Under a new plan unveiled by the Albanese government on Thursday, massive technology companies are expected to either partner with information organizations to support funding of journalism or make payments to the Australian government.

Under a new plan, the existing framework established by the Morrison government in 2021, known as the information media bargaining code, will be implemented. This system requires tech giants like Google and Meta – which owns Facebook, Instagram, and WhatsApp – to compensate news organizations for their role in supporting journalism through revenue-sharing arrangements.

The Australian government has announced

Implementing an Information Bargaining Incentive scheme to foster collaborations between digital platforms and information publishers through mutually beneficial industrial agreements. The Australian government has no plans to increase revenue from its healthcare program.

Companies that choose to forgo or fail to renew industrial agreements with information providers ultimately bear the consequences. Companies entering into such agreements will thereby mitigate their legal liability.

Regardless of their content offerings, the motivation applies equally to giant digital platforms, including prominent social media and search providers.

The design of the scheme remains under consideration, with the federal government anticipating the release of a public session paper in early 2025.

How did we arrive at this critical juncture – and what dire consequences might unfold should Meta fail to comply with the necessary measures?

What’s the point of dwelling on past mistakes?

Despite initial success over its first three years, the Australian media bargaining code is no longer seen as a viable solution by Meta, which now believes it should not be required to pay for news content. As of earlier this year, it has decided not to renew its existing information media contracts.

While other companies may have short-term agreements with talent agencies, Google’s contracts stand out in that they are consistently renewed for at least a year. It’s clear that even a basic search still retains its value; if a Google search yields no results at all, one would have to conclude that the search itself is quite ineffective.

Meta’s response echoes their approach in Canada, where they have prohibited access to Canadian content on their platforms since August last year.

Corporations designated as needing compliance with the bargaining code are required to adapt their practices in accordance with its provisions. Australia’s Albanese authorities believes that if Meta is designated under the country’s information media bargaining code, it is likely to cease providing news services in Australia in the same manner as it did for several weeks in 2021 and similarly as it has done in Canada.

The federal authorities are considering a novel approach.

The concept of an incentive cost, a unique approach to pricing:

The innovative approach involves instructing major technology corporations primarily: “If you have existing agreements with news organizations, please continue honoring those commitments.” “When you choose not to act, the consequences become expensive.”

In Australia, the system bears some resemblance to that of personal medical health insurance; if you lack coverage, you’ll incur a slightly higher Medicare levy. If you’re eligible for the Medicare levy exemption, you won’t need to pay the upper rate of 15.3% Medicare levy on your income.

Based on current market trends and regulatory requirements, large online platforms with existing information offerings will likely absorb this new cost to maintain their competitive edge. Income would be allocated to support public interest journalism initiatives, effectively compensating information media organizations for content that would have otherwise gone unpaid due to their partnerships with major platforms.

Both approaches, news media organizations will receive a share of revenue from the massive digital platforms.

Given the industry’s evolving landscape and Meta’s unique requirements, we’re reconsidering our approach by acknowledging that while the 2021 information bargaining code served some companies well, its limitations were evident in others, including Meta, which necessitates a revised strategy.

This innovative approach echoes the ideas my colleagues and I presented to a parliamentary committee examining online platforms.

“Seeking a fresh agreement to bolster quality Australian reporting: urging Meta to take action.”

— Mumbrella Information (@Mumbrellanews)

Another aspect of the proposal would involve establishing a novel framework that imposes the revised standards on large-scale digital platforms.

The federal government plans to consult on this matter, having established a threshold that will only impact digital platforms generating more than $250 million in annual Australian revenue.

One potential outcome that may emerge from the session is the consideration of licensing, similar to how we currently license telecommunications companies.

At the recent press launch, there was no mention of licensing options. The Australian government could potentially instruct Meta, Google, and other companies that, to operate their respective businesses within the country, they must comply with specific regulatory requirements.

In Australia, a key condition of your license is that you adhere to principles regarding compensation for information media organisations, or you bear the financial burden.

Would Meta comply?

Must Meta ultimately decide whether to continue conducting business in Australia despite the uncertainty surrounding the new regulatory framework?

In Australia, the lucrative nature of promotional income for these individuals means that failing to adapt could ultimately be a self-sabotaging decision. Rather than incurring the significant costs, they would likely abandon their online presence and forfeit potential revenue from advertising.

I’d expect them to absorb the expense with minimal fuss.

Regardless of their content, the newly introduced “incentive cost” will be applied to prominent digital platforms operating significant social media or search services.

Despite refusing to host news content on its platforms – Facebook, Instagram, or WhatsApp – Meta still incurred costs, unless it negotiated deals with news media organizations.

The federal government appears resolute in its efforts to take on this challenge head-on. As long as the lead-up to the election remains unmarred by controversy, there is no room for error or misplaced blame when targeting CEOs of grocery stores and Meta.