Through the proposed News Bargaining Incentive, Australia is considering how to force global digital platforms like Meta and Google to pay domestic legacy news organisations – even when those platforms do not link to news at all. What remains are ongoing compulsory transfers untethered from news content, use, or negotiation. We might as well call it what it is: a digital platform advertising tax.
The original News Media Bargaining Code from 2021 rested on the premise that linking to news content created value that required compensation. The logic was that legacy media lost money after failing to adapt their advertising models, and so the government should step in to make digital platforms prop up the news industry.
That policy foundation was already weak – linking is a basic function of the open internet – but at least the policy retained some internal logic.
The latest News Bargaining Incentive abandons even that. A digital platform may now be required to subsidise – sorry, ‘bargain with’ – news organisations without hosting, linking to, or reproducing news. This contradiction appears to be an attempt to avoid repeats of episodes like Meta’s 2021 Australian news Facebook blackout, which revealed just how small a jurisdiction Australia really is.
Whatever the motivation, the language of ‘news’ and ‘bargaining’ has now collapsed entirely.
Treasury’s focus on implementation details misses a more fundamental problem: threshold-based regulation reshapes commercial behaviour well before any firm formally crosses the line. The policy penalises firms that combine three characteristics – scale, advertising revenue, and some connection (however tenuous) to news – and firms will respond accordingly.
Some will redesign products to reduce advertising exposure. Others will exclude news content altogether. Still others will limit their Australian operations to remain below regulatory thresholds. These responses occur upstream of enforcement, meaning that the government will never have to admit that they happened.
These effects are particularly pronounced in digital markets. Firms developing AI-powered information tools, new social platforms, or novel advertising technologies operate in environments where regulatory costs spike precisely when scale is achieved. The result is a chilling effect on experimentation – difficult to observe in any single decision, but cumulative over time as business models are modified or abandoned to manage regulatory exposure rather than maximise user value.
By imposing a discrete revenue threshold – such as $250 million in Australian turnover – the policy entrenches incumbents rather than disciplining them. The policy will deter challengers from growing large enough to compete. That is market protection, not competition policy.
Treasury is also considering forcing these ‘deals’ to be ‘diverse’. Platforms won’t simply choose which firms to support to meet their calculated ‘incentive’. Payments will need to be spread across multiple incumbent media organisations. The need for such fine-grained prescription only underscores how far this policy has drifted from anything resembling commercial bargaining.
The News Bargaining Incentive normalises a troubling regulatory logic. Once governments become comfortable compelling payments from one sector to prop up another – untethered from use or causation – that logic does not remain confined to journalism. It becomes a general tool of technology policy, available whenever incumbents lobby effectively and platforms grow large enough to be politically convenient.
The direct financial transfers involved will run into the tens of millions of dollars each year. But the more significant effects are indirect. Firms considering advertising-supported services in Australia must now factor regulatory exposure into product design. Over time, this reshapes which services are built, which markets are entered, and which technologies are scaled domestically.
Australia faces genuine technology policy challenges: artificial intelligence governance, online safety rules, digital asset regulation, and the development of ex ante digital competition rules. These debates require careful analysis of how institutions shape incentives and long-run innovation. Many of them are falling the wrong way.
If the objective of the News Bargaining Incentive is to support journalism, the government should do so directly. It should not conscript unrelated firms into an ongoing transfer scheme while pretending the result reflects bargaining or incentives. That approach would also be a disaster, but at least it would be honest.
Instead, the incentive establishes a model of technology regulation that prioritises immediate transfers to incumbent businesses. It may be politically popular, but policies that penalise scale and success leave economies weaker and less dynamic over time.
Darcy Allen is an Associate Professor of economics with RMIT University.
