Meta has accused Australia of violating its free trade agreement with the United States by proposing new taxes on big tech companies that don't have licensing deals with local media, escalating a five-year-old dispute. The $1.6 trillion tech giant, which owns Facebook and Instagram, said Australia's proposal to impose a 2.25% tax on the platform's entire Australian income - including income not related to social media - was "indefensible" and went beyond the scope of measures that had prompted responses from the U.S. government.
Meta has previously expressed its opposition to so-called "news negotiation incentives" measures, and Australia's center-left government is currently considering submissions from the industry. But its latest statement shows the legal risk could stoke geopolitical tensions among allies.
Meta said in a blog post published on Thursday that the tax "clearly violates the commitments made by Australia and the United States in the bilateral free trade agreement, which commits Australia to treat US companies 'no less favorable' than their Australian counterparts". The article added that because the Australian tax is based on technology companies’ gross domestic revenue, it is “broader than existing digital services taxes that some governments have implemented and have led to U.S. trade actions.” "We encourage any government considering a similar approach to take a close look at what this model actually represents," Meta said.
A spokesman for Assistant Treasury Secretary Daniel Mulino, who oversees the tax, said the government remains committed to the change and that any tax revenue will be allocated back to the news media industry.
The issue of requiring social media companies to pay news organizations for content that generates clicks has been a point of contention between Australia and Meta since 2021, when Australia became the first country to legally force platforms to negotiate deals or face government arbitration.
After briefly blocking all news feeds in Australia, Meta struck deals with most major media outlets but said in 2024 it would stop paying for news. The government said it would switch to a new taxation model instead of setting up arbitrators.
The list of companies subject to this tax has also expanded from Meta and Google to Meta, Google and TikTok. Google has reached an agreement under the original model, but has previously expressed opposition to the proposed tax.
Australia's efforts to regulate largely U.S.-based technology companies have become a flashpoint under the current Trump administration. A US congressional committee has asked Australia's internet regulator to testify about what it calls a system of "censorship of free speech in the United States." The regulator has not yet said whether he will agree to testify.