ⁠legislation is here, and the message to platforms to pursue commercial deals is clear. Deals will need ​to be finalised before the end of a ​digital platform's ⁠financial reporting period to be used to offset their liability in that period," the government said in a statement.

"This is an important day ⁠for ​Australian news businesses and Australian journalism."

The passage ​of the News Bargaining Incentive comes one day after parliament passed laws restricting gambling advertisements.